Corporate Political Strategy in Contested Regulatory Environments

Fremeth, Adam; Holburn, Guy L. F.; Bergh, Richard G. Vanden

doi:10.1287/stsc.2016.0021

Cited by 8 publications

(2 citation statements)

References 64 publications

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“…These correlations are presented graphically, controlling for state and year fixed effects, using binned scatter plots in Figure 3. Within this subset of the data, I find a positive relationship between legislative competition and political contributions by businesses (Panel a), consistent with prior literature linking legislative competition and campaign contributions (A. R. Fremeth, Holburn, & Bergh, 2016;Holburn & Vanden Bergh, 2014), and a weak positive relationship between contributions and incentives and subsidies to incumbent firms (Panel b), consistent with prior literature suggesting that campaign contributions can be used as an effective tool of influence by incumbent firms (Dean, Vryza, & Fryxell, 1998). 16 This correlational evidence is consistent with the above theory and suggests that firms are more likely to deploy influence strategies when legislative competition is high and that such strategies are effective in terms of obtaining favorable outcomes in the nonmarket environment.…”

Section: Political Contributions and Lobbyingsupporting

confidence: 86%

A house divided: Legislative competition and young firm survival in the United States

Raj

2021

Strategic Management Journal

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Research Summary Features of the institutional environment influence the performance of firms. In this research, I examine how one aspect of the institutional environment, competition between parties within legislatures, relates to young firm mortality. I argue that higher legislative competition provides legislators with more power to reward favored interests and thus contributes to a competitive environment that benefits well‐connected incumbents and imposes negative consequences on young firms. Using data on state legislature composition in the United States and both an ordinary least squares and instrumental variables empirical strategy, I find that legislative competition has a positive relationship with young firm mortality and this relationship is partially mediated by incentives that favor incumbents. In doing so, I highlight that political competition can have negative consequences for some firms. Managerial Summary In this research, I examine how competition between parties within state legislatures affects the survival of young firms. I argue that higher interparty competition provides legislators with greater bargaining power to obtain policy rewards for favored constituents and that this can lead to a competitive environment that favors well‐connected incumbent firms and disadvantages younger firms. I find that interparty legislative competition has a positive relationship with young firm mortality and that this relationship is partially accounted for by the use of subsidies and incentives that favor incumbents. Through this research, I show that political competition may be harmful to some firms and highlight the importance of government institutions on firms and markets.

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Section: Political Contributions and Lobbyingsupporting

confidence: 86%

A house divided: Legislative competition and young firm survival in the United States

Raj

2021

Strategic Management Journal

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“…As evidenced by the additional agencies required to approve a foreign firm engaging in M&As in the United States, a foreign M&A raises additional red flags for domestic actors. Fremeth et al (2016) find that it is important when facing organized opposition from stakeholders for firms to use CPA to develop support from elected politicians due to their responsibilities to oversee regulators who have a direct influence on the firms. Recent studies have examined the relationship between market and nonmarket strategies, such as CPA, and MNC subsidiary performance and legitimacy.…”

Section: The Moderating Role Of Cpamentioning

confidence: 99%

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

Brown

Liou

Hasija

2023

Thunderbird Intl Bus Rev

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Due 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.

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Toward a new conceptual framework of business strategies to deal with environmental uncertainties: insights from a systematic literature review and bibliography

Esmaeilzadeh,

Ranjbar,

Jandaghi

2024

Manag Rev Q

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Corporate Political Strategy in Contested Regulatory Environments

Cited by 8 publications

References 64 publications

A house divided: Legislative competition and young firm survival in the United States

A house divided: Legislative competition and young firm survival in the United States

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

Toward a new conceptual framework of business strategies to deal with environmental uncertainties: insights from a systematic literature review and bibliography

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