Corporate Political Activity Research Articles

The half‐life of political capital: An examination of the temporal effects of board political connections

AbstractResearch SummaryDoes corporate political activity (CPA) help sustain performance? Prior literature did not address this question, only whether CPA increases profits—with mixed results over short timescales. We theorize about how political capital affects the regression‐to‐the‐mean of profits through firm and industry persistence mechanisms. Using data on over 6000 firms from 14 democratic countries, we estimate time‐varying, firm‐specific performance persistence coefficients with random‐coefficient models—and profit volatility measures. Triangulating identification methods suggests that the half‐life of political capital is shorter than expected, also compared with other strategy interventions. Political connections are marginally effective at sustaining performance and reducing volatility, delaying profit convergence by only 0.180 years—and with no effect beyond 7 years. Preliminary evidence shows that legislative constraints further curb these modest benefits of CPA.Managerial SummaryCorporate political activity (CPA) has an ambiguous impact on firm profits. Yet, it still is a prominent and recurrent firm strategy. Do firms use CPA to sustain existing performance advantages—rather than to create new ones? We show that one type of CPA—the co‐optation of politicians into company boards—does increase the persistence and lowers the volatility of firm performance. However, this effect is surprisingly small: advantages only last 2.4% longer, 7.44 years compared to 7.26 years for politically unconnected firms. Political capital erodes faster than expected, presumably due to political cycles or politically motivated firm strategies that are detrimental to performance. CPA seems less effective at sustaining performance advantages than firm investments in R&D or skilled labor—and has a limited anticompetitive effect.

Emerging market multinational corporations' cross‐border mergers and acquisitions and political distance: Does corporate political activity matter?

AbstractDue to rising anti‐globalization sentiment, emerging market multinational corporations (EMNCs) face additional challenges in conducting cross‐border mergers and acquisitions, particularly in the developed markets. Built on institutional theory, we specifically examine how political distance, representing host–home country differences in various attributes in the political environment, influences the speed of approval for EMNC acquisition in the United States. The findings suggest that a larger political distance between the United States and EMNCs home country reflects challenges for EMNCs to gain legitimacy in the United States, resulting in the longer time required for acquisition approval. The EMNCs' corporate political activity moderated this relationship in that more corporate political activity improves the legitimacy perception of EMNCs among political actors, decreasing the time required for acquisition approval.

Advocacy counterstrategies to tobacco industry interference in policymaking: a scoping review of peer-reviewed literature

BackgroundThere has been remarkable tobacco control progress in many places around the globe. Tobacco industry interference (TII) has been identified as the most significant barrier to further implementation of the World Health Organization Framework Convention on Tobacco Control (WHO FCTC). Civil society has been recognised as a key actor in countering TII. While TII has been extensively studied for several decades now, there is little research that focuses on counteractions to limit it and their effectiveness to do so. This scoping review seeks to map the peer-reviewed literature on civil society’s activities of countering TII in policymaking to identify common counterstrategies and assess their effectiveness.MethodsData sources: We searched Embase, IBSS, JSTOR, PubMed, Science Direct, Scopus and Web of Science using the following terms: (“Tobacco industry” OR “Tobacco compan*”) AND. (“corporate political activity” OR “CPA” OR “lobbying” OR “interference”) AND (“advoca*” OR “counter*” OR “activi*”), without time or language restrictions. Study selection: Our selection criteria included peer-reviewed studies that were written in English, German, or Spanish that drew on primary data and/or legal and policy documents and reported at least one specific example of civil society members or organisations countering tobacco industry action-based strategies. Data extraction: Advocates’ counterstrategies were analysed inductively and countered industry strategies were analysed using the Policy Dystopia Model (PDM). Perceptions of effectiveness of countering attempts were analysed descriptively.ResultsWe found five common counterstrategies among 30 included papers covering five WHO regions; 1. Exposing industry conduct and false claims; 2. Accessing decision-makers; 3. Generating and using evidence; 4. Filing a complaint or taking legal action; 5. Mobilising coalition and potential supporters. These counterstrategies were used to work against a wide range of industry strategies, which are captured by five action-based strategies described in the PDM (Coalition Management, Information Management, Direct Access and Influence, Litigation, Reputation Management). While some studies reported the outcome of the countering activities, their impact remained largely underexplored.ConclusionThe review shows that peer-reviewed literature documenting how civil society actors counter TII is scarce. It suggests that advocates employ a range of strategies to counter TII in its different forms and use them flexibly. More work is needed to better understand the effects of their actions. This could stimulate discussions about, and facilitate learning from, past experiences and help to further enhance advocates’ capacity.

How platform businesses mobilize their users and allies: Corporate grassroots lobbying and the Airbnb ‘movement’ for deregulation

Abstract This article analyzes and theorizes the political strategies of businesses in the new digital ‘platform’ economy. Airbnb, Uber and meal delivery companies have transformed travel, urban space and repertoires of everyday exchange; they are also transforming norms around governance. Central to platforms corporate political strategies is the use of corporate grassroots lobbying (CGL), the selection, mobilization, resourcing and coordination of ordinary users and grassroots allies to influence the public and policy-making process. The article argues that platforms build on, and make five innovations to, the most common existing repertoires of CGL. Four main approaches of CGL among these businesses are also identified: temporary mobilization; curated storytelling; front groups; and grassroots alliances. The article demonstrates how these approaches to CGL are deployed and combined, using Airbnb as the main case study. Finally, I reflect on the implications of the findings for the platform economy, corporate political activity and socioeconomic change.

Aiding empirical research on the commercial determinants of health: a scoping review of datasets and methods about lobbying

BackgroundTo support public health researchers and advocates seeking to challenge the influence of powerful commercial actors on health, it is necessary to develop a deeper understanding of corporate political activities. This project explores political science scholarship analysing lobbying to identify new datasets and research methods that can be applied to public health and stimulate further research and advocacy.MethodsWe undertook a systematic scoping review of peer-reviewed and grey literature reports analysing the practice of lobbying. Titles and abstracts of 4533 peer-reviewed and 285 grey literature reports were screened, with 233 peer-reviewed and 280 grey literature reports assessed for eligibility. We used a two-stage process for data extraction. In stage 1, we collected two pieces of information from all included studies: data sources and indicators used to measure lobbying. For the second stage, data extraction was limited to 15 studies that focused on meetings.ResultsThe most common indicators used to measure lobbying activity were: registrations of active lobbyists; expenditure on lobbying; meetings; written comments and submissions made to government consultations; bills; and committee participation. A range of different data sources were used to analyse lobbying, including from governments, not-for-profits and commercial sources. All 15 studies analysing lobbyist meetings were from high-income contexts. The studies analysed three key variables: the types of government actors targeted by lobbying; the policies of interest; and the lobbyists and/or their clients. The studies used a range of taxonomies to classify policy issues and the types of actors engaged in lobbying. All studies discussed challenges with accessing and analysing lobbying data.ConclusionsThere is enormous potential for public health research and advocacy concerned with commercial lobbying to learn from political science scholarship. This includes both conceptual frameworks and sources of empirical data. Moreover, the absence of good quality transparency internationally emphasises the importance of advocacy to support policy change to improve the quality of political transparency to make it easier to monitor commercial lobbying.

Corporate Political Activity: Taxonomies and Model of Corporate Influence on Public Policy.

Non-communicable diseases (NCDs) kill 41 million people a year. The products and services of unhealthy commodity industries (UCIs) such as tobacco, alcohol, ultra-processed foods and beverages and gambling are responsible for much of this health burden. While effective public health policies are available to address this, UCIs have consistently sought to stop governments and global organisations adopting such policies through what is known as corporate political activity (CPA). We aimed to contribute to the study of CPA and development of effective counter-measures by formulating a model and evidence-informed taxonomies of UCI political activity. We used five complementary methods: critical interpretive synthesis of the conceptual CPA literature; brief interviews; expert co-author knowledge; stakeholder workshops; testing against the literature. We found 11 original conceptualisations of CPA; four had been used by other researchers and reported in 24 additional review papers. Combining an interpretive synthesis of all these papers and feedback from users, we developed two taxonomies - one on framing strategies and one on action strategies. The former identified three frames (policy actors, problem, and solutions) and the latter six strategies (access and influence policy-making, use the law, manufacture support for industry, shape evidence to manufacture doubt, displace, and usurp public health, manage reputations to industry's advantage). We also offer an analysis of the strengths and weaknesses of UCI strategies and a model that situates industry CPA in the wider social, political, and economic context. Our work confirms the similarity of CPA across UCIs and demonstrates its extensive and multi-faceted nature, the disproportionate power of corporations in policy spaces and the unacceptable conflicts of interest that characterise their engagement with policy-making. We suggest that industry CPA is recognised as a corruption of democracy, not an element of participatory democracy. Our taxonomies and model provide a starting point for developing effective solutions.

Commercial determinants of human rights: for-profit health care and housing.

Commercial determinants of human rights: for-profit health care and housing.

Aggregate economic policy uncertainty and corporate political contribution disclosure

PurposeUnlike other types of corporate disclosure, corporate political disclosure (CPD), which is the disclosure of corporate political contributions and the related governing policies and oversight mechanisms, does not provide completely new information to stakeholders. Some of the information disclosed in CPD is available from other public records (e.g. the Federal Election Committee website or OpenSecrets website). Given this unique feature of CPD, it is interesting to investigate the cost and benefit tradeoff for firms of altering their CPD practice in response to policy and political uncertainty.Design/methodology/approachThis study employs recently developed indexes of aggregate economic policy uncertainty (EPU) and a novel dataset of CPD transparency to examine the impact of EPU on CPD transparency and how the proprietary cost of corporate political activities moderates this association. The sample consists of S&P 500 companies from the 2012 to 2019 period.FindingsThe authors document that firms mitigate the heightened information asymmetry associated with higher aggregate EPU by increasing CPD transparency. The positive association between EPU and CPD is less pronounced for firms that are more sensitive to EPU, for firms that more actively manage EPU through corporate political contributions or lobbying activities and for firms that are followed by more analysts. The authors also find that more transparent CPD helps to mitigate the information asymmetry caused by heightened EPU. This study’s results hold when the authors control for other types of voluntary corporate disclosure.Originality/valueThis study contributes to the emerging literature on the determinants of CPD transparency by identifying EPU's positive impact on CPD transparency. This study also provides empirical evidence that the proprietary costs arising from the controversial nature of corporate political activities dampen firms' incentives to provide transparent CPD in response to heightened EPU, and that information on corporate political activities gathered and processed by financial analysts seems to lower the marginal benefit to companies of publicizing CPD on their own website.

STRATEGIC MANAGEMENT OF CORPORATE POLITICAL ACTIVISM

Vikas Mittal and Jihye Jung provide evidence-based guidance and a strategic framework for senior executives to mitigate the downside of engaging in corporate political activism.

Opening up corporate political strategizing – An institutional work approach

I apply an institutional lens to explore how strategists in a pharmaceuticals firm successfully include managers in the formulation and implementation of corporate political activity (CPA). I depict these strategists as institutional carriers who face mindset-, skills-, and commitment-related barriers when importing new industry norms favoring inclusive CPA processes into an organizational setting where exclusive strategic practices prevail. They reduce barriers resulting from this confrontation of institutional logics by enacting specific instances of institutional work. Strategists' ability to perform cultural and technical work aimed at shifting managers’ perceptions about CPA and empowering them to design and conduct new forms of political action is facilitated by their expertise and social capital. In the absence of hierarchical authority, they draw on personality traits – chiefly, their perseverance – to enact more challenging political work aimed at reconfiguring organizational rules and increasing commitment to CPA. I stretch understandings of open strategy by exploring the inclusion of managers in a complex and uncertain strategic activity previously overlooked, and providing new insights into how strategists manage individual-level constraints to open strategizing. I build on CPA literature by opening up the black box of corporate political strategizing and exposing political strategists as internal lobbyists who drive strategic change in firms.

Corporate political activity and the constraint of stakeholder reciprocity

Corporate political activity (CPA) has been linked to significant problems, such as agency costs for firms and the weakening of democratic institutions. We explain a previously unexplored problem of CPA: the constraint of negative stakeholder reciprocity. Reciprocity is a ubiquitous phenomenon that adds a moral dimension to markets. A robust stakeholder theory literature explains how treating stakeholders generously improves firm performance through patterns of positive reciprocity, and treating stakeholders poorly diminishes performance through patterns of negative reciprocity. Some firms, however, use CPA to avoid negative reciprocity and its economic consequences while treating at least some of their stakeholders poorly. We describe the elements necessary for reciprocity and explain how CPA targets and impairs these elements. Because reciprocity is a market governance mechanism, the intentional constraint of negative reciprocity tends to result in stakeholder mistreatment and market inefficiency.

Corporate strategy, political contributions and corporate risk-taking

Purpose Despite the importance and prevalence of corporate political activities in modern organizations, there remains limited insight on the potential relationship between political contributions and companies’ risk-taking activities. This study aims to examine the relationship between monetary political contributions of firms and corporate risk-taking activities in the context of unstable political and economic environments. Design/methodology/approach The authors use a two-step system GMM estimation to investigate the subject using a cross-country sample of 307 firms from 22 countries covered over 2002–2017. In line with previous studies, the authors control for various corporate governance mechanisms, firm-level factors and country-level characteristics. Findings The findings demonstrate that firms that make monetary political contributions exhibit lower levels of risk as measured by different proxies for risks, namely, systematic, idiosyncratic and total risk. Practical implications The results suggest that political contributions can be a useful mechanism to mitigate risk exposure. Also, the use of different risk measures and other factors for robustness fosters a better understanding of political connectedness in a more contextualized and dynamic manner. Originality/value This study seeks to contribute to the debate surrounding corporate strategy, political connectedness and corporate risk-taking by using actual monetary political contributions as an explicit measure of political connection. This study furthers scholarly understanding on the dynamics of corporate political activities using political contributions in monetary terms as a measure of political connectedness and its impact on risk-taking. Furthermore, the authors explore this topic using insights from nonmarket strategy literature and studies on political contributions.

Narcissistic CEOs and their corporate political activity

There has been growing scholarly interest in the impact of CEO narcissism on discrete firm outcomes. One area this CEO characteristic might impact is the firm's corporate political activity (CPA), and in fact scholars have called for further research into its antecedents. In this article, we argue that while CEO narcissism might be negatively related to CPA in general, the CPA the firms do engage in will be aimed at more ideologically extreme politicians. To test this prediction, we rely on prior research that has identified manifestations of CEO narcissism such as CEOs’ compensation and the size of their pictures in the annual report. We develop databases following this guidance that we test using panel data analysis and propensity score matching to address endogeneity. We find support for our hypotheses by testing an unbalanced panel with 10,841 observations of 2,211 publicly traded firms over a ten-year period.

Caught in the Revolving Door: Firm-Government Employee Mobility as a Fleeting Regulatory Advantage

How does the exchange of employees between regulatory agencies and regulated firms (i.e., the firm-government revolving door) affect firm regulatory outcomes? Existing work has mostly found a positive impact of revolving door hiring on firm outcomes, but it has overlooked potential limitations of this corporate political activity (CPA) tactic. We argue that the advantages firms can gain from hiring former regulators are bound by the timing of revolving door employment relative to the regulatory process. Within the context of agribiotechnology and its main regulator, the U.S. Department of Agriculture, we study regulators who move to in-house and contract lobbying positions (i.e., exit revolving door). We find that firms receive better regulatory outcomes (i.e., faster regulatory approval for new crops) only prior to the regulators’ move to in-house lobbying, consistent with the regulatory capture perspective. Moreover, this revolving door was only valuable in the time period immediately before the mobility event. Additionally, contrary to the belief that former regulators provide firms with expertise and social capital as lobbyists, we find that firms did not gain any advantage after regulators became lobbyists. Taken together, our results suggest that revolving doors can be an effective business political mobilization strategy, albeit one that has limited success in shaping firm government outcomes, much like other types of CPA. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2023.1669 .

Entrepreneurial Political Action in the Informal Economy: The Case of the Kumasi Petty Traders

This paper develops a new concept, entrepreneurial political activity based on corporate political activity to understand when an entrepreneur, representing both the firm and the individual simultaneously, will engage in political activity. The case of petty traders in Kumasi, Ghana generates grounded theory of entrepreneurial political activity. Faced with an existential threat, informal entrepreneurs had to decide whether to try to influence government policy by engaging in political activity. Findings from over 200 interviews demonstrated entrepreneurs carefully considered the state’s willingness to allow for the extra-legal economic activity in the informal economy to continue, and if they had trust in the leadership of the collective action before engaging in political action. Policy saliency motivating action was determined by growth orientation and dependency on the venture for household survival, both driven by the entrepreneur’s social role in the social system.

Corporate populism: How corporations construct and represent ‘the people’ in political contestations

Business implications of the recent surge in populism in societal and academic discourse have been relatively neglected. This is surprising, considering that corporations provide financial support (e.g., donations and political action committees), intellectual resources (e.g., think tanks and public relations firms) and informational channels (e.g., social media platforms) that populist parties and movements depend on. In this article, we develop a conceptualization of corporate populism as a distinct form of firm or industry practice to theorize how corporate political involvement influences democratic processes. The concept of corporate populism problematizes the prevailing treatment of corporations as political actors in corporate political activity (CPA) scholarship by attending to the democratic implications of business mobilization efforts. The practice of corporate populism is significant in that it influences democracies by constructing and reifying divisions in society, legitimizing de-politicization, and repressing representative democratic deliberations.

Organizational slack, entrepreneurial orientation, and corporate political activity: From the behavioral theory of the firm

As a popular non-market strategy, corporate political activity (CPA) benefits a firm’s risk management and competitive advantage. However, the mechanism of promoting firms to engage in corporate political activity remains obscure. Based on the behavioral theory of the firm, this research develops a mediation model containing organization slack, entrepreneurial orientation, and corporate political activity to investigate the prediction effect of different types of slack, as well as the mediation effect of different dimensions of entrepreneurial orientation. Based on the multiple informant data from 303 firms in China, this research conducted ordinary least-squares estimation with SPSS and post hoc analysis with PROCESS. The results support the main and key hypotheses. First, entrepreneurial orientation plays a mediation effect between slack and corporate political activity. Second, financial slack provides stronger support to develop certain capabilities than operational slack. Third, two sub-dimensions of entrepreneurial orientation play heterogeneous mediation effects according to their different emphasis. Managerial attitude also mediates the effect of entrepreneurial behavior effect toward CPA. This research enriches the antecedent research of CPA, deepens our understanding of the CPA engagement mechanism, and extends the behavioral theory of the firm.

ESG Capitalism from a Law and Religion Perspective

In an age of fear, insecurity, and multiple and overlapping crises, the fortunes of ESG—the idea that companies should include environmental, social, and governance standards of good performance—are now steadily growing. This is all the truer in the West, where corporate financial misconduct and, more worryingly, corporate political activities impacting democratic processes, have become a matter of evident concern. Business scholars and policymakers are, however, still uncertain about which corporate activities merit an ESG label, with pressure groups pushing for their own ESG definitions and standards according to their agendas and beliefs. Against this background, this paper contributes to this Special Issues’ guiding question of how religions can act as agents of civic mobilisation by critically examining their role in addressing sustainability topics due to religious concerns from a legal perspective. This current paper hopes to create a preliminary intellectual bridge between two apparently unrelated fields of research (law and religion; corporate governance) that could help scholars in both areas to develop expertise and sophistication in applying their respective specialities to an otherwise unfamiliar area.

Corporate Governance and Corporate Political Responsibility

This study investigates the pivotal policy question of whether a firm’s corporate governance influences its political spending disclosures. Using a sample of S&P 500 firms from 2011 to 2019, we find empirical evidence that a board of directors’ monitoring and resource provision roles affect a firm’s political spending disclosure. Extending agency theory-driven expectations, we provide evidence that measures of a board’s monitoring role such as female monitoring directors, shorter board tenure, audit committee size, audit committee meetings, and audit committee education enhance a firm’s political spending disclosures. Second, drawing from resource dependence theory and examining a board’s resource provisions, we find evidence that female advisory directors, CEO duality, additional directorships, and audit committee characteristics (i.e., size, number of meetings, age, and education) promote political spending disclosures. The study contributes to corporate governance and corporate political activity literatures by outlining different types of governance that may drive a firm’s political spending disclosures, a key component of a firm’s political responsibility.

Nonmarket strategy in emerging markets: The link between SMEs’ corporate political activity, corporate social responsibility, and firm competitiveness

Motivated by inconsistent findings in prior research on nonmarket strategy (NMS), we draw on insights from the resource-based view (RBV) and institutional literature to examine the relationship between corporate political activity (CPA) and corporate social responsibility (CSR) on firm competitiveness. Data from two African and two Asian countries (N = 499) largely support the hypotheses and extend our understanding of the contingencies that affect the relationship between CPA as well as CSR and firm competitiveness. We specifically highlight the moderating role of economic adversity, marketing capability, and foreign ownership. Additionally, we show that CPA and CSR have strong combined effects that allow small and medium enterprises (SMEs) to leverage their resource complementarity to navigate the challenges in emerging markets, which in turn enhances their competitiveness.