Insider lobbying and government contracts: The moderating role of firm size

Abstract

AbstractThis study examines insider lobbying as a form of relational Corporate Political Activity (CPA) that can be used by firms to gain an advantage in the competition for government contracts, and how firm size moderates the effectiveness of different insider lobbying strategies. Drawing on a unique dataset that captures meetings between private companies and British government ministers, we find that both the breadth and depth of insider lobbying are positively related to the value of the contracts awarded by the UK Ministry of Defence. Further analysis reveals that the benefits from a strategy of lobbying depth are stronger for small firms, than those from a strategy of lobbying breadth. The findings suggest that the bridging and bonding social capital cultivated through meetings with politicians can be deployed in alternative ways by different‐sized firms.