Antecedents of Corporate Lobbying Participation and Intensity: A Review of the Literature

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ABSTRACT

Lobbying constitutes a major element in the political strategy of firms for securing favorable outcomes and is perceived as a source of firm's competitive advantage. Recognizing firm's ability to influence their external environment through reactive and proactive political behavior, this article reviews the literature in economic and political science and analyzes the supply and demand dimensions for political intervention,

INTRODUCTION

The last decade has seen the development of a rich stream of research following Wernerfelt's (1984) seminal "A Resource-based View of the Firm." The authors who have contributed to this revived Penrosian tradition have shed light on many aspects of firm-level differences in key assets and capabilities (Rumelt, 1984, Barney, 1986, 1991; Prahalad and Hamel, 1990; Dierickx and Cool, 1989; Teece et al., 1991). As in any knowledge accumulation process, the field's slow and uncertain beginnings (Wernfelt, 1995) eventually led to a profusion of more sophisticated and less constraint-ridden analyses of firms' distinctive capabilities. The thrust of the resource-based literature has been to refocus scholarly attention on the internal mechanisms explaining corporate performance. In embracing this approach, mainstream strategy research has turned away from the examination of structural elements in the environment (Porter, 1980) and industry-level analysis (Foss et al., 1995; Levinthal, 1995). Notwithstanding the recent pendulum swing in the strategy research agenda, firms may not seek to build autonomy from their environment (Westney, 1993; Westney and Ghoshal, 1993). The interdependencies between major environments forces and the firm may indeed be nurtured by the latter to the extent that they promote and sustain strategic objective.

In short, the concern with environmental dynamics does not subtract from the role of key internal assets. Indeed, the schools of thought that have coalesced around these vantage points do share a common lineage in Andrew's (1971) typology. Taking a step further, it is possible to conceive of the environments as a source of resources that firms-or at least some firms-can appropriate. In the words of Foss and Eriksen (1995:45), "[F]irms confront a large external resources and capabilities space." However, the firm's firmament is not limited to this constellation. There are other capabilities beyond those developed within an industry constituting potential rent-producing resources when combined with firm-specific assets. The social, political, and regulatory entities that populate the organization's universe often control unique assets coveted by the firm as well as its competitors.

Among the many environmental actors that interact with the firm, one player, namely the state, wields unparalleled coercive power and exercises its influence through a variety of affiliated organizations from national legislative bodies to local regulatory agencies. This omnipotence can be considered as a constraint or a source of uncertainty for the corporation. This has been the approach adopted by neoclassical economics and traditional management literature. Alternatively, government intervention can be viewed as part of a firm or a group of firms' strategic arsenal: a key resource that can be used to gain or sustain competitive advantage (Boddewyn and Brewer, 1994; Mitnick, 1981; Morrison and Roth, 1992).

This is the central premise upon which the present study is based. A dynamic approach to government intervention helps explain why it may be at once abhorred and actively pursued by corporate managers (Maitland, 1987; Mitnick, 1981). Government intervention can take many different forms and affect a variety of firms, industry or market parameters. Individual firms or coalitions design their political behavior in light of the expected outcomes or benefits, on the one hand, and the likely costs and their available resources, on the other. …