The Impact of Internationalization of U.S. Multinationals on Public Affairs Strategy and Performance

Abstract

This study uses partial least squares (PLS) analysis to investigate the changing relationships among corporate international expansion, public affairs strategies, and public affairs performance over a 10-year period. Two waves of single-respondent data were collected from the same U.S. multinational corporations (MNCs) in 1993 and 2003. These data are used to test hypotheses that internationalization affects how successfully a U.S. MNC manages its relationships with social and political stakeholders in its nonmarket environment. The results of this unique study indicate that the number of countries in which the MNC operates and its percentages of foreign employees, foreign assets, and foreign sales are associated with the public affairs strategies that MNCs use in nonmarket environments. The study differentiates these strategies into social or political buffering and social or political bridging. Significant differences exist across the two time periods in the impact of percentage of foreign employees on social buffering and the impact of political buffering on political affairs performance. The study elaborates the implications of these findings.