Social and political capabilities as nonmarket activities: What are they and how do firms develop them?

Abstract

Firms recognize the need for strategic efforts in the nonmarket environment to improve their performance. We seek to explore the different ways in which firms learn about nonmarket strategies (NMS), whether the social or the political dimension. We conducted a search of previous NMS studies and analyzed this literature to reflect on the process of development and evolution of political and social corporate capabilities. Based on the theoretical insights of resource dependency theory (RDT) and the resource‐based view (RBV) and its variants, we adopt an external perspective of how firms capture critical political and social knowledge in the nonmarket environment and an internal perspective of how firms develop nonmarket capabilities from this new knowledge. We argue that the new knowledge obtained from the observation of peer firms, from co‐opting and collaborating with nonmarket and market actors and from their own experiences is incorporated into the firm's knowledge system and allows for the development and evolution of capabilities to integrate and deploy resources for strategic purposes. We also point out that changes in the nonmarket environment require firms to constantly seek new social and political capabilities. They learn, unlearn and relearn.