Making Friends in Hostile Environments: Political Strategy in Regulated Industries

We examine how regulated firms target their political strategies at multiple government institutions to gain more favorable regulatory agency decisions. Integrating the corporate political strategy literature and positive political theory literature, we derive propositions that (1) identify the political and regulatory circumstances generating hostile environments and (2) delineate the conditions under which firms will employ an indirect strategy instead of a direct strategy to induce changes in regulator decisions, identifying the specific political institutions a firm will target when adopting an indirect strategy. We develop a rich set of predictions about firms' political strategy that can form the basis for future empirical testing.

[1]  David Vogel,et al.  National Styles of Regulation: Environmental Policy in Great Britain and the United States , 1986 .

[2]  Leonard S. Hyman.  America's Electric Utilities: Past, Present And Future , 1988 .

[3]  Policy and process: A game-theoretic framework for the design of non-market strategy , 2000 .

[4]  Beth L. Leech,et al.  Interest Niches and Policy Bandwagons: Patterns of Interest Group Involvement in National Politics , 2001, The Journal of Politics.

[5]  Thomas Schwartz,et al.  Congressional Oversight Over-looked: Police Patrol versus Fire Alarms , 1984 .

[6]  Guy L. F. Holburn,et al.  Consumer capture of regulatory institutions: The creation of public utility consumer advocates in the United States , 2006 .

[7]  Michael J. Lenox,et al.  Industry Self-Regulation Without Sanctions: The Chemical Industry's Responsible Care Program , 2000 .

[8]  W. Hansen,et al.  Globalization or National Capitalism: Large Firms, National Strategies, and Political Activities , 2001 .

[9]  D. Schuler,et al.  Pursuing Strategic Advantage Through Political Means: A Multivariate Approach , 2002 .

[10]  J. Milyo,et al.  Corporate PAC Campaign Contributions in Perspective , 2000, Business and Politics.

[11]  Steven D. Levitt.  ARE PACS TRYING TO INFLUENCE POLITICIANS OR VOTERS , 1998 .

[12]  Witold J. Henisz.  Political Institutions and Policy Volatility , 2004 .

[13]  Thomas Stratmann.  The Market For Congressional Votes: Is Timing of Contributions Everything?1 , 1998, The Journal of Law and Economics.

[14]  J. Mahon,et al.  Strategic Planning for Regulated Companies , 1981 .

[15]  Colin Scott,et al.  Regulation in the Age of Governance: The Rise of the Post-Regulatory State , 2004 .

[16]  M. J. Moran,et al.  Bureaucratic Discretion or Congressional Control? Regulatory Policymaking by the Federal Trade Commission , 1983, Journal of Political Economy.

[17]  Barry M. Mitnick.  The strategic uses of regulation — And deregulation , 1981 .

[18]  Terry M. Moe,et al.  The Institutional Foundations of Demo­cratic Government: A Comparison of Presidential and Parliamentary Systems , 1994 .

[19]  Praveen R. Nayyar,et al.  Organizing to Attain Potential Benefits from Information Asymmetries and Economies of Scope in Related Diversified Firms , 1993 .

[20]  John M. de Figueiredo,et al.  The Structure and Conduct of Corporate Lobbying: How Firms Lobby the Federal Communications Commission , 2000 .

[21]  P. Spiller,et al.  A Rational Choice Theory of Supreme Court Statutory Decisions with Applications to the State Farm and Grove City Cases , 1990 .

[22]  M. Mizruchi,et al.  The Structure of Corporate Political Action: Interfirm Relations and Their Consequences. , 1992 .

[23]  F. Hanssen.  Is There a Politically Optimal Level of Judicial Independence? , 2001 .

[24]  D. P. Baron,et al.  Integrated Strategy: Market and Nonmarket Components , 1995 .

[25]  Keith. Krehbiel.  Pivotal Politics: A Refinement of Nonmarket Analysis for Voting Institutions , 1999, Business and Politics.

[26]  Toward A Positive Theory of State Supreme Court Decision Making , 2003 .

[27]  Guy L. F. Holburn,et al.  Influencing Agencies Through Pivotal Political Institutions , 2004 .

[28]  John Ferejohn,et al.  Congressional Influence on Bureaucracy , 1990 .

[29]  D. Schuler.  Corporate Political Strategy and Foreign Competition: The Case of the Steel Industry , 1996 .

[30]  David L. Epstein,et al.  Administrative Procedures, Information, and Agency Discretion , 1994 .

[31]  M. Russo.  Power plays: Regulation, diversification, and backward integration in the electric utility industry , 1992 .

[32]  G. Stigler.  The Theory of Economic Regulation , 2021, The Political Economy.

[33]  Emerson H. Tiller.  Controlling Policy by Controlling Process: Judicial Influence on Regulatory Decision Making , 1998 .

[34]  K. Getz.  Research in Corporate Political Action , 1997 .

[35]  R. V. Bergh.  Political Uncertainty and Administrative Procedures , 2002 .

[36]  M. Russo.  Institutions, Exchange Relations, and the Emergence of New Fields: Regulatory Policies and Independent Power Production in America, 1978–1992 , 2001 .

[37]  S. Peltzman.  Toward a More General Theory of Regulation , 1976, The Journal of Law and Economics.

[38]  Mark A. Zupan,et al.  Capture and Ideology in the Economic Theory of Politics , 1984 .

[39]  G. Keim.  Business and public policy: Competing in the political marketplace , 2008 .

[40]  W. Crain,et al.  The Impact of Regulatory Costs on Small Firms , 2005 .

[41]  Roger G. Noll,et al.  Administrative Procedures as Instruments of Political Control , 1987 .

[42]  David R. Mayhew.  Congress: The Electoral Connection , 1975 .

[43]  Roger G. Noll,et al.  STRUCTURE AND PROCESS, POLITICS AND POLICY: ADMINISTRATIVE ARRANGEMENTS AND THE POLITICAL CONTROL OF AGENCIES , 1989 .

[44]  K. T. Poole,et al.  Congress: A Political-Economic History of Roll Call Voting , 1997 .

[45]  M. Hitt,et al.  Corporate Political Strategy Formulation: A Model of Approach, Participation, and Strategy Decisions , 1999 .

[46]  Sarah J. Marsh.  Creating barriers for foreign competitors: a study of the impact of anti-dumping actions on the performance of U.S. firms , 1998 .

[47]  W. Gormley.  The Politics of Public Utility Regulation , 1983 .

[48]  Emerson H. Tiller,et al.  Strategic Instruments: Legal Structure and Political Games in Administrative Law , 1999 .