Access Type

Open Access Dissertation

Date of Award

January 2018

Degree Type

Dissertation

Degree Name

Ph.D.

Department

Management and Information Systems

First Advisor

Jaegul Lee

Abstract

Despite the fact that Corporate Political Activity (CPA) is an area of research generating increasing interest among both academics and practitioners, there has been relatively little empirical research in the field, and what research has been done has often been inconclusive. In this dissertation, I argue that prior research has been hampered by a theory that relies upon a market analysis to understand this non-market activity. Instead, I describe and test a model of CPA in which business interests negotiate three factors in their efforts to convince politicians to support their positions: the ideology of the politician, the politician's relationships, and the political trends in the politician's constituency. I also argue that two institutions moderate CPA: strong political parties and the politicians' ideology. Relying upon agency theory, I argue that where top managers have the ability to behave opportunistically, they will be more likely to engage in CPA that targets politicians with more extreme ideologies rather than the undecided moderates. Such CPA might be personally satisfying to the managers, but it is unlikely to benefit the firm. I test these theories on a unique dataset and find support for them. This result brings more sophistication to understanding the mechanisms of CPA, while also helping to explain a problem that had previously puzzled scholars, namely why businesses engage in CPA when research has failed to find a link between CPA and firm performance in most industries.

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