Abstract
It is important to understand why firms invest in corporate political activity (CPA) and how such investments impact firms and society. Resource dependence theory suggests that large firms have the most to gain from CPA and explains why firm size has been a reliable predictor of CPA. Large firms vary, however, in the extent to which they invest in CPA. We focus on large family-influenced firms by theorizing that their sensitivity to social attacks leads them to resist CPA investments until they rank among the very largest firms, at which point their inherent exposure forces them to pivot and out-spend peers on CPA. We find support for our theory in a sample of firms listed on the 2005 S&P 500 from 1998 to 2005. One implication is that firms’ owners vary in their willingness to be seen shaping government policy toward their private objectives.
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