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Nonmarket performance: Evidence from U.S. electric utilities

Author

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  • Bonardi, Jean-Philippe
  • Holburn, Guy
  • Vanden Bergh, Rick

Abstract

Building on a framework that assesses the attractiveness of ‘political markets’ – where firms transact over public policies with government policy-makers – we develop hypotheses regarding the success or performance of firms’ nonmarket strategies. We propose that the ability of firms to gain more favorable policy outcomes is increasing in the degree of rivalry among elected politicians; the firm’s recent experience with policy-makers; and the opportunity to learn from other firms’ recent experiences; and is decreasing in the degree of rivalry from competing interest groups and the resource base of regulatory agencies. Using data on regulatory filings for rate increases made by the population of U.S. privately-owned electric utilities over a 13 year period, we find empirical support for our arguments.

Suggested Citation

  • Bonardi, Jean-Philippe & Holburn, Guy & Vanden Bergh, Rick, 2006. "Nonmarket performance: Evidence from U.S. electric utilities," MPRA Paper 14437, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:14437
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    File URL: https://mpra.ub.uni-muenchen.de/14437/1/MPRA_paper_14437.pdf
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    References listed on IDEAS

    as
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    Cited by:

    1. Barkemeyer, Ralf & Preuss, Lutz & Lee, Lindsay, 2015. "On the effectiveness of private transnational governance regimes—Evaluating corporate sustainability reporting according to the Global Reporting Initiative," Journal of World Business, Elsevier, vol. 50(2), pages 312-325.
    2. Hagen Worch & Bernhard Truffer & Mundia Kabinga & Jochen Markard & Anton Eberhard, 2012. "Tackling the Capability Gap in Utility Firms: Applying Management Research to Infrastructure Sectors," CID Working Papers 55, Center for International Development at Harvard University.
    3. Rajwani, Tazeeb & Liedong, Tahiru Azaaviele, 2015. "Political activity and firm performance within nonmarket research: A review and international comparative assessment," Journal of World Business, Elsevier, vol. 50(2), pages 273-283.
    4. White, George O. & Boddewyn, Jean J. & Galang, Roberto Martin N., 2015. "Legal system contingencies as determinants of political tie intensity by wholly owned foreign subsidiaries: Insights from the Philippines," Journal of World Business, Elsevier, vol. 50(2), pages 342-356.
    5. Bonardi, Jean-Philippe, 2008. "The internal limits to firms' nonmarket activities," MPRA Paper 14500, University Library of Munich, Germany.
    6. repec:spr:manint:v:55:y:2015:i:4:d:10.1007_s11575-014-0232-5 is not listed on IDEAS
    7. Adam Fremeth & Guy Holburn & Pablo Spiller, 2014. "The impact of consumer advocates on regulatory policy in the electric utility sector," Public Choice, Springer, vol. 161(1), pages 157-181, October.
    8. Weymouth Stephen, 2013. "Firm lobbying and influence in developing countries: a multilevel approach," Business and Politics, De Gruyter, vol. 14(4), pages 1-26, January.
    9. Bonardi Jean-Philippe & Urbiztondo Santiago, 2013. "Asset freezing, corporate political resources and the Tullock paradox," Business and Politics, De Gruyter, vol. 15(3), pages 275-293, October.
    10. David Eduardo Cavazos & Matthew A. Rutherford, 2017. "Applying firm attention theory to assess the antecedents of firm participation in regulatory processes," Review of Managerial Science, Springer, vol. 11(2), pages 395-410, March.
    11. Jean-Philippe Bonardi & Santiago Urbiztondo & Bertrand V. Quelin, 2009. "The political economy of international regulatory convergence in public utilities," International Journal of Management and Network Economics, Inderscience Enterprises Ltd, vol. 1(2), pages 232-256.
    12. M. Maegli & C. Jaag & M. Finger, 2010. "Regulatory Governance Costs in Network Industries: Observations in Postal Regulation," Competition and Regulation in Network Industries, Intersentia, vol. 11(2), pages 207-238, June.
    13. Kim Jin-Hyuk, 2008. "Corporate Lobbying Revisited," Business and Politics, De Gruyter, vol. 10(2), pages 1-25, September.
    14. Salla Laasonen & Martin Fougère & Arno Kourula, 2012. "Dominant Articulations in Academic Business and Society Discourse on NGO–Business Relations: A Critical Assessment," Journal of Business Ethics, Springer, vol. 109(4), pages 521-545, September.
    15. repec:bla:stratm:v:38:y:2017:i:8:p:1668-1687 is not listed on IDEAS
    16. repec:kap:jbuset:v:143:y:2017:i:4:d:10.1007_s10551-016-3077-y is not listed on IDEAS
    17. Brown Richard S., 2016. "How do firms compete in the non-market? The process of political capability building," Business and Politics, De Gruyter, vol. 18(3), pages 263-295, October.
    18. Ozer, Mine, 2010. "Top management teams and corporate political activity: Do top management teams have influence on corporate political activity?," Journal of Business Research, Elsevier, vol. 63(11), pages 1196-1201, November.
    19. White, George O. & Hemphill, Thomas A. & Joplin, Janice R.W. & Marsh, Laurence A., 2014. "Wholly owned foreign subsidiary relation-based strategies in volatile environments," International Business Review, Elsevier, vol. 23(1), pages 303-312.
    20. Aranda Gutierrez, Ana, 2016. "Thank you for (not) smoking : Essays on organizational theory and strategy in a contested industry," Other publications TiSEM ec7e4803-0702-496c-8b36-8, Tilburg University, School of Economics and Management.
    21. Jeffrey Macher & John Mayo, 2012. "The World of Regulatory Influence," Journal of Regulatory Economics, Springer, vol. 41(1), pages 59-79, February.
    22. David Szakonyi, 2017. "Businesspeople in Elected Office: Identifying Private Benefits from Firm-Level Returns," Working Papers 2017-20, The George Washington University, Institute for International Economic Policy.
    23. Poisson-de Haro, Serge & Bitektine, Alex, 2015. "Global sustainability pressures and strategic choice: The role of firms’ structures and non-market capabilities in selection and implementation of sustainability initiatives," Journal of World Business, Elsevier, vol. 50(2), pages 326-341.
    24. repec:bbz:fcpbbr:v:11:y:2014:i:1:p:62-86 is not listed on IDEAS
    25. Maegli, Martin & Jaag, Christian, 2009. "Regulatory Governance Costs in Network Industries: Implicatins for postal Regulation," MPRA Paper 15309, University Library of Munich, Germany.

    More about this item

    Keywords

    Nonmarket strategy; lobbying; Electric utilities;

    JEL classification:

    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • M1 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration
    • L94 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Electric Utilities

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