Why your company may need a chief external officer: upgrading external affairs can help align strategy and improve competitive advantage

Companies and their executives have long had to factor external political and social environments into their strategic decisions. In recent years, however, political and social issues have become more complex and consequential. In just the past few years, major social and political events such as the Deepwater Horizon oil spill and the implementation of the Affordable Care Act have had profound and lasting impacts on business. As a result, some global organizations must develop new roles to manage these nonmarket phenomena. In this paper we review research on nonmarket strategy and its connection to competitive advantage. We document the often fractured nature of nonmarket functions in most corporations and suggest that proactive companies should consider creating a unified senior executive function to manage the political-regulatory and social-cultural environments. We illustrate how this role can improve the competitive advantage of the organization and we provide managers with a framework to explore different scenarios, structures and options for managing a wide range of nonmarket pressures