Predictors of foreign corporate political activities in United States politics

Abstract

Research Summary Although there is growing recognition of the importance of nonmarket strategies in ensuring favorable outcomes for firms, most of the research on corporate political activity (CPA) in the U.S. has focused on domestic firms. However, foreign firms are also actively involved in lobbying in the U.S. We identify several predictors of foreign firm CPA using an institutional perspective. Based on a sample of 1,701 publicly listed foreign firms from 37 different countries during the period 1998–2014 and using penalized maximum likelihood and Poisson estimators, we find that the cultural‐cognitive, normative, and regulative institutional characteristics of the home countries of the foreign firms can explain a firm's willingness to engage in CPA in the U.S., over and above firm and industry‐level factors. Managerial Summary There is growing recognition of the importance of nonmarket strategies in ensuring favorable outcomes for firms. However, most of the research on corporate political activity (CPA) in the U.S. has focused on domestic firms. Foreign firms are also active participants in CPA in the U.S. In this article, we try to identify the country‐level predictors of foreign firm CPA, more specifically their lobbying activities, using data on 1,701 publicly listed foreign firms from 37 different countries during the period 1998–2014. Our results indicate that country‐level institutional factors influence a foreign firm's likelihood of engaging in CPA in the U.S. above and beyond more well‐known firm and industry‐level variables.

The construct of institutional distance through the lens of different institutional perspectives: Review, analysis, and recommendations

“…Lindner, Muellner, and Puck's (2016) study, which uses four of the nine dimensions related to the regulatory and normative domains, exemplifies the typical application. There are also studies that select one dimension, mostly administrative distance (e.g., Ahrens et al, 2018;Brown, Yaşar, & Rasheed, 2018; or various subsets as control variables (e.g., Schwens, Zapkau, Brouthers, & Hollender, 2018;Valentino, Schmitt, Koch, & Nell, 2018). None of these studies, however, are clearly positioned in the comparative institutionalism theoretical tradition, because they do not theorize at the level of the configuration.…”

Corporate political connections in global strategy

“…Brown, Yaşar, and Rasheed () draw on an institutional perspective to investigate how country‐level characteristics influence the propensity of corporate political activity (CPA) by foreign firms in the United States. The authors go beyond the typical examination of the firm‐ and industry‐level predictors of domestic firms' CPA.…”

“…Brown et al () proxy CPA by foreign MNEs in the U.S. by political donations. This proxy seems appropriate in the U.S., but it makes a number of assumptions that may not apply elsewhere: direct donations to political agents are legal, such donations are transparently recorded, and political actors consider their donors when making political decisions.…”

“…Across countries, this boundary between legitimate engagement with political actors through political donations and illegal corruption varies considerably. For example, in the U.S., campaign donations face few constraints but are subject to public disclosure and, thus, are commonly used as a proxy in CPC research (Bonica, ; Brown et al, ; Christensen, Dhaliwal, Boivie, & Graffin, ). Elsewhere, constraints apply, especially with respect to foreigners, which include MNEs.…”

Nonmarket Responses to Regulation: A Signaling Theory Approach

“…Studies of regulation have generally been limited to case studies focusing on a particular firm or empirical examinations of a specific industry (Brown et al, 2019, Gil & Ruzzier, 2017; King & Lenox, 2000). If multiple industries are studied, a very coarse-grained approach is taken (Brown, Yaşar, & Rasheed, 2018). Often industries are categorized into two broad groups of “highly regulated” and “not highly regulated” industries, although it is more appropriate to understand regulatory intensity as a continuum with wide variation across industries.…”