Corporate political strategies and firm performance: indications of firm-specific benefits from personal service in the U.S. government

Abstract

Firms employ a variety of political strategies (e.g., lobbying, contributions) in an attempt to gain influence or access to the public policy process. A variety of benefits may accrue to firms that are successful in creating a linkage with the government: information, access, influence, reduced uncertainty and transaction costs, etc. However, the direct benefits of such strategies are difficult to observe. One political strategy is studied here-personal service (having a firm representative serve in a political capacity). Event-study methodology results show that such linkages with the government positively affect firm value. These findings indicate that firmspecific benefits may result from political strategies.

How CEO hubris affects corporate social (ir)responsibility

“…In a highly uncertain environment, they also depend on sustained government support for access to critical information, favorable policies and regulations, as well as other resources (Hillman, Zardkoohi, and Bierman, ). Hence, CEOs will seek to win over government by doing more good deeds and avoiding bad ones.…”

Buffering and enabling: The impact of interlocking political ties on firm survival and sales growth

“…Several studies have used resource dependence (Hillman, ; Hillman, Zardkoohi, and Bierman, ; Lester et al, ; Meznar and Nigh, ) and resource‐based (Frynas, Mellahi, and Pigman, ; Keim, ; Li and Zhang, ; Li et al , ) theories to study political ties. Resource dependence and resource‐based theories highlight the importance of resources for firm survival and performance.…”

“…Examples of resources that political ties can provide include direct cash or resource transfers (Faccio et al , ), government contracts (Goldman, Rocholl, and So, ), tax breaks and subsidies (Bertrand et al , ), and low‐cost bank loans (Khwaja and Mian, ). Ties may also provide intangible resource benefits such as influencing policies, regulations, rules, and their enforcement (Lester et al , ; Meznar and Nigh, ; Pfeffer, ), enhancing legitimacy (Hillman et al , ), facilitating market entry (Agrawal and Knoeber, ), and hindering competitors' entry (Dean and Brown, ).…”

Not all family firms are equal: The moderating effect of family involvement on the political risk exposure of the foreign direct investment portfolio. Preliminary evidence from Spanish multinational enterprises

“…By actively engaging in political activities and strategies, firms can access key political actors in the host country to inform them on the firm's strategy, their views on relevant issues, and influence the decision‐making process (Nell, Puck, & Heidenreich, ). When political capabilities are strong, MNEs may enjoy preferential treatment and advantageous conditions when entering risky countries (McWilliams, Van Fleet, & Cory, ) as well as an overall lower environmental uncertainty and transaction costs (Hillman, Zarkhoody, & Bierman, ). This allows firms to follow a proactive approach and invest in a greater number of countries to benefit from the advantages of international diversification including economies of scale, new knowledge, talent, and so forth (Hitt, Tihanyi, Miller, & Connelly, ).…”