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 firm‐specific benefits may result from political strategies. Copyright © 1999 John Wiley & Sons, Ltd.

Do Political Connections Buffer Firms from or Bind Firms to the Government? A Study of Corporate Charitable Donations of Chinese Firms

“…Therefore, we generally expect that executives with achieved political connections are more likely to meet government expectations. unique information and knowledge about bureaucratic operation, which, because of its complexity, is often very expensive or difficult for a firm to obtain (Hillman et al 1999). For instance, such knowledge in China enables firms to differentiate various GONGOs and government requests, complying with serious requests while ignoring less consequential ones.…”

“…As institutional linkages that span firms and governmental authorities, firms' political connections are a key component of corporate political strategy in both developed and emerging economies (Hillman 2005, Hillman et al 1999, Peng and Luo 2000. However, the effects of political connections on firm behavior and outcomes are not clear (Sun et al 2012).…”

“…However, the effects of political connections on firm behavior and outcomes are not clear (Sun et al 2012). Many studies focus on the benefits from such linkages and indicate that political connections have a "buffering" effect; that is, they provide a buffer for the organization from competitive and regulatory forces via access to information, influence, and legitimacy (Hillman 2005, Hillman et al 1999, Lester et al 2008, Peng and Luo 2000. Research has shown that firms can employ their political capital to shield themselves from unwanted political interference, unfavorable regulations, and/or various forms of government rent expropriation (Mellahi et al 2016).…”

A Recent Literature Review on Corporate Political Connections

“…Indeed, management scholars (Hillman et al, 1999;Tripathi et al, 2002;Hilman et al, 2004;Ozer et al, 2010) have also introduced the concept of corporate political activity which to some extent could be considered to be overlapping with the term of corporate political connections.…”

Corporate political strategy and liability of foreignness: Similarities and differences between local and foreign firms in the South African Health Sector

“…A firm's political strategies include a wider network of stakeholders than just government and include all relations with non-market stakeholders that may affect the operations of a firm (Holtbrugge, Berg, & Puck, 2007;Puck et al, 2013). The firm may benefit through decreased environmental uncertainty, lower transaction costs or better long-term sustainability (Hillman, Zarkhoodi, & Bierman, 1999;Lawton et al, 2013).…”