Academic journal article Asian Social Science

Corporate Political Activity: An Integrated Model

Academic journal article Asian Social Science

Corporate Political Activity: An Integrated Model

Article excerpt

Abstract

This paper reviews the current state of research in the area of corporate political activity to build an integrated model. This model segregates the related but scattered corporate political activity constructs in literature into enablers, motivators, moderators, choices, and outcomes of corporate political activity. This model can be help in reconciling contradictory results in literature. For instance, several studies have found evidence positive, neutral, and negative effect of CPA on performance. This model suggests that CPA-performance relationship is enabled and moderated by several factors, and controlling them may yield a better picture of CPA effect on performance. We further suggest gaps in current literature and give suggestions for future research in this area.

Keywords: corporate political activity, antecedents and outcomes of CPA, CPA performance link

1. Introduction

World's largest democracy, India, recently held elections to elect a new government. The main issue in elections this time was corporations and the perceived benefits they have received from different political parties. In Thailand, the Prime Minister, after facing protests over her role in trying to save her businessman-politician brother from corruption charges levelled during his term as prime minister, was forced to resign. In the United States businessman Sant Chatwal has recently pleaded guilty of violating electoral law while raising funds for Hillary Clinton's presidential bid. Several businessmen are occupying or have occupied important public offices, including head of state, around the world. In the United States businessmen Michael Bloomberg, Bob Corker, Mitt Romney, and Mark Warner have held public offices. In Pakistan the incumbent prime minister is a steel tycoon who entered politics to secure his rights to his business when it was nationalized by the then government. Former Italian Prime Minister Silvio Berlusconi who served three terms as prime minister of Italy is a businessman with interests in media. Sebastián Piñera, who till recently was president of Chile, is among the richest businessmen of his country. These anecdotes seem to suggest that political participation of businessmen is quite widespread. Scholars of political participation by corporates have found evidence in support of this. (Faccio, 2006) observed that political participation by firms is widespread, existing in 35 of the 47 countries she studied. The countries where political participation by business exists are quite varied: they have different levels of corruption, market development, economic development, and different types of government. Corporations today are feared to "have not only become prominent actors in society, but they may have become only kind of actor with significant cultural and political influence" (Stern & Barley, 1996). For example, although government is elected by plebiscite, election campaigns are largely financed by corporations with the aim of getting favorable legislation. Corporations affect legislation by employing lobbyists, political action committee, and government membership of boards.

This has triggered an increase in academic interest in the political activities of firms. Literature in management, economics, finance, political science, and sociology is sprinkled with empirical investigation of corporate political activities. Corporate Political Activity (CPA), defined as attempts by corporations to influence government policy to make it favorable for firms (Baysinger, 1984), is, along with CSR (Corporate Social Responsibility), a major ingredient of non-market strategies employed by firms (Baron, 1995) in both developed and developing economies.

Theoretically, CPA has been studied from different perspectives. Public interest theorists view policy as an outcome of interest group competition. Business is seen as a monolithic entity which works collectively in interest group competition to secure policies favorable to business; undermining public interest and democratic processes (Lowi, 1969). …

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