Gaining Access by Doing Good: The Effect of Sociopolitical Reputation on Firm Participation in Public Policy Making

Werner, Timothy

doi:10.1287/mnsc.2014.2092

Cited by 130 publications

(127 citation statements)

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“…While existing literature focuses on either industry (e.g., DiMaggio and Powell 1983) or region (e.g., Marquis and Battilana 2009), we differentiate and compare the moderating effects of the two. Third, we address the relationship (and potential integration) between corporate social responsibility (CSR) and corporate political activity (CPA)-two important nonmarket strategies (Sun et al 2012, Mellahi et al 2016, Werner 2015. We show that, depending on different types of political connections and institutional conditions, CSR and CPA are either complements or substitutes.…”

Section: Introductionmentioning

confidence: 90%

“…But the relationship between the two is less clear (Delmas et al 2016, Mellahi et al 2016, Sun et al 2012. Some studies suggest that the two activities complement each other, e.g., CSR facilitates corporate political access (McWilliams et al 2002, Werner 2015. Others suggest that given that both CSR and CPA are not cost-free, the two nonmarket strategies can also serve as substitutes (Wang and Qian 2011); that is, if firms consider one strategy to be effective in achieving/protecting their interests, why would they bother to spend more resources on the other?…”

Section: Institutional Contingency Of Political Connectionsmentioning

confidence: 99%

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

Zhang

Marquis

Qiao

2016

Organization Science

318

348

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D o political connections buffer firms from or bind firms to the government? To examine this theoretical puzzle, we distinguish two types of managerial political connections, ascribed and achieved, and theorize that these different types of ties either buffer firms from or bind firms to government demands. Furthermore, we propose that these effects are contingent on both industrial and regional institutional conditions. We test our framework with a unique panel data set of privately controlled listed firms' charitable donations in China from 2001 to 2012. We find that firms whose executives have ascribed bureaucratic connections are more likely to use their connections as a buffer from governmental donation pressure, particularly in competitive industries and less market-oriented regions, whereas in state-monopolized industries this buffering effect is reduced. In contrast, achieved political connections are more likely to serve a binding function that facilitates donation, particularly in state-monopolized industries and more market-oriented regions, but in less marketoriented regions, they buffer firms from the pressure to donate. Our research contributes to the literatures on the effects of political connections, the institutional contingencies of political connections, and the relationship between corporate social responsibility (CSR) and corporate political activities (CPA).Keywords: political connections; corporate charitable donation; resource dependence; institutional environment History: Published online in Articles in Advance September 29, 2016. IntroductionAs 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). 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). Even in the United States, political connections have been shown to help firms when they deal with regulators (Correia 2014, Yu andYu 2011). In emerging markets, such a buffering effect is seen as an effective mechanism to protect firms from government rent-seeking behavior (Chen et al. 2011, Dieleman andBoddewyn 2012).In contrast, other studies consider these connections from the perspective of the government and emphasize the necessary costs of such linkages for the firm. From this perspective, political connections have a "binding" effect, ...

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Section: Introductionmentioning

confidence: 90%

Section: Institutional Contingency Of Political Connectionsmentioning

confidence: 99%

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

Zhang

Marquis

Qiao

2016

Organization Science

318

348

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“…Elected politicians tend to be self‐interested; their top priority is typically to get reelected (de Figueiredo & Richter, ). Policy‐makers are likely to distinguish among organizations depending on their reputations, and to allow access only to those that can increase their reelection probabilities (Werner, ); thus elected politicians have stronger incentives to meet with domestic players and to be informed about domestic firms' interests (Franklin, ), particularly in industries where noneconomic factors play a key role (e.g., automotive, defense). In the words of a revolving‐door lobbyist, “Elected politicians might support Toyota as long as there is no conflict of interest with other American carmakers.” Other interviewees echoed this observation.…”

Section: Theory and Hypothesesmentioning

confidence: 99%

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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“…After all, despite its ubiquity, corporate political activity is a contentious subject that draws widespread media coverage and public opprobrium, especially given steady declines since the 1970s in public approval of the role of business in American politics (Smith, 2000). As social actors, government officials strive to build and protect their legitimacy in order to wield and exercise power within their own social field (Pfeffer & Salancik, 1978;Skocpol, 1985;Suchman, 1995;King, Felin & Whetten, 2010;Hiatt & Park, 2013;Werner, 2014). Individual regulators are especially sensitive to threats to their legitimacy because of their continuous, substantial reliance on support from external constituencies (Carpenter, 2001), and elected officials, with their focus on reelection, are similarly cautious.…”

Section: Blacklisted Benefactors: the Political Contestation Of Non-mmentioning

confidence: 99%

Blacklisted Benefactors: The Political Contestation of Non-Market Strategy

McDonnell

Werner

2015

AMPROC

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This paper explores whether and how contentious stakeholders can disrupt a firm's non-market strategy. We offer the first systematic study of the effect of public protest on corporate political activity, using a unique database that allows us to empirically analyze the impact of social movement boycotts on targeted firms' campaign contributions. We show that boycotts lead to significant reductions in the amount of targets' campaign contributions and increase the proportion of contributions that politicians refund. These results highlight the importance of considering how a firm's socio-political environment shapes its non-market strategy. We supplement this primary analysis by drawing from social movement theory to extrapolate and test a number of mechanisms that moderate the extent to which movement challenges effectively disrupt corporate political activity. ABSTRACTThis paper explores whether and how contentious stakeholders can disrupt a firm's non-market strategy. We offer the first systematic study of the effect of public protest on corporate political activity, using a unique database that allows us to empirically analyze the impact of social movement boycotts on targeted firms' campaign contributions. We show that boycotts lead to significant reductions in the amount of targets' campaign contributions and increase the proportion of contributions that politicians refund. These results highlight the importance of considering how a firm's socio-political environment shapes its non-market strategy. We supplement this primary analysis by drawing from social movement theory to extrapolate and test a number of mechanisms that moderate the extent to which movement challenges effectively disrupt corporate political activity.* We would like to thank Caroline Flammer, Olga Hawn, Shon Hiatt, Brayden King, Jiao Luo, Jeff Macher, Michael Malbin, and Ed Walker, as well as seminar participants at Wharton, Yale University, Columbia University, the University of Michigan, Chicago Booth, the University of Texas, the University of Maryland, Rice University, Boston University, and Ohio State University for their comments and suggestions on earlier versions of this paper. This paper was previously presented at the 2014 annual meetings of the American Political Science Association and the Strategic Management Society. Blacklisted Benefactors 2 Blacklisted Benefactors: The Political Contestation of Non-Market StrategyFirms exist in multiple institutional environments, requiring interaction with myriad audiences who often have conflicting expectations and demands (Scott, 1987;Greenwood, 2011). One of the most critical of these audiences is the state, which crafts the rules of the game that define market competition and creates the system of laws and punishments that comprise the formal, regulatory pillar of firms' institutional environments (Scott, 2001). Though legal rules certainly constrain corporate behavior, firms do not passively acquiesce to the iron cage of their regulatory institutions. Rather, work at the inte...

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Gaining Access by Doing Good: The Effect of Sociopolitical Reputation on Firm Participation in Public Policy Making

Cited by 130 publications

References 111 publications

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

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

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

Blacklisted Benefactors: The Political Contestation of Non-Market Strategy

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