In search of El Dorado: The elusive financial returns on corporate political investments

Hadani, Michael; Schuler, Douglas A.

doi:10.1002/smj.2006

Cited by 318 publications

(302 citation statements)

References 91 publications

(144 reference statements)

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“…Empirical evidence is also mixed.There is evidence in support for both positive (Cooper, Gulen, & Ovtchinnikov, 2010;Fisman, 2001;Frynas, Mellahi, & Pigman, 2006;Goldman, Rocholl, & Jongil So, 2009;Jayachandran, 2006) and negative (Aggarwal, Meschke, & Wang, 2012a;Ansolabehere, De Figueiredo, & Snyder Jr., 2003;Hadani & Schuler, 2013a;Hersch, Netter, & Pope, 2008;Okhmatovskiy, 2010;Siegel, 2007;Sun, Wright, & Mellahi, 2010) effect of CPA on business performance. (Tian, Hafsi, & Wu, 2009) suggest that even in emerging economies the effectiveness of CPA is not uncontested.…”

Section: Performance Outcomes Of Cpamentioning

confidence: 99%

Corporate Political Activity: An Integrated Model

Kumar¹,

Thakur²,

Pani³

2015

ASS

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This paper reviews the current state of research in the area of corporate political activity to build an integrated model. This model segregates the related but scattered corporate political activity constructs in literature into enablers, motivators, moderators, choices, and outcomes of corporate political activity. This model can be help in reconciling contradictory results in literature. For instance, several studies have found evidence positive, neutral, and negative effect of CPA on performance. This model suggests that CPA-performance relationship is enabled and moderated by several factors, and controlling them may yield a better picture of CPA effect on performance. We further suggest gaps in current literature and give suggestions for future research in this area.

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Section: Performance Outcomes Of Cpamentioning

confidence: 99%

Corporate Political Activity: An Integrated Model

Kumar¹,

Thakur²,

Pani³

2015

ASS

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“…Recent research shows that firms' political investments are negatively associated with market performance and cumulative political investments worsen both market and accounting performance (Hadani & Schuler, 2013). It would be interesting to examine how such results differ when taking into account issue performance.…”

Section: Resultsmentioning

confidence: 99%

“…Additionally, firms in regulated sectors have the most to gain from CPA as they are most affected by regulations (Hadani & Schuler, 2013) and we expect the U shape to be more pronounced in these sectors. While it is difficult to determine which sectors are most affected by legislation that was not passed, the amount of lobbying might be a good proxy.…”

Section: Graph Of Relationship Between Ghg Emissions and Lobbying Expmentioning

confidence: 92%

Corporate Environmental Performance and Lobbying

Delmas

Lim

Nairn-Birch

2016

AMD

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In 2013, the energy and natural resources sector spent $359 million lobbying. Such spending is largely perceived as a strategy by industry to oppose regulation. Research has barely begun to investigate how firm-level performance on salient political issues affects corporate political strategy. In this paper, we address this issue in the context of the recent climate change policy debate in the United States. We hypothesize a U-shaped relationship between greenhouse gas (GHG) emissions and lobbying expenditures. To test our hypothesis, our study leverages novel data on firm-level GHG emissions and lobbying expenses aimed specifically at climate change legislation. Our results based on 3,194 firm-observations during a 4 year-period, suggest that both dirty and clean firms are active in lobbying, which challenges the view of adversarial corporate strategy.

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“…Most empirical studies link an organization's political ties to performance, either having positive (e.g., Hillman, Zardkoohi, & Bierman, 1999), negative (e.g., Hadani & Schuler, 2013;Siegel, 2007), or contingent effects (e.g., Lux et al, 2011;Sun et al, 2012) as compared to organizations without them. The political ties literature further suggests that advantages of having political ties could be better performance (e.g., Hillman, 2005;Peng & Luo, 2000), first-mover advantages (Frynas, Mellahi, & Pigman, 2006), higher chances of a government bailout (Faccio, Masulis, & McConnell, 2006), or lower costs of capital (Boubakri, Guedhami, Mishra, & Saffar, 2012).…”

Section: Political Ties and Appropriationmentioning

confidence: 99%

How powerful political ties appropriate resources and how weaker organizations protect themselves: A case study from Indonesia

Dieleman

Widjaja

2018

Asia Pac J Manag

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We advance the resource dependence literature on appropriation of organizational resources by powerful partners, focusing on political ties. Using a unique emerging market case of a venture with political ties, we advance theory by unpacking how political connections can hurt the organization by increasing the permeability of organizational boundaries. Our extensions highlight the crucial role of control mechanisms for politically connected organizations.Keywords Organizational boundary . Resource dependence . Political ties . PermeabilityOrganizations commonly seek to create linkages with external parties to access key resources and opportunities (Hitt, Ahlstrom, Dacin, Levitas, & Svobodina, 2004), especially in emerging economies (Ahlstrom, Young, Nair, & Law, 2003). Yet these linkages also carry some costs and risks (Lin & Si, 2010). Researchers employing resource dependence theory (RDT) in particular have shown that risks are prevalent when there is a power imbalance, as powerful partners may appropriate organizational resources (Casciaro & Piskorski, 2005;Emerson, 1962;Gulati & Singh, 1998;Pfeffer & Salancik, 1978). Although considerable research has advanced our knowledge of the conditions under which organizations seek partnerships (e.g., Hillman, Withers, & Collins, 2009;Katila, Rosenberger, & Eisenhardt, 2008), we know much less about the mechanisms by which powerful partners appropriate resources (Mellahi, Frynas, Sun, & Siegel, 2016;Xia, 2011) and, in turn, how weaker organizations can seek to protect themselves (Katila et al., 2008). This is important as smaller firms increasingly enter new markets and must partner with larger (and sometimes) state linked partners creating relationships that need to be carefully managed (Young, Ahlstrom, Bruton, & Rubanik, 2011). How companies can protect themselves against appropriation is a relatively recent but important research topic within RDT, especially in the context of powerful political ties, an area where capture by powerful partners is particularly acute. Political ties link the organization to the government with potentially beneficial effects (Hillman, 2005), but they cannot be fully controlled and may create their own problems such the extraction of rents or derailing strategy (Fan, Wong, & Li, 2007;Lin & Si, 2010;Shleifer & Vishny, 1994;Siegel, 2007;Sun, Hu, & Hillman, 2016;Sun, Mellahi, & Wright, 2012). A new generation of RDT research suggests this problem is particularly salient in emerging economies, where new ventures often need powerful political ties to acquire resources such as licenses to operate and build legitimacy, but this can yield a power imbalance that may stimulate appropriation of firm resources (Mellahi et al., 2016).A few recent studies address the question how appropriation works. For instance, Sun et al. (2016) detailed how substantial shareholders colluded with political ties to expropriate minority shareholders, but they focus mostly on well-established publicly listed companies. Dieleman and Boddewyn (2012) investig...

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In search of El Dorado: The elusive financial returns on corporate political investments

Cited by 318 publications

References 91 publications

Corporate Political Activity: An Integrated Model

Corporate Political Activity: An Integrated Model

Corporate Environmental Performance and Lobbying

How powerful political ties appropriate resources and how weaker organizations protect themselves: A case study from Indonesia

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