Making Friends in Hostile Environments: Political Strategy in Regulated Industries

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

doi:10.5465/amr.2008.31193554

Cited by 146 publications

(105 citation statements)

References 43 publications

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“…Firms are viewed not as separate from but as embedded within the social environment in which they operate (Hillman & Hitt, 1999;Holburn & Vanden Bergh, 2008). Here, some NMS scholars have viewed interactions with institutional actors as obstacles to be avoided or overcome (Getz, 1997).…”

Section: Neo-institutionalismmentioning

confidence: 99%

Advancing Nonmarket Strategy Research: Institutional Perspectives in a Changing World

Doh

Lawton

Rajwani

2012

AMP

311

295

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Section: Neo-institutionalismmentioning

confidence: 99%

Advancing Nonmarket Strategy Research: Institutional Perspectives in a Changing World

Doh

Lawton

Rajwani

2012

AMP

311

295

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“…We have shown that firms can either attempt influence through direct connections to the constraining government or indirect connections via the rival government. As such, this study contributes to the emerging body of work that highlights the strategic implications of political constraints on governments and the increased effectiveness of firms’ political strategies via indirect channels (Holburn & Vanden Bergh, ; Macher & Mayo, ). This study therefore answers the call from Henisz and Zelner () to examine nonmarket strategies by taking into account both the political environment and firms’ heterogeneous resources, like political capital, as affecting their ability to manage the political environment.…”

Section: Discussionmentioning

confidence: 85%

The contingent effects of political strategies on firm performance: A political network perspective

Yan

Chang

2018

Strategic Management Journal

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Research Summary: We examine the performance impact of corporate political strategies by analyzing the relationships among firms and various government institutions. While a firm's political connections to a focal government with decision‐making authority enhance performance, connections to a rival government competing with the focal government harm performance, particularly when the rivalry is intense. Firms can neutralize the negative effect from this political rivalry by using direct or indirect connections to a constraining government with power over the focal government. We find support for our conjectures based on an analysis of interactions among Chinese steel firms and the central and provincial governments in acquisition decisions during the industry's consolidation period of 1999–2010. Managerial Summary: Firms invest in political capital in order to influence public policies in their favor. However, the government is a not a monolithic entity and the relationships among various government institutions can alter and even reverse the effects of a firm's political strategy. This research shows that a firm's political connections can be both an asset and a liability. That is, although firms benefit from their connections to governments with decision‐making authority, they can be caught in the crossfire when there is a rivalry between governments. Furthermore, our research suggests that firms can cope with the negative impact from political rivalry by taking advantage of the structural relationships within the political system and influencing governments that have constraining power.

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“…As a result, firms will be more dependent on political organizations with the authority to enforce rules and regulations and the ability to commit resources than on those with weaker or indirect authority (Holburn & Vanden Bergh, 2008). Such dependence will make executive ties more useful than legislative ties in facilitating firms' sell-off strategies.…”

Section: The Heterogeneity Of Dependence: Executive and Legislative Tiesmentioning

confidence: 92%

Ties to Unbind: Political Ties and Firm Sell-Offs During Institutional Transition

Zheng

Singh

Chung

2015

Journal of Management

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We examine how formal interlocking political ties between business leaders and political actors affect sell-off strategy of firms in emerging markets. We propose that political ties substitute for underdeveloped institutions and provide firms with market intermediation, influence over political actors, and access to resources. These benefits increase the likelihood that firms with political ties will exit through sell-offs, which is an adaptation strategy in emerging markets. We propose that the effectiveness of political ties in facilitating sell-offs is contingent on the type of political ties and the state of institutional development. Empirically, we evaluate 280 television manufacturers in China between 1993 and2003. Results show that political ties can help firms exit through sell-offs but that these effects are primarily from ties to actors with executive authority rather than legislative authority. The value of executive ties declines with capital market development, while that of legislative ties increases with legal system development. We show that political ties help firms exit an industry, clarify the conditions under which they are valuable during institutional transition, and improve understanding of the seller's perspective in acquisitions.

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Making Friends in Hostile Environments: Political Strategy in Regulated Industries

Cited by 146 publications

References 43 publications

Advancing Nonmarket Strategy Research: Institutional Perspectives in a Changing World

Advancing Nonmarket Strategy Research: Institutional Perspectives in a Changing World

The contingent effects of political strategies on firm performance: A political network perspective

Ties to Unbind: Political Ties and Firm Sell-Offs During Institutional Transition

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