Corporate Democratic Action (CDA): The commitment of companies to protect liberal democracy

How can and should companies contribute to the protection of liberal democracy? This question is the focus of a new discussion paper on the topic of Corporate Democratic Action (CDA), published in the renowned “Schmalenbach Impulse” series. Benedikt Kapteina, a post-doctoral researcher at the Chair of Business Administration, specialising in Responsible Management, and Prof. Markus Scholz are the lead authors of this paper.

In times of increasing social division, growing populist tendencies and liberal democracy coming under pressure worldwide, the political engagement of companies is coming more into focus in business research and corporate practice. The term Corporate Democratic Action is used to discuss how companies can protect and strengthen democratic values, institutions and spaces for discourse.

The article shows that CDA can be justified from two perspectives: On the one hand, an instrumental-strategic perspective highlights that companies depend on stable democratic and constitutional frameworks. Fundamental rights such as private property, freedom of trade, the rule of law and independent institutions form central prerequisites for reliable markets, investment security and long-term economic activity. Those who strengthen liberal democracy thereby simultaneously protect the foundations of the social market economy.

Secondly, a normative-ethical perspective emphasises the shared responsibility of companies as corporate citizens. Companies benefit from democratic institutions, fair procedures, independent media and social trust. This raises the question of whether they also bear a responsibility to contribute to the stability of these conditions – for instance, by promoting democratic culture, the capacity for public discourse and trust in social institutions.

At the same time, the article makes it clear that Corporate Democratic Action is not free from tensions. Critical questions relate in particular to the functional division of labour between business and politics, the democratic legitimacy of corporate action, and potential shifts in power from public to private actors. Corporate political engagement must therefore be structured in a way that is transparent, credible and institutionally sensitive.

This presents management with a challenging task: companies must reflect on when, how and by what means they can engage with democratic values – individually or collectively, directly or indirectly, out of enlightened self-interest and/or a sense of moral shared responsibility.

The full contribution to the debate has been published in the series “Schmalenbach Impulse”.

Click here for the full text.