Corporate Double Takes: How Elites Link State Principles to Firm Instruments

• In Event: Firms and Political Risk

Abstract

Scholars often regard multinational corporations (MNCs) as powerful and independent economic actors. They are less often considered tools of foreign policy. Yet I find many cases where MNCs have been persuaded by powerful countries to participate in covert international operations, risking their reputations and profits by doing so. I call this tactic “firm instrumentalization,” using the pretext of international commercial enterprise to execute foreign security operations. This paper confirms, describes and analyzes this unexamined policy tool and offers an initial theory for why and how such instrumentalization occurs. I theorize that a state will seek to maximize the impact of a firm instrument while also seeking to minimize agency slack and ensure the discretion of the firm. I draw on findings in economic sociology to propose that state intelligence elites will often turn to personal friends who manage multinational firms in selecting agents to balance these competing needs. To test these claims, I leverage the near-universe of US news and media firms from 1950-1970, a period scrutinized by the Pike Congressional Committee in its investigation into CIA operations. The resulting report, along with corroborating evidence by investigative journalists and confessions from firm leaders, identifies news firms that served as instruments for CIA activities abroad during the Cold War. The names of almost all of these firms are also revealed. Such information allows me to compare firms that were CIA instruments with those that were not, making possible a rare statistical analysis of covert action. I complement this analysis with a case study of Columbia Broadcasting Station (CBS), a firm that initially worked with the CIA but terminated its cooperation prior to 1970. These tests offer strong support for my theory. The impacts of this project are far reaching. First, it illuminates an underexamined phenomenon in international relations that is significant in contemporary politics. Second, it strengthens the claim that states retain significant influence over MNCs, at times compelling them to repeatedly participate in financially risky operations. Third, it suggests that, in covert interactions with states, non-state actors do not behave as expected by prior scholarship. Finally, the paper opens an important new discussion within ongoing debates about the security risks posed by international trade.

Author

• Lauren Barden-Hair, University of California, Berkeley