Resource Dependence, Uncertainty, and the Allocation of Corporate Political Activity across Multiple Jurisdictions

Abstract

This paper contributes to the resource dependence theory and corporate political activity literatures by distinguishing dependence from uncertainty and explaining how two different types of uncertainty have opposite effects on dependence management. We explain how some environmental factors increase the state uncertainty associated with firms’ dependence on government jurisdictions, whereas other factors increase response uncertainty. We hypothesize that, due to the historical influence of the media and social movement organizations on politics, negative national media tenor and oppositional social movement organization resources increase state uncertainty (i.e., government’s likely behavior toward firms becomes less predictable), strengthening the relationship between firms’ dependence on jurisdictions and their use of political contributions in those jurisdictions. Further, we hypothesize that top management team turnover and politician turnover increase response uncertainty (i.e., the effectiveness of firms’ efforts to manage their dependence becomes less clear), weakening the relationship between dependence and political contributions. We find support for our theory in an examination of state-level political contributions of firms in environmentally intensive industries from 2009 to 2016. Interviews with senior executives, political consultants, and senior government employees directly involved in corporate political activity help illustrate the hypothesized relationships.