Academic journal article Journal of Business Strategies

Strategic Political Emphasis (Spe), Environmental Uncertainty, and Firm Performance in Ghana

Academic journal article Journal of Business Strategies

Strategic Political Emphasis (Spe), Environmental Uncertainty, and Firm Performance in Ghana

Article excerpt

INTRODUCTION

The influence of a nonmarket orientation in firms has been recognized for some time, primarily within the strategic analysis stage (Aplin & Hegarty, 1980), but more recently within the formulation and execution domains (Parnell, 2015). With heightened regulations, increasing political influence, greater emphasis on government-business partnerships in many nations, and the rapid development of emerging markets, the notion of nonmarket strategy (NMS) is now widely viewed as a key component of a firm's overall strategic orientation and has been investigated within several research traditions. Strategic political management (SPM) refers to the strategic actions that firms plan and execute to extract profits directly or indirectly from the political environment. Strategic political emphasis (SPE) refers to the amount of emphasis placed on SPM. Corporate political activity (CPA) encompasses SPM as well, but also includes other activities (Hillman & Hitt, 1999; Hillman, Keim, & Schuler, 2004; Oliver & Holzinger, 2008).

Each of these variations on NMS underscores the relevance of political considerations in modern firms. In many instances, the means by which organizations address such factors can ultimately drive performance (Doh, Lawton, & Rajwani, 2012; Henisz & Zelner, 2012; Kingsley, Bergh, & Bonardi, 2012; Sawant, 2012). An effective NMS rooted in an elevated strategic political emphasis (SPE) is also vital to many firms from the perspectives of both profit maximization for shareholders and the satisfaction of broader, social objectives (Singer, 2013). It has evolved as business has become more global, and many governments in developing and emerging nations have adopted mixed economic models that blend extensive regulatory regimes, government influence in specific sectors, public-private partnerships, and large, private firms well connected to government entities (Bach & Allen, 2010, p. 41).

Advances in NMS scholarship notwithstanding, the shortage of work in Africa and other parts of the developing world is an ongoing challenge (Coffie & Owusu-Frimpong, 2014; Obeng, Robson, & Haugh, 2014; Saffu, Walker, & Hinson, 2007). This paper addresses this gap by investigating SPE in Ghanaian firms. As a relatively stable, developing country compared to its sub-Saharan neighbors, Ghana has made tremendous strides in the last decade in promoting private sector growth. Nonetheless, cultural differences between Ghanaian and western firms cannot be overemphasized. An investigation of the strategic tools adopted by Ghanaian firms would inform our understanding of Ghanaian organizations within the global context. The remainder of the paper begins with an overview of extant NMS literature, followed by hypotheses, findings, discussion of results, conclusions and directions for additional research.

NONMARKET STRATEGY AND STRATEGIC POLITICAL EMPHASIS

NMS emphasizes lobbying, campaign contributions, direct collaboration with government actors, and other factors not directly linked to market activity (Delmas & Montes-Sancho, 2010; Lawton, McGuire, & Rajwani, 2013; Okhmatovskiy, 2010). While NMS exists in all nations, its prominence has long since been recognized in developing and socialist regimes fraught with corruption. As emerging economies develop and their governments emphasize partnerships with private firms, the use of NMS becomes more prominent. It is now seen by many as a complement to market strategy (Brito-Bigott, Faria, Rodriguez, & Sanchez, 2008; Doh et al., 2012; Henisz & Zelner, 2012; Kingsley et al., 2012; Meyer & Peng, 2016; Sawant, 2012), insomuch that firms invoke a nonmarket orientation to enhance competitiveness (Iriyama, Kishore, & Talukdar, 2016). However, why firms develop NMS and how doing so impacts performance is not completely understood (Parnell, 2015).

Distinct, overlapping streams have emerged from NMS research, including CPA, SPE, and SPM (Hillman & Hitt, 1999; Hillman et al. …

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