The Corporate Political Activity of MNCs: Taking Stock and Moving Forward.

VerfasserPuck, Jonas
PostenINTRODUCTION - Multinational corporations - Report

1 Introduction

For the past 50 years, business and management and political science and international relations scholars alike have studied multinational corporations (MNCs) ties with political and regulatory actors and agents, particularly governments, political institutions, and regulators. We refer to such efforts by the firm to influence or manage political entities as corporate political activity (CPA) (Hillman and Hitt 1999; Hillman et al. 2004; Lawton et al. 2013a, b). Both academics and practitioners frequently highlight the relevance of CPA in and across international markets and call for further integration of the non-market perspective into international business and management research (Lawton et al. 2014).

MNCs engage in such activities for at least three, partially overlapping reasons. First, and specifically in the international business environment, companies encounter a wide variety of regulations and public policies enacted by regional and national governments and by international or supranational treaties and organizations such as the North American Free Trade Agreement or the European Union. This creates substantial complexity and costs for firms. Consequently, firms try to better understand and engage with this environment through CPA (e.g., Lawton et al. 2013a, b). Second, the political environment in each market can create significant threats for firms and negatively influence MNCs strategic options and performance, e.g., through regulatory or legal measures (De Villa et al. 2015). Firms often respond to such political and regulatory pressures by using different types of corporate political activities, including engaged and non-engaged approaches (e.g., De Villa et al. 2018; Nell et al. 2015; Puck et al. 2013). Lastly, political environments can also create opportunities for firms. MNCs, try to create strategic opportunities, such as favorable investment conditions, preferential treatments, or similar, using CPA in a proactive way (Heidenreich et al. 2015; Shirodkar and Mohr 2015a, b).

Existing research has created a wealth of insights into the CPA of MNCs. However, assessing CPA research in the context of internationalization and the MNC, we argue that our knowledge of many dimensions of MNC non-market, political strategies is still rather limited, specifically when compared to research on the market side of strategy. With this focused issue, we therefore intend, both theoretically and empirically, to venture further into this research realm.

2 Aim and Content of this Focused Issue

In our call for papers for this focused issue, we highlighted the need for research in the following four areas.

2.1 Drivers of MNC Corporate Political Activity (CPA)

Identifying the factors that lead firms to engage in CPA, or factors that affects firms' choice of particular types of CPA, is the subject of the majority of prior studies into the CPA of MNCs. Recent research has discussed a large number of such drivers at the firm-level (De Villa et al. 2018; Funk and Hirschman 2017; Lawton et al. 2013a, b; Shirodkar and Mohr 2015a, b), industry-level (Lawton et al. 2013a, b; Mbalyohere and Lawton 2018; Mbalyohere et al. 2017; Schuler 1996) or country/institutional-level (Banerjee and Venaik 2018; Choi et al. 2014; Holtbruegge et al. 2007; Sojli and Tham 2017; Zhang et al. 2016). Given the nature of MNCs, however, we perceive a need for more research specifically into the idiosyncrasies of firm contexts and into how these contexts interact with firm-level drivers of firms' choice of political strategy in different markets. Recent research in this vein has, for example, investigated the relative importance of non-market capabilities versus supranational institutional safeguards as a means to mitigate against risks in overseas markets (Albino-Pimentel et al. 2018).

In this focused issue, Liedong and Frynas (2018), Voinea and van Kranenburg (2018) and White et al. (2018) draw on institutional theory to explore how specific characteristics of institutional contexts shape firms' political activities and strategy.

2.2 Management and Organization of CPA

Despite some recent advances, we still know relatively little about the management and organization of CPA within the MNC Doh et al. (2014). For example, discuss how MNCs can benefit from a chief external officer, ensuring ownership of non-market issues is explicitly integrated into the corporation's strategic decision-making and top management team profile. There is also ample evidence that organizing CPA across borders represents a substantial challenge for the MNC (Blumentritt and Nigh 2002; Kobrin 2015). Overall, however, our knowledge on the challenges of organizing CPA across borders remains fragmented. Therefore, we called for submissions addressing CPA management, organization, and structure within MNCs as promising avenues for theory development in the field.

In this focused issue, the paper by Elsahn and Benson-Rea (2018) takes a more micro-level perspective and explores the interplay between MNC management's attitude towards external stakeholders and the implementation of different political strategies.

2.3 Outcomes of CPA in MNCs

We also argue that research on the effectiveness of non-market strategy across borders remains scarce (Doh et al. 2012, 2015; Dorobantu et al. 2017). Research has identified and analyzed the performance and other outcomes of political strategies. For example, Nell et al. (2015) found a positive and significant relationship between the use of the three types of political strategy suggested by Hillman and Hitt (1999) and the goal achievement perceived by subsidiary managers (Nell et al. 2015). Similarly, Heidenreich et al. (2014) investigated the effects of firms' use of Hillman and Hitt's (1999) information and financial incentives strategy (Hillman and Hitt 1999) on firms' development of a stakeholder network and their performance. Furthermore, Jia (2014) analyzed to what extent public and private political actions are substituting or complementing each other. Because of the often inconsistent and even conflicting findings as to the effects of different types of CPA, extant research has also explored the contingent nature of the performance effects and other outcomes of political strategies. For example, Luo and Zhao (2013) suggested two firmlevel variables-subsidiary reputation and length of operations in the host country-to moderate the positive link between a relational political strategy used at the subsidiary level and the firm's performance in the host country. Mohr et al. (2016) investigated how the effect of partnering with state-controlled actors on the survival of international joint ventures in China varies with the type of state-controlled actor, the foreign firm's host-country experience as well as the age of the joint venture. Also focusing on firms' CPA in China, Yan and Chang (2018) examined the (interdependent) effects of firms' having political connections to different government institutions.

We see more space for theoretical and empirical contributions that theorize about, and empirically explore, the contingent nature of the effects of CPA. Specifically, while there has been research on the role of institutional contingencies in the domestic context (Kozhikode and Li 2012), there is a need to clarify the role how differences in the institutional characteristics in firms' home and host country or countries, as well as the differences between such characteristics, may affect the consequences of firms' use of different types of CPA (Seong-Jin et al. 2015).

In our focused issue, Banerjee and Venaik (2018) draw on institutional theory to investigate the effects that different political strategies have on firm legitimacy, whereas Arreola and Bandeira-de-Mello (2018) investigate how minority state ownership affects the subsequent internationalization of emerging market multinationals.

2.4 Integration of CPA and CSR in MNCs

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