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Corporate Political Strategy in Contested Regulatory Environments

Author

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  • Adam R. Fremeth

    () (Ivey Business School, University of Western Ontario, London, Ontario N6G ON1, Canada)

  • Guy L. F. Holburn

    () (Ivey Business School, University of Western Ontario, London, Ontario N6G ON1, Canada)

  • Richard G. Vanden Bergh

    () (Grossman School of Business, University of Vermont, Burlington, Vermont 05405)

Abstract

We examine how firms strategically manage opposition from organized stakeholders who participate in regulatory agency policy-making processes. As stakeholder opposition in regulatory agency hearings increases, we argue that firms invest more in developing counter-balancing support from elected politicians who oversee regulators, and more so when regulators are less experienced or are closer to reappointment dates. We find robust statistical support for our predictions in a statistical analysis of financial campaign contributions to state politicians by firms in the U.S. electric utility industry during the period 1999–2010. Our findings contribute to nonmarket strategy research by providing evidence that firms respond to contested regulatory environments by cultivating support from elected political institutions, contingent on the degree of regulator sensitivity to political and stakeholder pressures.

Suggested Citation

  • Adam R. Fremeth & Guy L. F. Holburn & Richard G. Vanden Bergh, 2016. "Corporate Political Strategy in Contested Regulatory Environments," Strategy Science, INFORMS, vol. 1(4), pages 272-284, December.
  • Handle: RePEc:inm:orstsc:v:1:y:2016:i:4:p:272-284
    DOI: 10.1287/stsc.2016.0021
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    File URL: http://dx.doi.org/10.1287/stsc.2016.0021
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    References listed on IDEAS

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