Aligning to disadvantage: How corporate political activity and strategic homophily create path dependence in the firm

Abstract

To what extent should firms get close to government for competitive advantage? What happens if they get too close? In this article we explore how corporate political activity inculcated strategic homophily in leading UK aluminium producer, the British Aluminium Company Ltd, resulting in its path dependence and eventual lock-in. The article makes three main contributions: a longitudinal study of corporate political activity and strategic homophily revealing their organizational manifestations and detailed understanding of certain mechanisms of path dependence; articulating the value of historical methods and perspectives to exploring organizational path dependence; and exploring the impact that prolonged business-government relations can have on the organizational behaviour and strategic outlook of the firm with implications for TMT selection and environmental scanning. In so doing it responds to calls for firms to align market positions with political activity, as well as those for the recognition of the value of business history in better understanding the links between corporate political activity and firm performance. It further elucidates the longer-term consequences of strategic homophily, which has to date focused on the early stages of venture formation.

Current Interest in the Theory of Organizational Path Dependence. A Short Update on the Occasion of the 2019 AMR Decade Award

“…Several authors using the case study method plead for a multilevel analysis of the phenomenon (e.g. Strambach, 2010;Brunninge & Melander, 2016;Perchard & MacKenzie, 2020). The analysis of organizational path dependence may indeed benefit from capturing more or less parallel path dependencies on more micro as well as more macro levels of analysis (Sydow, Windeler, Müller-Seitz, & Lange, 2012).…”

How and Why? A Review of Corporate Political Activity Predictors and Actions

“…Thus, they avoided free riding. In looking at CPA from a business history approach, Perchard and MacKenzie (2020) found that path dependence can play a role in firm CPA. Prolonged business–government relationships can have a lock-in effect on the firm in their CPA.…”

What corporations can learn from the struggle in the market for souls

“…Societies that rally around monotheistic religions have a greater likelihood of aligning their populations more cohesively, allowing them to project their influence over larger territories (Perchard & MacKenzie, 2020; Skaperdas & Vaidya, 2020). Monotheistic religions develop a cadre of professional priesthoods, trained at specific schools to observe religious mandates (Basuchoudhary, Ferrero, & Lubin, 2020).…”