Beyond Lobbying Expenditures: How Lobbying Breadth and Political Connectedness Affect Firm Outcomes

Ridge, Jason W.; Ingram, Amy; Hill, Aaron

doi:10.5465/amj.2015.0584

Cited by 93 publications

(113 citation statements)

References 87 publications

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“…We argue that this is a valid instrument for a few reasons. First, political donations are correlated with the possibly endogenous variable, FDA Lobbying, since firms that are politically active in one dimension are likely to be politically active in other dimensions (Hillman et al, ; Ridge et al, ). Second, donations meet the exclusion restriction, because supporting political candidates is unlikely to impact FDA decisions about a particular NDA since the FDA's scientific committees are relatively insulated from the political process .…”

Section: Resultsmentioning

confidence: 99%

“…First, we gather all lobbying activities for public and private pharmaceutical firms that submitted an NDA application. Second, we only account for lobbying that targets the FDA, since it matters what government agencies firms lobby (Ridge, Ingram, & Hill, ). We do not expect, for example, that lobbying the Department of Defense or the Department of Transportation to help with FDA approvals.…”

Section: Methodsmentioning

confidence: 99%

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Pushing for speed or scope? Pharmaceutical lobbying and Food and Drug Administration drug review

Barber

Diestre

2019

Strategic Management Journal

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Research Summary: We argue firms implementing political activities face a fundamental trade-off between the content and the speed of public officials' decisions. Firms can use their political capital to speed up public officials' decisions at the expense of less customized content, or to push for more tailored content at the expense of speed. How do firms respond to this trade-off? We argue firms' nonmarket strategies are determined by their market environment: they will push for content or speed depending upon the level of competitive pressures they face in the market. In the presence of high market pressures, firms are more likely to push for speed; whereas firms facing low market pressures are more likely to push for customized content. Managerial Summary: We show evidence of a trade-off between content and speed in the political arena looking at Food and Drug Administration (FDA) drug approvals: lobbying for broader drugs leads to longer revisions, whereas lobbying to speed up the review process leads to narrower drugs. We explore how firms respond to this trade-off in a sample of 540 new drug applications to the FDA from 1998 to 2015. We show firms' lobbying strategies depend upon the level of intellectual property (IP) protection behind their drugs: firms with high levels of IP protection are more likely to lobby for drug scope, whereas firms with low levels of IP protection are more likely to lobby for revision speed. K E Y W O R D S corporate political activities, innovation, lobbying, new product development, pharmaceutical industry

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Section: Resultsmentioning

confidence: 99%

Section: Methodsmentioning

confidence: 99%

Pushing for speed or scope? Pharmaceutical lobbying and Food and Drug Administration drug review

Barber

Diestre

2019

Strategic Management Journal

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“…The current results show that total lobbying spending and campaign contributions seem to affect the contract amount positively but moderately. This pattern might imply that the effect of firms' nonmarket activities is contingent on the context, and that greater focus on certain boundary conditions will allow us to better tease apart the effects of these activities (Ridge et al, ).…”

Section: Resultsmentioning

confidence: 99%

“…Before turning to the main regression results, it is worthwhile to examine some of the control variables. Prior studies have argued that, because lobbying is a purposefully targeted activity (de Figueiredo & Silverman, 2006;Ridge et al, 2017), lobbying expenditures on specific congressional issues are a better predictor of outcomes than total lobbying expenditures. Prior studies also show that campaign contributions do indeed result in access to key political players (Keim & Zeithaml, 1986) but that their effect on outcomes is mixed (Hadani & Schuler, 2013).…”

Section: Regression Resultsmentioning

confidence: 99%

“…I also control for firms' political capital related to in-house lobbying: I include total lobbying spending (logged) for each year, the percentage of such spending devoted to internal lobbying functions (in-house lobbying as a % of total lobbying), and number of in-house revolving-door lobbyists. The first measure allows me to control for firms' overall lobbying activities (Ridge et al, 2017); the second and third enable me to alleviate concern that in-house lobbying capability might influence defensecontract outcomes. If a defense contract is driven largely by in-house lobbying efforts, two control variables will capture that effect.…”

Section: Control Variablesmentioning

confidence: 99%

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Is your playing field unleveled? U.S. defense contracts and foreign firm lobbying

Kim

2019

Strategic Management Journal

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Research Summary Prior research in political strategy shows that political capital is critical in achieving desirable nonmarket strategy outcomes. Less attention has been paid to the fact that firms vary in their ability to acquire political capital. Foreign firms, which typically suffer from the liability of foreignness, have difficulty acquiring and strengthening political capital in a host country. Drawing on the literatures on political capital, the liability of foreignness, and certification, I argue that relying on outside political capital—that is, hiring outside lobbyists—helps foreign multinational enterprises (MNEs) achieve better nonmarket outcomes, thanks to outside lobbyists' certifying role as political insiders. Empirically, the study examines U.S. Department of Defense weapons‐system prime contracts awarded to 20,301 U.S. and foreign‐owned defense contractors from 1998 through 2006. This study has theoretical and practical implications for studies on political capital, international business, and nonmarket strategies. Managerial Summary Political capital is assumed to be critical in nonmarket strategy to achieve positive firm outcomes, particularly in industries where political and regulatory players play an important role. However, due to certain industry or firm characteristics, some firms are at a disadvantaged position in acquiring and consolidating the political capital they need. In this research, I argue that one of the factors creating such disadvantage is foreignness. The results indicate that for those foreign firms with a liability of foreignness, relying on outside lobbyists is beneficial to overcome the disadvantages and to achieve better nonmarket outcomes because outside professional lobbyists can ease information flows between political and regulatory players and foreign firms through their trustworthiness as political insiders.

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De‐politicization and corporate social responsibility: Empirical evidence from China

Qiu,

Zhou

2024

Corp Soc Responsibility Env

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Given the lack of consensus in the existing studies about the impact of political resources on corporate social responsibility (CSR), we delve into this relationship and analyze the underlying mechanisms. To address the endogenous problems associated with political connection, this paper explores the consequence of de‐politicization and adopts an exogenous event in China. Results indicate that de‐politicization significantly enhances the CSR performance of firms. Specifically, de‐politicization can lead to a 1.474 increase in CSR scores. This finding is further supported by various robustness tests. Additionally, this paper probes into the reasons for the positive influence focusing on prerequisite and driving forces. For one thing, de‐politicization reduces the rent‐seeking expenses of politically connected firms, thereby granting these firms enough financial resources to improve their CSR performance. For another thing, CSR practices can convey positive information, improve financial performance, and enhance competitiveness, which motivates firms to actively participate in CSR issues to alleviate the adverse influence of losing political connection. This paper enriches the existing research on political connections and provides theoretical guidance and policy recommendations for improving CSR in developing countries.

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Beyond Lobbying Expenditures: How Lobbying Breadth and Political Connectedness Affect Firm Outcomes

Cited by 93 publications

References 87 publications

Pushing for speed or scope? Pharmaceutical lobbying and Food and Drug Administration drug review

Pushing for speed or scope? Pharmaceutical lobbying and Food and Drug Administration drug review

Is your playing field unleveled? U.S. defense contracts and foreign firm lobbying

De‐politicization and corporate social responsibility: Empirical evidence from China

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