Firms and the State : An Examination of Corporate Political Activity and the Business-Government Interface

In their pursuit of competitive advantage, firms will sometimes engage in politics. In this dissertation, I build on a resource-dependence understanding of business-government relations to answer the following questions:
(1) what are the antecedents of corporate political activity (CPA)?
(2) what factors determine the expected benefits and costs of CPA? and
(3) how do firms cope with political uncertainty when conventional forms of CPA are not readily available?
In two studies of this dissertation, I focus on a particular form of CPA, namely the appointment of politicians to firms’ boards of directors. Using 14 OECD economies as an empirical context, I find that the degree of national corruption determines the benefits to firms of being politically-connected, but also the agency-based risks of being overly connected. I also find that politicians on the board can help firms secure relational capital from non-political stakeholders, such as financiers and the public at large.
In the third study, I examine the transitional period in Egypt succeeding the collapse of an authoritarian regime, but preceding the establishment of a democratic alternative. Combining a behavioral view of investor decision-making with insights from the political science literature on civil conflict, I identify an important manifestation of political uncertainty that firms and their stakeholders face under interim governments specifically.
Taken together, the findings of this dissertation demonstrate promising opportunities for multi-level and inter-disciplinary research on the business-government interface. In today’s politicized business environment, research of this kind is ever more important for business and society alike.