Hostname: page-component-745bb68f8f-f46jp Total loading time: 0 Render date: 2025-01-22T16:47:32.241Z Has data issue: false hasContentIssue false
  • English
  • Français

Firm lobbying and influence in developing countries: a multilevel approach

Published online by Cambridge University Press:  20 January 2017

Stephen Weymouth
Get access Rights & Permissions [Opens in a new window]

Abstract

A large literature examines corporate political activity in the United States, but much less is known about firms’ lobbying activities and policy influence in developing countries. I argue that firm-level heterogeneity helps explain firms’ political behavior, while political institutions shape policymakers’ incentives to respond to business interests. The empirical analysis relies on the World Bank's Enterprise Survey, which covers over 20,000 firms operating in 42 developing and transition countries, to examine the determinants of lobbying and perceived policy influence. Multilevel estimates support the hypotheses that lobbying and influence increase with the firm's size and market power. Additionally, I find that firms report greater policy influence in democracies than in non-democracies.

Type
Research Article
Information
Business and Politics , Volume 14 , Issue 4 , December 2012 , pp. 1 - 26
Copyright
Copyright © V.K. Aggarwal 2013 and published under exclusive license to Cambridge University Press 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Alt, J. E., Carlsen, F., Heum, P. and Johansen, K. 1999. “Asset specificity and the political behavior of firms: lobbying for subsidies in Norway.” International Organization 53 (1): 99–116.Google Scholar
Antras, P. and Helpman, E. 2004. “Global sourcing.” Journal of Political Economy 112 (3): 552–580.CrossRefGoogle Scholar
Ayyagari, M., Demirgüç-Kunt, A. and Maksimovic, V. 2008. “How well do institutional theories explain perceptions of property rights?” Review of Financial Studies 21 (4): 1833–1871.Google Scholar
Baron, D. P. 1995. “Integrated strategy: market and non-market components.” California Management Review 37: 47–66.Google Scholar
Barseghyan, L. 2008. “Entry costs and cross-country differences in productivity and output.” Journal of Economic Growth 13 (2): 145–167.Google Scholar
Baysinger, B. D. 1984. “Domain maintenance as an objective of business political activity: an expanded typology.” The Academy of Management Review 9 (2): 248–258.Google Scholar
Bernard, A. B. and Jensen, J. B. 1999. “Exceptional exporter performance: cause, effect, or both?” Journal of International Economics 47 (1): 1–25.Google Scholar
Bertrand, M. and Kramarz, F. 2002. “Does entry regulation hinder job creation? Evidence from the French retail industry.” The Quarterly Journal of Economics 117 (4): 1369–1413.Google Scholar
Boddewyn, J. J. and Brewer, T. L. 1994. “International-business political behavior: new theoretical directions.” The Academy of Management Review 19 (1): 119–143.Google Scholar
Bonardi, J., Holburn, G. and Vanden Bergh, R. 2006. “Nonmarket performance: evidence from US electric utilities.” Academy of Management Journal 49 (6): 1209–1228.Google Scholar
Bonardi, J.-P., Hillman, A. J. and Keim, G. D. 2005. “The attractiveness of political markets: implications for firm strategy.” Academy of Management Review 30: 397–413.Google Scholar
Broz, L., Frieden, J. and Weymouth, S. 2008. “Exchange rate policy attitudes: direct evidence from survey data.” IMF Sta. Papers 55.Google Scholar
Bueno de Mesquita, B., Smith, A., Siverson, R. M. and Morrow, J. D. 2003. The Logic of Political Survival. MIT Press.Google Scholar
Chen, M. “The matching of heterogeneous firms and politicians.” Economic Inquiry, forthcoming.Google Scholar
Chong, A. and Gradstein, M. 2010. “Firm-level determinants of political influence.” Economics and Politics 22 (3): 233–256.Google Scholar
Ciccone, A. and Papaioannou, E. 2007. “Red tape and delayed entry.” Journal of the European Economic Association 5 (2–3): 444–458.Google Scholar
Cox, G. W. and McCubbins, M. D. 2001. “The institutional determinants of economic policy outcomes.” In: Haggard, S. and McCubbins, M. D. (eds.), Presidents, Parliaments, and Policy. Cambridge: Cambridge University Press, pp. 21–63.Google Scholar
De Figueiredo, J. M. and De Figueiredo, R. 2002. “The allocation of resources by interest groups: lobbying, litigation, and administrative regulation.” Business and Politics 2: 161–181.Google Scholar
De Soto, H. 1989. The Other Path. New York: Harper and Row.Google Scholar
Demirgüç-Kunt, A., Kane, E. J. and Laeven, L. 2008. “Determinants of deposit-insurance adoption and design.” Journal of Financial Intermediation 17 (3): 407–438.CrossRefGoogle Scholar
Denzau, A. T. and Munger, M. C. 1986. “Legislators and interest groups: how unorganized interests get represented.” The American Political Science Review 80 (1): 89–106.Google Scholar
DiMaggio, P. and Powell, W. 1983. “The iron cage revisited: institutional isomorphism and collective rationality in organizational fields.” American Sociological Review 48 (2): 147–160.Google Scholar
Djankov, S., La Porta, R., Lopez-de Silanes, F. and Shleifer, A. 2002. “The regulation of entry.” Quarterly Journal of Economics 117 (1): 1–37.Google Scholar
Esty, D. and Caves, R. 1983. “Market structure and political influence: new data on political expenditures, activity, and success.” Economic Inquiry 21: 24–38.Google Scholar
Fan, C. S., Lin, C. and Treisman, D. 2009. “Political decentralization and corruption: evidence from around the world.” Journal of Public Economics 93 (1–2): 14–34.Google Scholar
Fatas, A. and Mihov, I. 2013. “Policy volatility, institutions, and economic growth.” Review of Economics and Statistics, forthcoming.Google Scholar
Gandhi, J. 2008. “Political Institutions Under Dictatorship.” Cambridge: Cambridge University Press.Google Scholar
Gandhi, J. and Przeworski, A. 2007. “Dictatorial institutions and the survival of autocrats.” Comparative Political Studies 40: 1279–2301.Google Scholar
Greif, A. 2006. Institutions and the path to the modern economy: lessons from medieval trade. Cambridge: Cambridge University Press.Google Scholar
Greif, A., Milgrom, P. and Weingast, B. R. 1994. “Coordination, commitment, and enforcement: the case of the merchant guild.” Journal of Political Economy 102 (4): 745–776.Google Scholar
Grier, K. B., Munger, M. C. and Roberts, B. E. 1994. “The determinants of industry political activity, 1978–1986.” The American Political Science Review 88 (4): 911–926.Google Scholar
Grossman, G. and Helpman, E. 1994. “Protection for sale.” American Economic Review 84 (4): 833–850.Google Scholar
Hall, R. L. and Deardorff, A. V. 2006. “Lobbying as legislative subsidy.” The American Political Science Review 100 (1): 69–84.Google Scholar
Hansen, W. L. and Mitchell, N. J. 2000. “Disaggregating and explaining corporate political activity: domestic and foreign corporations in national politics.” The American Political Science Review 94 (4): 891–903.CrossRefGoogle Scholar
Henisz, W. J. 2000. “The institutional environment for economic growth.” Economics and Politics 12 (1): 1–31.Google Scholar
Hillman, A. and Keim, G. 1995. “International variation in the business-government interface: institutional and organizational considerations.” The Academy of Management Review 20 (1): 193–214.CrossRefGoogle Scholar
Hillman, A. J. 2003. “Determinants of political strategies of US multinationals.” Business and Society 42: 455–484.Google Scholar
Hillman, A. J. and Hitt, M. A. 1999. “Corporate political strategy formulation: a model of approach, participation, and strategy decisions.” The Academy of Management Review 24 (4): 825–842.Google Scholar
Hillman, A. J. and Wan, W. P. 2005. “The determinants of mne subsidiaries’ political strategies: evidence of institutional duality.” Journal of International Business Studies 36 (3): 322–340.Google Scholar
Hitt, M. A., Beamish, P. W., Jackson, S. E. and Mathieu, J. E. 2007. “Building theoretical and empirical bridges across levels: multilevel research in management.” Academy of Management Journal 50 (6): 1386–1399.Google Scholar
Keefer, P. and Stasavage, D. 2002. “Checks and balances, private information, and the credibility of monetary commitments.” International Organization 56 (4): 751–774.Google Scholar
Kennelly, B. and Murrell, P. 1991. “Industry characteristics and interest group formation: an empirical study.” Public Choice 70 (1): 21–40.Google Scholar
Kerr, W. R., Lincoln, W. F. and Mishra, P. 2011. “The dynamics of firm lobbying.” Working Paper 17577, National Bureau of Economic Research.Google Scholar
Kim, J. 2008. “Corporate lobbying revisited.” Business and Politics 10 (2): 1–23.Google Scholar
Klapper, L., Laeven, L. and Rajan, R. 2006. “Entry regulation as a barrier to entrepreneurship.” Journal of Financial Economics 82 (3): 591–629.Google Scholar
Lenway, S. A. and Rehbein, K. 1991. “Leaders, followers, and free riders: an empirical test of variation in corporate political involvement.” The Academy of Management Journal 34 (4): 893–905.Google Scholar
Lux, S., Crook, T. and Woehr, D. 2011. “Mixing business with politics: a meta-analysis of the antecedents and outcomes of corporate political activity.” Journal of Management 37 (1): 223–247.Google Scholar
Macher, J. T. and Mayo, J. W. 2012. “Firm size and influence on government policymaking.” Working Paper.Google Scholar
Macher, J. T., Mayo, J. W. and Schiffer, M. 2011. “The influence of firms on government.” B.E. Journal of Economic Analysis and Policy 11 (1).Google Scholar
Martin, K. D., Cullen, J. B., Johnson, J. L. and Parboteeah, K. P. 2007. “Deciding to bribe: a cross-level analysis of firm and home country influences on bribery activity.” Academy of Management Journal 50 (6): 1401–1422.Google Scholar
Masters, M. F. and Keim, G. D. 1985. “Determinants of PAC participation among large corporations.” The Journal of Politics 47 (4): 1158–1173.CrossRefGoogle Scholar
Melitz, M. J. 2003. “The impact of trade on intra-industry reallocations and aggregate industry productivity.” Econometrica 71 (6): 1695–1725.Google Scholar
Mitchell, N. J., Hansen, W. L. and Jepsen, E. M. 1997. “The determinants of domestic and foreign corporate political activity.” The Journal of Politics 59 (4): 1096–1113.Google Scholar
Naoi, M. and Krauss, E. 2009. “Who lobbies whom? Special interest politics under alternative electoral systems.” American Journal of Political Science 53: 874–892.Google Scholar
North, D. C. 1991. “Institutions.” Journal of Economic Perspectives 5 (1): 97–112.Google Scholar
North, D. C. and Weingast, B. R. 1989. “Constitutions and commitment: the evolution of institutional governing public choice in seventeenth-century England.” The Journal of Economic History 49 (4): 803–832.Google Scholar
Olson, M. 1965. The Logic of Collective Action. Harvard University Press.Google Scholar
Ozer, M. and Lee, S.-H. 2009. “When do firms prefer individual action to collective action in the pursuit of corporate political strategy? A new perspective on industry concentration.” Business and Politics 11.Google Scholar
Panizza, U. 2001. “Electoral rules, political systems, and institutional quality.” Economics and Politics 17 (3): 311–342.Google Scholar
Peltzman, S. 1976. “Toward a more general theory of regulation.” Journal of Law and Economics 19 (2): 211–240.Google Scholar
Rabe-Hesketh, S. and Skrondal, A. 2008. Multilevel and Longitudinal Modeling Using Stata. College Station, Texas: Stata Press.Google Scholar
Rajan, R. G. and Zingales, L. 2003. “The great reversals: the politics of financial development in the twentieth century.” Journal of Financial Economics 69 (1): 5–50.CrossRefGoogle Scholar
Salamon, L. M. and Siegfried, J. J. 1977. “Economic power and political influence: the impact of industry structure on public policy.” The American Political Science Review 71 (3): 1026–1043.Google Scholar
Schuler, D. A. 1996. “Corporate political strategy and foreign competition: the case of the steel industry.” The Academy of Management Journal 39 (3): 720–737.Google Scholar
Schuler, D. A., Rehbein, K. and Cramer, R. D. 2002. “Pursuing strategic advantage through political means: a multivariate approach.” The Academy of Management Journal 45 (4): 659–672.Google Scholar
Shugart, M. S. and Haggard, S. 2000. “Institutions and public policy in presidential systems.” In: Haggard, S. and McCubbins, M. D. (eds.), Presidents, Parliaments, and Policy. Cambridge: Cambridge University Press, pp. 64–104.Google Scholar
Stigler, G. J. 1971. “The theory of economic regulation.” The Bell Journal of Economics and Management Science 2 (1): 3–21.Google Scholar
Sundaram, A. K. and Black, J. S. 1992. “The environment and internal organization of multinational enterprises.” The Academy of Management Review 17 (4): 729–757.Google Scholar
Tsebelis, G. 2002. Veto Players: How Political Institutions Work. Princeton University Press.Google Scholar
Tullock, G. 1967. “The welfare costs of tariffs, monopolies, and theft.” Western Economic Journal 5: 224–232.Google Scholar
Weymouth, S. and Broz, J. L. “Government partisanship and property rights: crosscountry firm-level evidence.” Economics and Politics, 2013, forthcoming.Google Scholar