Author's School

Strategy and Entrepreneurship

Author's School

Olin Business School

Language

English (en)

Date of Award

5-10-2024

Degree Type

Dissertation

Degree Name

Doctor of Business Administration (DBA)

Chair and Committee

Seth Carnahan

Committee Members

Nicholas Argyres

Abstract

In the intricate landscape of modern society, the role of corporations extends beyond their primary business operations and financial goals. Companies are now deeply embedded in the complex interplay of political processes. Despite the extensive scholarly focus on business-government interactions, significant gaps remain in understanding how firms engage with government entities. To advance this discussion, my dissertation proposes and investigates two potential explanations for corporate lobbying across three chapters. Chapter 1. Theories of Why Firms Lobby reviews extensive literature on corporate lobbying and situates it within various theoretical frameworks such as the neoclassical view, industrial organization, resource dependence theory, resource-based view, and capability theory. It explores how firms' resources and capabilities, such as their ability to mobilize stakeholders or invest in local communities, bolster their lobbying efforts. This chapter sets the stage for a deeper examination in subsequent chapters of how strategies like vertical integration and supply chain management influence lobbying activities, underscoring that lobbying is a strategic tool essential for firms navigating the intricate interplay between business and government. Chapter 2. Vertical Integration and Corporate Lobbying: Alternative Measures and Drivers of Lobbying delves into how corporate strategies concerning firm boundaries relate to lobbying. It poses the question of whether vertically integrated firms lobby more and how their lobbying differs from that of diversified firms. Initial findings indicate a negative association between vertical integration and lobbying, suggesting a potential trade-off between a firm's integration and lobbying activities. The chapter also contrasts vertical integration with horizontal expansion, revealing that while horizontal expansion correlates with increased lobbying, vertical integration demonstrates a complex, sometimes inverse relationship. These insights prompt further exploration of how changes in a firm's vertical scope influence its political engagement. Chapter 3. Chains of Lobbying: How Supply Chain Relationships Affect Corporate Political Activities empirically examines how supply chain relationships impact corporate lobbying, focusing on environmental, social, and governance (ESG) risks. This chapter connects the literature on corporate lobbying and trade, highlighting that cost-driven strategic decisions about whether to produce inputs in-house or outsource can lead to negative externalities such as poor labor conditions and environmental damage. Drawing from examples like the 2020 palm oil import ban, it illustrates how malpractices within firms and across their supply chains can economically impact firms, particularly as the importance of ESG grows. It argues that increasing supplier-driven ESG risks are likely to result in intensified lobbying efforts by customer firms to influence policies and manage supply chain risks. This dissertation aims to deepen our understanding of the nuanced dynamics between corporate strategy and lobbying and its potential impact on organizational performance. It emphasizes the increasing importance of the interplay between business and politics as a critical pillar for organizational success.

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