Contextualizing Political Strategies

Abstract

We examine firms’ selection of political strategies. Building on institutional theory, we develop a conceptual understanding of how firms select particular political strategies depending on the institutional and political quality of the contexts of countries. Specifically, we propose that in contexts with high institutional and political quality, firms are more likely to select the engaged political strategies of information, constituency-building, or financial incentive, traditionally discussed in the literature. In contrast, in contexts with low institutional and political quality, firms are more likely to use either bribery and state capture, or the non-engaged political strategies of low visibility, rapid compliance, reconfiguration, and anticipation. Moreover, in contexts with high institutional but low political quality, firms are more likely to select the information strategy. Finally, in contexts with low institutional but high political quality, firms are more likely to use either the information and constituency-building strategies, or bribery and state capture. By focusing on the contexts of countries, our model goes beyond traditional attention to engaged and legal political strategies, incorporating not only non-engaged but also illegal strategies among the options available to firms. We contribute to political strategies and institutional research by offering a contextualization of the selection of political strategies.