Making Friends in Hostile Environments: Political Strategy in Regulated Industries

We examine how regulated firms target their political strategies at multiple government institutions in order to gain more favorable regulatory agency decisions than would otherwise occur. By integrating the corporate political strategy and positive political theory literatures we derive proposition...

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Bibliographic Details
Published in:The Academy of Management review 2008-04, Vol.33 (2), p.521-540
Main Authors: Holburn, Guy L. F., Vanden Bergh, Richard G.
Format: Article
Language:English
Subjects:
Business government relations
Business management
Business studies
Firm theory
Hostility
Industry
Macroeconomic policy
Management techniques
Political conditions
Regulated industries
Regulation
Regulatory policy
Studies
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Summary:We examine how regulated firms target their political strategies at multiple government institutions in order to gain more favorable regulatory agency decisions than would otherwise occur. By integrating the corporate political strategy and positive political theory literatures we derive propositions that (a) identify the political and regulatory circumstances that generate hostile environments from the firm's perspective, (b) delineate the conditions under which firms will employ an indirect strategy (i.e. target legislatures or executives) instead of a direct strategy (i.e. target regulators) to induce changes in regulator decisions; and, importantly, (c) we identify the specific political institutions a firm will target when adopting (b). Even though our structured-interaction approach to the analysis of formal institutions is quite straightforward, we are able to develop a rich set of predictions about firms' political strategy that can form the basis for future empirical testing. [PUBLICATION ABSTRACT]
ISSN:0363-7425
1930-3807
DOI:10.5465/AMR.2008.31193554