Institutions Behind Corporate Nonmarket Strategy

Date

2018-08

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Abstract

This dissertation examines firm behavior that seeks to reach new institutions or change existing institutions. I specifically extend the research on firm behaviors regarding institutions that are either unfriendly or hostile to these firms. The essays of this dissertation are devoted to firm behaviors that change institutions using the theoretical framework of nonmarket strategies, such as corporate political activity and corporate social responsibility, including environmental management.

This dissertation is composed of three essays that capture these interests. The first essay (Chapter 1) probes the impact of private incentives that influence firm behaviors when lobbying for collective benefits from antidumping protection. Firms are often tempted to free ride on others’ contributions toward common interests. This collective action problem may also be found in corporate lobbying for antidumping protection. While the literature examines many examples of mitigated collective action problems, research on the impact of new private incentives is rare. This study leverages a natural experiment setting provided by an antidumping regulation called the Byrd Amendment in order to examine whether new private incentives encourage firms to secure benefits via their own individual lobbying.

The second essay (Chapter 2) examines the new products of firms as a trigger for nonmarket strategies. This study investigates how firms’ new products lead to individual corporate lobbying for regulations that favor these new products. Firms creating new products may gain competitive advantages from new products. However, the novelty of such products may also involve the risk of failure in the market. According to this study, if carmakers introduce eco-friendly vehicles, then these firms would undertake lobbying for effective environmental protection in order to shape the institutional environment so as to favor the success of the new products. At the same time, firms’ engagement in lobbying for favorable regulations would be under the influence of an external factor regarding substitute products and an internal factor regarding firms’ integrity-based management practices.

The third essay (Chapter 3) explores how firms’ nonmarket strategy of lobbying for private benefits of antidumping protection is influenced by the factors of market competition in which the lobbying firms engage. I analyze the Byrd Amendment as providing private incentives for antidumping protection in order to evaluate the question of why some firms are active, but other firms remain inactive with regard to antidumping protection lobbying. By leveraging the setting of the Byrd Amendment, I probe the impact of factors such as firms’ foreign-source profit, the degree of competition in the industry of firms, and firms’ organizational age toward lobbying for private benefits. I find that firms’ potential size of private benefits could affect the factors in a way that would increase lobbying for private benefits.

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Keywords

Lobbying, Incentives in industry, Social responsibility of business, Corporations—Political activity, Free rider problem (Economics), Dumping (International trade)—Law and legislation

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©2018 The Author. Digital access to this material is made possible by the Eugene McDermott Library. Further transmission, reproduction or presentation (such as public display or performance) of protected items is prohibited except with permission of the author.

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