Predictors of foreign corporate political activities in United States politics

Abstract

Research SummaryAlthough there is growing recognition of the importance of nonmarket strategies in ensuring favorable outcomes for firms, most of the research on corporate political activity (CPA) in the U.S. has focused on domestic firms. However, foreign firms are also actively involved in lobbying in the U.S. We identify several predictors of foreign firm CPA using an institutional perspective. Based on a sample of 1,701 publicly listed foreign firms from 37 different countries during the period 1998–2014 and using penalized maximum likelihood and Poisson estimators, we find that the cultural‐cognitive, normative, and regulative institutional characteristics of the home countries of the foreign firms can explain a firm's willingness to engage in CPA in the U.S., over and above firm and industry‐level factors.Managerial SummaryThere is growing recognition of the importance of nonmarket strategies in ensuring favorable outcomes for firms. However, most of the research on corporate political activity (CPA) in the U.S. has focused on domestic firms. Foreign firms are also active participants in CPA in the U.S. In this article, we try to identify the country‐level predictors of foreign firm CPA, more specifically their lobbying activities, using data on 1,701 publicly listed foreign firms from 37 different countries during the period 1998–2014. Our results indicate that country‐level institutional factors influence a foreign firm's likelihood of engaging in CPA in the U.S. above and beyond more well‐known firm and industry‐level variables.