Examining Automobile Manufacturer Participation in Regulatory Processes

Abstract

Despite the fact that government regulation is one of the primary external sources of pressure on firms, the antecedents of firm participation in regulatory processes remain relatively unexplored in the management literature. Most studies to date have instead focused on examining firms’ influence on elected officials. This study begins to explore the factors influencing firm participation in the federal regulatory process by examining automobile firms’ participation in NHTSA (National Highway Traffic and Safety Administration) rulemaking comment periods as a function of firm financial performance and government ratings in crash tests. Longitudinal analysis of 21 automobile manufacturers results in several findings. First, firm financial performance is shown to be negatively associated with comment period participation. Second, firm performance in NHTSA crash tests is shown to be negatively associated with participation in NHTSA rulemaking comment periods. Finally, crash test performance moderates the effect of financial performance on comment period participation. These results provide new insights into the factors influencing firm political activity.