Political Strategy Formulation

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POLITICAL STRATEGY FORMULATION FOR INTERNATIONAL FIRMS:
THE ROLE OF FIRM, INDUSTRY, AND INSTITUTIONAL VARIABLES
A Dissertation
by
AMY JULIAN HILLMAN
Submitted to the Office of Graduate Studies of

Texas A&M University
in partial fulfillment of the requirements of the degree of
DOCTOR OF PHILOSOPHY
August 1996
Major Subject: Management
UMI Number: 9701648
UMI Microform 9701648

Copyright 1996, by UMI Company. All rights reserved.
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POLITICAL STRATEGY FORMULATION FOR INTERNATIONAL FIRMS:
THE ROLE OF FIRM, INDUSTRY, AND INSTITUTIONAL VARIABLES
A Dissertation
by
AMY JULIAN HILLMAN

Submitted to Texas A&M University
in partial fulfillment of the requirements
for the degree of
DOCTOR OF PHILOSOPHY
Approved as to style and^content by:

<r"
Michael 'Hitt Barjfy "Basinger

(Chair of Committee) (Member)
■lfLC-VLA-
Albert Cannella Ramona Paetzold
(Member) (Member)
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Frank B.amigartner Richard woodman
(Me&ber)
mber) (Head of Department)
August 1996
Major Subject: Management
ABSTRACT
Political Strategy Formulation for International Firms:
The Role of Firm, Industry, and Institutional Variables.

(August 1996)
Amy Julian Hillman, B.A., Trinity University;

M.B.A., Incarnate Word College
Chair of Advisory Committee: Dr. Michael Hitt
This dissertation was an exploratory analysis of the

relationship between firm, industry, and institutional
variables and the choice of political strategies used by
international firms. While market strategies, such as pricing
and promotion, have received a great deal of attention in
strategic management literature, nonmarket strategies, such

as the political strategies firms use to affect public
policy, have received scant attention in the literature.
This study was an attempt to more fully integrate political

strategies into the strategic management domain. A
comprehensive taxonomy of four political strategy types:

information, direct access/pressure, constituency building,
and cooperative strategies was developed along with the

theoretical distinction between transactional and relational
approaches to political strategy.
From this theoretical development, a model was developed
to depict political strategy formulation and formal
iv
hypotheses were formed regarding three specific firm

variables: financial resources, firm size, and firm
experience; two industry variables: technical nature and
competitors' strategies; and one institutional variable:

corporatism versus pluralism. The effect of these six
variables on the use/non-use of the four types of political
strategies and the two types of approaches to political

strategies was the focus of the hypotheses.
An analysis of surveys completed by U.S. multinational

corporations operating in the European Union found that firms
are using a variety of political strategies throughout

different subsidiary locations. This result confirms the
need for an integration of political strategies into our
understanding of corporate strategy, as market and nonmarket

strategies go hand in hand. Testing of the hypotheses
revealed that the institutional variable of corporatism/
pluralism was a significant predictor of the likelihood of
using an information strategy, the direct access/pressure
strategy, and transactional/relational approaches to
political strategy. In addition, corporatism/pluralism was

found to be a significant predictor of the likelihood of a
firm matching a competitors' strategy. Thus, the

relationship between the institutional variable and one
industry variable and the use of political strategy and
approach type was confirmed.
V
DEDICATION
This dissertation is dedicated to five very special

people in my life: without these five people I would not be
who I am today.
My mother, Barbara Kavanagh, has been an invaluable
support. She has supported and loved me through all my

successes and failures. My mother taught me many things, but
mostly to pursue my dreams. Mom, your love means the world

to me.
My father, Bob Hillman, has been an inspiration. Your

love and steady advice has always been there for me. From you
I have learned that dedication and hard work will always be
rewarded. Dad, thank you for everything. I love you dearly.
My stepmother, Marsha Hillman, has always put a smile on
my face. Marsha, thank you for showing me that being happy
is one of the greatest gifts of life. I love you.
My late stepfather, John Kavanagh, gave me the advice to
continue my education. He taught me that one of the greatest
pleasures is a life based on learning. Your memory remains
bright in my heart.
Finally, this dissertation is dedicated to my husband,

Gerry Keim. You are the love of my life.
ACKNOWLEDGMENTS
Many people have provided the wisdom, support, love, and
friendship that has made this dissertation possible. Although

at times the task seemed insurmountable, many people were
there to express their encouragement. The completion of this
project is not my accomplishment alone, for it belongs to all

of you who have helped me along the way.
First, I would like to thank my committee members. To my
committee chair, Dr. Michael Hitt, I owe a special debt for

encouraging me to pursue a topic that is outside the
mainstream research in our area. No matter how many other
projects Mike was working on, or deadlines he had, he always

made time for me and my project. Mike, thank you for always
believing in me and supporting my efforts to pursue a topic

that stirs the passion necessary for me to keep going. Dr.
Ramona Paetzold has served as my mentor throughout the
doctoral program. Without her guidance and friendship, this
program at times would have engulfed me. Ramona, your

friendship has been invaluable to me and one that I will
treasure always; I will miss our escapes to Houston and chats
across the hall terribly. Dr. Barry Baysinger provided the
encouragement of my initial research idea in the back row of

a management seminar held in the Czech Republic. Barry, thank
you for always challenging me and making me laugh. Dr. Albert

Cannella has given me tremendous support throughout the
vii
doctoral program as an instructor, friend, and colleague.
Bert, thank you for keeping me from taking myself too

seriously. Dr. Frank Baumgartner has been a tremendous asset
in this project. His insights from political science have

aided me in cross-fertilization and bringing richness to this
project. Frank, thank you keeping me in touch with a
discipline that I have my roots in.

My husband, Gerry Keim, has been a source of strength
for me in this last critical year of the program. His love
and support has made the difference in this project. Gerry
has served as an invaluable source of feedback and most of
all, love. A dissertation is probably more than newlyweds
should ever have to endure; weathering this year together
provides evidence that we will be able to meet any challenge
that lies ahead. Gerry, thank you cannot express how much
you have helped me in this endeavor.
Next, I would like to thank my family and friends. To
my parents who have been such tremendous supports throughout,
yes, 22 years of formal education, I could not have done it
without you. To my sisters, Maureen and Elaine, thank you
for always understanding how demanding this program has been
and how important it was to me. I count you both not only as
sisters, but as treasured friends. To my brother, Brad, who
has kept me sane throughout four years of phone calls and
visits, your love and support is special and dear to me. No
matter how far away I am from you, we will always be close at
viii
heart. To my sister Diane, please know that you are a

guiding light to me, your memory and love remains bright.
To my friends back home, GiGi, Laura, Lisa, Mitch, and
Susan, thanks for always understanding how a program like
this takes time away from us, but never from our friendship.
To my friends here, in College Station, you all have
transformed the program from four years from hell to four
years from hell with great friends. To my cohort, Scott
Sherman, Glenn Rowe, Mark Hansen, and Blaine McCormick, you
are a special group. Thank you all for creating a supportive
environment where five very different people grew to respect
each other and long-standing friendships were formed. A
special thanks to my dear friend Scott Sherman and his wife
Peggy. While finishing this program has been an incredible
high, leaving the two of you will be very hard. Your
friendship has been a light for me. To the other friends and
colleagues I have made here at Texas A&M, thank you. Kay
McGlashan and Doug Glasgow have been the best of buds, we
will be together in spirit every Friday for happy hour.
Special thanks to Karen Jansen, Ken Brunsman, Andrea Griffin,
and Scott Williams for always being there and making me
laugh. To my friends and colleagues who have preceded me,
Regena Farnsworth, Gary McMahan, and Bert Morrow, your advice
was invaluable and friendship dear. To faculty members Jay
Dial, Lynda Kilbourne, Bob Hoskisson, Asghar Zardkoohi, and
Teresa Rothausen, thank you all for being there for me; you
all have served as role models and great friends.
ix
Finally, a special thanks to my dear friend Phyllis
Washburn. Phyl, your smiling face has kept me up when I was
down. You have always been there for me and I will miss you
terribly. You and my friends Wanda Bird, Argie Butler, and

Sabrina Saladino will always have a special place in my
heart.
X
TABLE OF CONTENTS
Page
A B S T R A C T ........................................ iii
DEDICATION ............................................ V
ACKNOWLEDGMENTS ...................................... vi
TABLE OF CONTENTS........................................ X
LIST OF T A B L E S ....................................... xii
LIST OF F I GU R E S................................... xiii
CHAPTER I INTRODUCTION ............................... 1
CHAPTER II LITERATURE REVIEW/THEORETICAL MODEL AND

HYPOTHESES DEVELOPMENT .......................... 12
The Importance of Government to Business ........ 12

The Importance of Government to Corporate
Strategy and the Role of Political Behavior . 16
Political Competencies and Firm Advantage . . . . 20
The Objectives of Corporate Political Behavior
and Some General Categories of Corporate
Political Behavior ........................ 23
Corporate Political Tactics and Strategies. . . . 27
The Choice of Corporate Political Strategies . . . 40
A General Model of the Choice of Proactive
Corporate Political Strategies ............ 52
Firm-specific Variables ........................ 55
Institutional/ Country-specific Variables . . . . 65
Industry Variables .............................. 73
Summary/Conclusion .............................. 77
CHAPTER III RESEARCH DESIGN AND METHODOLOGY .......... 79
Research Design ................................ 79

Sample Selection ................................ 79
Development of the Survey Instrument ............ 83
xi
Page
Dependent Variable Measures .................... 84
Independent Variable Measures .................. 88
Validity and Reliability ........................ 92
Data A n a l y s i s .................................. 93
CHAPTER IV R E S U L T S .................................. 95
Descriptive Statistics .......................... 95
Tests of Underlying Assumptions ................ 100
Tests of H y p o t h e s e s .............................. 106
Firm Variables: Firm Resources-ROA................ 113
Number of E m p l o y e e s .............................. 118
Firm Experience/Legitimacy........................ 120
Institutional Variable: Corporatism/Pluralism . . 121
Industry Variable: Technical Nature ............ 125
Competitor's Perceived Use of Strategy .......... 126
Additional Analyses ............................ 127
Information Strategy ............................ 128
Cooperative Strategy ............................ 133
CHAPTER V DISCUSSION AND CONCLUSIONS ................ 138

Discussion........................................ 138
Discussion of Results .......................... 139
Discussion of Other Factors Contributing
to Study R e s u l t s ............................ 155
Limitations of the S t u d y .......................... 159
Implications for Theory ........................ 161
Implications for Organizations .................. 171
Opportunities for Future Research .............. 175
C o n c l u s i o n s ...................................... 180
R E F E R E N C E S ............................................ 183
APPENDIX A ............................................ 195

APPENDIX B ............................................ 197
APPENDIX C ............................................ 199
V I T A .................................................. 203
xii
LIST OF TABLES
Page
TABLE 4.1 Dependent Variable Frequency .............. 96
TABLE 4.2 Independent Variable Frequency ............ 101
TABLE 4.3 Inter-Correlation Matrices ................ 102

TABLE 4.4 Full Logistic M o d e l s ........................107
TABLE 4.5 Tests of Multicollinearity..................110
TABLE 4.6 Approach Dependent Variable Models of

Separate Effects ........................ 114
TABLE 4.7 Cooperative Strategy Dependent Variable

Models of Separate Effects ................ 116
TABLE 4.8 Information Strategy Dependent Variable

Models of Separate Effects .............. 117
TABLE 4.9 Constituency Building Strategy Dependent

Variable Models of Separate Effects . . . . 119
TABLE 4.10 Direct Access/pressure Dependent Variable

Models of Separate Effects ................ 122
TABLE 4.11 Information Strategy Tactics Dependent

Variable Full M o d e l s ........................ 129
TABLE 4.12 Cooperative Strategy Tactics Dependent

Variable Full M o d e l s ........................ 134
TABLE 5.1 Summary of R e s u l t s ......................... 140
xiii
LIST OF FIGURES
Page
FIGURE 2.1 Getz's Model of Political Tactic Choice . . 43

FIGURE 2.2 Oberman's Model of Political Strategy
F o r m u l a t i o n ........................... 51
FIGURE 2.3 A General Model of Proactive Political Strategy
C h o i c e ................................. 53
1
CHAPTER I
INTRODUCTION
The expansive influence of governments on business

operations should not be considered "out of the control of
firms." As prior research shows, political strategies are a
viable way for firms to have effects on the public policy

process, regardless of the nation within which they operate.
Political strategies, in general, do not take the place of
market strategies, but instead the two may be viewed as

complementary (Boddewyn, 1993). For example, MCI's successful
opening of long-distance markets through its political
strategy could not ensure competitiveness for MCI without a
successful market strategy (Yoffie & Bergenstein, 1985).

Similarly, the benefits and incentives Disney received from
the French Government as a result of intense negotiations

with several European nations cannot guarantee the success of
its international expansion into France.
In this opening chapter, I develop the rationale for
investigating corporate political strategy by first placing

political strategy in the broad domain of strategic
management. A great deal of research in strategic management

has focused on the interplay between a firm's strategies and
its environment. The process of selecting a strategy involves
This dissertation follows the style and format of the Academy

of Management Journal.
2
analysis of both firm resources and competencies and the

environment in order to gain a sustained competitive
advantage. Many strategy scholars examine such concepts as
"strategic fit" between a firm and the external environment,
with the implication that a firm whose strategy or resources
best "fit" the needs or opportunities in the environment is

more successful than firms without an effective fit (Jennings
& Seaman, 1994; Nohria & Ghoshal, 1994; Venkatraman, 1989) .

Two distinct approaches to strategy selection have
evolved in management research, the Industrial Organization

approach and the Resource Based View. In the Industrial
Organization model (Porter, 1980), the external environment
is scanned and evaluated along five critical forces — the
power of buyers, the power of suppliers, the threat of new

entrants, the threat of substitutes, and the intensity of
rivalry within the industry. Through this analysis, an
industry can be rated as to its "attractiveness" and
appropriate strategies that maximize firm opportunities and
minimize threats in the environment may then be selected. In
contrast, in the Resource-Based View of the firm (Penrose,

1959; Rumelt, 1984; Barney, 1986, 1991; Peteraf, 1993), firm
resources are examined to determine firm capabilities that
can produce a sustained competitive advantage. Strategies are
selected that maximize these firm strengths and minimize any

firm weaknesses.
3
Despite the differences in these approaches, each
represents a process by which strategies are "fit" to the

external environment and/or internal capabilities of the
firm. Strategies then may be categorized into "generic"
types: at the corporate level a firm may exhibit various
levels of diversification and may internationally choose a

multidomestic, transnational, or global strategy. At the
business level, Porter has identified "generic" strategies to
include: cost-leadership, differentiation, and focus
strategies. The commonality among these strategies is that
their selection involves a process of environmental and

internal analysis. The choice of strategy that results from
this process is the one which has the greatest potential for
sustained competitive advantage.
Another characteristic that all of these strategy
categories have in common is that they are focused primarily
on the competitive or market environment of the firm,

sometimes referred to as the task or industry environment.
The market environment may be best understood as those
elements more directly relevant to a firm's profitability and
the nature of competition in the industry, such as suppliers,
customers, and competitors. Baron (1995) identifies this
segment of the environment as that which is "intermediated by
markets or private agreements." The generic strategies

discussed above all focus on affecting the competitive
environment of the firm. A cost-leadership strategy, for
4
example, is designed to appeal to customers, having
implications for relationships with suppliers and for
competitors. Differentiation is an attempt to rotate the

demand curve for a firm's product or service to increase
inelasticity of demand and reduce competitive threats. When

a product becomes differentiated, close substitutes are more
difficult to find so the demand for that product becomes less
price sensitive.
The segment of the environment not emphasized by these
generic strategies is the nonmarket environment, or the
general environment consisting of social, political, and

legal elements relevant to the firm. Instead of being
intermediated by markets or private agreements, exchange in
the nonmarket environment is governed by the public,
stakeholders, government entities, the media, and other
public institutions. Examples of these elements include
demographic trends, sociocultural trends, technological
advancements, macroeconomic issues, regulations, legal

precedents, etc.
The relative lack of concentration on nonmarket
strategies does not imply that the nonmarket environment is
any less critical for the firm, however. Each of these

elements may create or destroy opportunities for firms as
well as threaten profitability (Schendel & Hofer, 1979;
Mitnick, 1993). For example, a change in technology may
greatly affect the demand for a firm's products or services,
5
or shift marginal cost; interest rates may affect purchasing

costs or the price of capital for firms; new medical findings
may contribute to societal trends that create opportunities
for new types of products. But perhaps the area of the
nonmarket environment with the greatest potential to shape
the opportunities and threats of firms is the government.
Governments have enormous power over the opportunity
sets faced by firms and play a role in shaping the
competitive environment firms face as well. Ultimately, the
government has power over property rights, taxation, trade
restrictions, standards of competition such as antitrust and
licensing, and infrastructure investments, in addition to a

large amount of government contracts and purchases from
private firms. Government regulation affects all aspects of

business: human resources, from hiring to termination; the
work environment, from sexual harassment to safety issues;
product safety and liability; advertising; product claims;

pollution; ownership and control structures, regulation of
foreign ownership in some industries and limitations on who

can serve on a board of directors; licensing; patent and
trademark protection; accounting procedures and taxation;
pricing policies; standard setting; and antitrust among
others. In addition to these intranation powers, the
increased international activities such as trade negotiations

and the formation of economic cooperatives and trading blocs
are also significant forces on business. Thus, in the
6
increasingly global marketplace, firms, especially those that
expand internationally, are increasingly affected by

government activities and the importance of government should
not be dismissed.
The potential impact of the government on firms suggests
that keeping informed about government regulations, policies,
and current public policy issues is essential. Even the best

of competitive strategies, accompanied by a superior product
and unique firm resources, may not survive without attention
to the nonmarket environment, particularly government
activities. The market and nonmarket environments are
interrelated for firms (Baron, 1995), but maintaining a
current knowledge of political policies and issues is an

enormous task. This task is exacerbated by the number of
countries within which the firm operates. Added to this
complexity and criticality is the fact that the political
environment is dynamic within each country at nonconstant,
changing rates.
A common misconception is that while the nonmarket

environment is important to the firm, it is exogenous and
outside the control of the firm (Baron, 1995) . This

conception may be more accurate for elements such as
demographic trends and certain macroeconomic issues
exemplified by interest rates. But this conception is not
accurate for the political environment of the firm. Instead,
the business-government interface may be characterized as one
7
in which business can be proactive in influencing public

policy, as well as reactive by responding to policy once
implemented. Salamon and Seigfried (1977) state that firms
may be passive reactors to government, positive anticipators
of new policies, or may play a role in shaping public policy.
Each structure of a non-totalitarian government
incorporates some method of interest aggregation within

society. In more corporatist nations, such as Austria and
Sweden, businesses may have a direct and formally established
consulting role in public policy. In other nations, like the
United States and Canada, businesses may affect policy
through a variety of points of access in the policy process.

For example, in these countries businesses are able to
communicate directly with political decision makers, are
often asked to testify about their positions before congress,
and are able collectively to impact the political process
through trade associations. Thus, government should not be
assumed as outside of the firm's control, as many critics

once argued (Grosse & Behrman, 1992).
Given the importance of the nonmarket environment and

the potential for individual firm access and influence, some
scholars have argued that another generic business-level

strategy be added to Porter's list — that of political
strategy, which applies to both political activity within a
home country and internationally. This additional nonmarket
"generic" may supplement the use of Porter's other three
8
business-level strategies. The call for another category of

generic strategies is a relatively recent one beginning to
receive attention in academia (Boddewyn, 1988; Rugman &

Verbeke, 1990). Whether or not political strategies are in
keeping with the Industrial Organization perspective may be
debated, but this call is an indication of the importance of

both such strategies and the nonmarket environment. In
addition, the importance of such strategies can be witnessed
in practice. A great deal of political activity is used by
firms to affect the policy process both in their home

countries and in their international locations. Thus, while
academic research has traditionally emphasized market over
nonmarket strategies, firms have been politically active

throughout history (Wood, 1986).
Firm political behavior may be defined as those

activities that attempt to affect the public policy
environment in a way favorable to the firm (Baysinger, 1984) .

Political activity may range from attempts to influence
political decision makers to attempts to influence public

opinion and other competing interest groups in the nonmarket
environment, such as activists or other social groups. The

strategic purpose of firm political behavior is not to
operate within the rules of the economic game, but to change

these rules when appropriate (Boddewyn, 1993).
The importance of political strategies is exemplified in
the research on U.S. corporate political activities such as
9
lobbying, grassroots building, and PAC contributions. This

research has focused primarily on the strategic uses of
corporate political activity with reference to specific

policy issues (e.g. Blau & Harris, 1992; Lenway & Rehbein,
1991; Mahon, 1993; Shaffer, 1992; Yoffie, 1987) or has
involved the study of particular tactics (e.g. Baysinger,
Keim, & Zeithaml, 1985; Mizruchi & Koenig, 1986; Keim &
Baysinger, 1988; Keim, 1981; Pittman, 1977; Zardkoohi, 1985) .
For example, some research has examined an issue or

regulation that affects or may affect the competitive nature
of the firm and how firms have responded to these issues
through the use of political strategies. Alternatively, past
research has examined a particular tactic, such as PAC
contributions, to link such tactics to policy influence or
understand how they are implemented.
As shown both by prior research and in practice,

"political strategies" entail many different tactics. Some
firms employ ad hoc or transactional attempts to influence
thepolicy process, while others develop relational

strategies with political decision makers. Within both of
these approaches, various tactics such as grassroots
advocacy, PAC contributions, personal service (having a firm

member serve in a political capacity), lobbying, and advocacy
advertising may be used. There are many different types of
political tactics (Yoffie, 1987; Buchholz, 1992; Aplin &
Hegarty, 1980). Notably absent from this research, however,
10
are comprehensive studies of the choice of political tactics

and the environmental and firm-specific variables that affect
this choice (Yoffie & Bergenstein, 1985). One exception is

Getz (1993), who proposes a United States specific model of
how the choice of political tactics is made but identifies no
specific variables affecting the choice.
To date, research on corporate political tactics and

strategies has been either theoretical in nature or has
targeted the use of specific tactics or responses to specific
issues. Most of these studies originate from a starting
point of "We see firms using political tactics...why?" or,
"What effect can firms have on the political process,
specific issues or regulations?" Questions of why one
particular tactic is used over others are largely absent from
this literature. Unlike research examining the choice of
market or competitive strategies, there is little research on
the choice of political tactics. Environmental variables and
firm-specific variables that may affect the choice of
political tactics have not been explored.
Political strategies encompass a variety of tactics and
time frames. As in the case of market strategies, the choice
of tactics depends not only on firm resources and
capabilities, but also on environmental variables.
Increasing our understanding of the variables that influence
the choice of a particular political tactic, especially
across nations, should be an area of investigation for
strategy scholars.
11
This dissertation is an attempt to link the choice of

political tactics used to firm resources and competencies and
environmental forces. Relevant literature in the areas of

business and government, market and nonmarket strategies, and
corporate political behavior and tactics is reviewed. A
classification scheme of political tactics is developed that

*
will, in turn, facilitate theory development of the types of

variables likely to affect the choice of political tactics.
Firm-specific variables as well as environmental variables
that may affect the choice of tactics, such as industry

considerations and institutional or country-specific
constraints, are identified. A model of international
variation in the choice of political tactics used by firms is

developed and formal hypotheses concerning the affect of the
identified variables are formulated. From this point, a
research design for testing these hypotheses through survey
data is outlined and specific implementation and analyses is

discussed in detail.
12
CHAPTER II
LITERATURE REVIEW/THEORETICAL MODEL AND HYPOTHESES
DEVELOPMENT
The Importance of Government to Business
As the opening chapter points out, the potential impact

that government has on business is of great importance.
Governments have the ability to alter the size of markets
through government purchases and through regulation affecting
substitute and complementary products; to affect the
structure of markets through entry and exit barriers and
antitrust legislation; and to alter the cost structure of
firms through various types of legislation ranging from
employment practices to pollution standards (Gale & Buchholz,
1987). Precisely because of these powers, Gale and Buchholz
(1987) argue that over the last two decades, public policy
has become an important determinant of corporate behavior.
The power of government over business practices has
become so substantial that Weidenbaum (1980) argues that the
expansion of government regulation since the 1970's has
fundamentally altered the relationship between business and
government, and that these changes are tantamount to a second
managerial revolution. Weidenbaum contends that the shift of
decision-making away from the firm to government regulators
(through increased regulation) is as significant for
management as the separation of ownership and control was
earlier this century (Berle & Means, 1932).
13
The increased role of government is a trend that has

continued into the 1990's as well. While in the U.S. the
downsizing of government has been a popular trend in recent

elections, the rate at which the Federal Register (a
measurement of laws passed by Congress each term) has grown
is indicative of the increasing role of government regulation
(Congressional Quarterly, 1994). Dunning predicts that "it is

difficult to imagine the significance of government as a
shaper of economic activity diminishing in the 1990's;
indeed, it is more likely to increase" (1993: 125). Harris
(1989) similarly asserts that since the advent of social
regulation in the 1970's management has been "politicized."

This politicization of management includes: a growing
awareness of government and its relevance to daily life; an
increasing concern over politics; and greater political
participation and attempts to influence policy-makers. Given
the expansion of government and the implications of such
expansion for business, Molitor asserts that "in a world of

uncertainties, where change is the one thing we can count on,
business needs the ability to anticipate and adapt
successfully to changes in matters of public policy and their
own market pursuits" (1977: 4).

However, despite this agreement surrounding the
relationship between business and government, and the
widespread recognition of the effect of government regulation
on business, relatively few academicians have specifically
14
examined the strategic implications and responses to

legislative conditions (Aplin & Hegarty, 1980). Notable
exceptions to this are in the area of international business
and international strategy.
Dunning argues that government shapes both the
competitive advantage of domestic multinational enterprises
(MNEs) and the attraction of their location-bound assets to

inbound investors. He asserts that any theory of MNE activity
that does not explicitly seek to understand and explain the
role of governments, not just as another variable, but, like
the market, as an organizational entity, is bound to be

deficient (1993:49).
However, to Dunning, the government is considered an
exogenous variable affecting dynamic change (along with
economic development and technology). Grosse and Behrman,
however, argue that "an examination of international
activities of companies, which assumes governments as "given"
or unchanging, takes the "national" out of inter-national and

leaves the analysis as a simple extension of firm and market
theories" (1992: 97).
Boddewyn and colleagues concur with this sentiment.
Because the pursuit of wealth interacts with the pursuit of

power, the government should not be taken as exogenous to the
economy (Boddewyn, 1988). Individual firms, along with other
interest groups and individual voters, play a part in the
formulation and implementation of government policy, and
15
through this function, these groups are able to have impact
on government policy. For international business in
particular, crossing national borders through trade,
investment, and alternative modes of entry automatically adds
a political dimension to the transaction (Boddewyn & Brewer,

1994). This crossing of borders requires a sustained
political response because access to foreign resources is
constantly controlled by home and host governments (as is the
case with access to domestic resources) ; political mechanisms
interfere everywhere with the allocation of economic
resources (Boddewyn, 1993) .
Because of the political dimension inherent in

international business, the government may be viewed as
another factor of production (Boddewyn, 1988; Kindleberger,
1970) . Non-market factors such as the government should be

viewed not only as "risks" (often labeled by international
research as political risks), but also as "opportunities"
(Boddewyn & Brewer, 1994). Organizations should analyze and
evaluate opportunities and threats coming from the socio

political environment much the way it analyzes and evaluates
market experiences and opportunities (Baetz & Fleisher,
1994). Given this analysis, organizations may then respond
strategically to public policy threats or opportunities

through political behavior.
16
The Importance of Government to Corporate Strategy and the
Role of Political Behavior
The incorporation of nonmarket forces such as the
government into the strategy formulation and implementation

process is not a new idea to research in corporate political
behavior. Many scholars have acknowledged the relationship
between market and nonmarket environments and the role of
corporate political activity, defined as all activities by
firms designed to influence the decisions of government

bodies, including both the means used in these activities and
the targets toward whom these are directed (Salorio, 1993).

As far back as 1969, Epstein argued that "political
competition follows in the wake of economic competition" and

that government may be viewed as a competitive tool to create
the environment most favorable to a firm's competitive
efforts (p. 242) . For example, in a study of the tobacco
industry, Miles (1982) found that the tobacco industry as a
whole was able to defend its domain and profitability through

political action and government cooptation. Similarly,
Boddewyn (1993) asks "What did the U.S. automobile companies
do when outcompeted by Japanese firms?" They sought

government protection. He argues that when a firm cannot be
a cost, differentiation, or focus leader, the firm may still

beat competition in the nonmarket environment.
Thus, political activity can also be used to create,
protect, and/or sustain economic competitive advantage.
17
Political behavior is neither interchangeable with nor an

alternative to economic behavior. Instead, Boddewyn argues
that political behavior is needed to build economic power.
Government relations are more than defensive in that they

have real "earning" potential and deserve as much attention
as efficient management within a firm and business
effectiveness within the marketplace (Boddewyn, 1975).

Another example of the potential economic gains may be
illustrated by examining protection. Stigler (1971) outlines

four categories of benefits that firms may get from
regulatory protection (or pursuing a "shelter" strategy as

defined by Rugman & Verbeke, 1993): direct subsidies; control
over entry into the market; power affecting substitutes and
complements; and price fixing. Specifically, Moran (1985)

calculates that seeking protection is one of the most
lucrative activities a firm can undertake, producing by some
estimates an average return of more than 200% on investment
(legal fees) per year, with the U.S. government picking up
almost 90% of the costs, no matter what the outcome.

Baron (1995) also argues that both market and nonmarket
strategies attempt to improve performance; market strategies

emphasize economic performance whereas nonmarket strategies
emphasize overall performance. He asserts that nonmarket
strategies have the potential to help realize competitive
advantage and also help offset competitive disadvantage, and
that both market and nonmarket strategies should be
18
considered in addressing and defending against market forces.

Baron calls for integrated strategy formulation, which
combines a market or competitive analysis and a nonmarket
analysis into a comprehensive strategy. To the extent that
individual firms are able to influence the nature and extent
of nonmarket forces such as the government, corporate
political behavior may be viewed as strategic (Salorio,

1993).
Like Boddewyn and colleagues, Baron contends that the
nonmarket environment should be treated as endogenous rather
than exogenous. By treating the government as endogenous,

when a firm looks to the future, neither the market or
nonmarket environment can be assumed to be static (1995: 58) .
Firms can and do influence the political agenda and the rules
of the game are never stable; government rules are in a state
of flux as new regulations and standards are passed almost
daily (Aharoni, 1993). Thus, firms have the ability to shape
government policy that affects business.
Businesses can use their influence in public affairs for

a number of strategic ends: to bolster their economic
positions; to hinder both their domestic and foreign

competitors' progress and ability to compete; and to exercise
their right to a voice in government affairs (Wood, 1986).
Similarly, Boddewyn (1993) outlines the goals of corporate
political behavior: profits, efficiency, power, hegemony,
survival, and legitimacy, each of which can individually
19
affect the strategic position of a firm. Through political
behavior, firms have the possibility of increasing overall

market size, gaining an advantage aimed at industry
competition, reducing the threats of substitutes and entry,
and increasing the bargaining power relative to suppliers and

customers (Gale & Buchholz, 1987).
Given the strategic implications of political behavior,

Gale and Buchholz (1987) argue that competition in public
policy is asfierce as competition in the market and that
politicalbehavior is animportant part of overall
competitive strategy. The public policy process is one
in which a variety of interests (business, social,
environmental, etc.) express their preferences on any issue.

These groups in essence "compete" for their preferences to be
the ones translated into policy. On some issues, competitors
in an industry may work toward a common goal, competing only
against outside interests (e.g. a trade association lobbying
for import restrictions against Chinese textiles). In other
cases, however, members of an industry may actually have

different preferences and compete against one another to
affect policy. For example, within the automobile industry,
companies that already produce fuel-efficient models may be
in favor of increased fuel-efficiency regulations while other
automobile companies may work against such measures in order
to avoid costly changes in existing products.
20
In many industries, the success of business in
Washington is no less important than business success in the

marketplace, and as a result it is critical for firms to
develop political behavior and strategies as a part of its

overall strategies (Oberman, 1993; Yoffie & Bergenstein,
1985). If the government is important to a firm's competitive
future, political behavior must be a business priority
(Yoffie, 1988).
Boddewyn (1975, 1993) and Mahon (1993) argue that

political advantages may also be a part of a firm's
competitive advantage. Aharoni asserts that "the capabilities
of the firm, to the extent they fit the environment (or when
the firm can shape the environment), are the major means by
which strategic advantage is won" (1993: 34). Firm political

behavior is an attempt to attain just this task — to shape
the market environment through nonmarket strategies, and to
the extent that a firm is successful, political behavior is

a potential means for strategic advantage.
Political Competencies and Firm Advantage
The Resource Based View of the firm (Barney, 1986, 1991;
Penrose, 1959; Peteraf, 1993; Rumelt, 1984) holds that a

firm's competencies that are rare, inimitable, non-
substitutable, and create value for a firm may result in
sustained competitive advantage. Boddewyn (1993) argues that
political competencies, which are not commonly discussed by
21
the Resource Based View, may be important to competitive
advantage. Political competencies may include better

intelligence about the nonmarket environment; better access
to decision and opinion makers; better bargaining and
nonbargaining skills; money; and other tools such as

reputation, coalition-building ability and political
entrepreneurship (Boddewyn & Brewer, 1994). Alternatively,

they may be viewed as nonmarket assets such as expertise and
competency in dealing with nonmarket forces and a reputation
for responsible behavior (Baron, 1995). Baron asserts that

"at any instant in time, these distinctive competencies and
firm-specific nonmarket assets are fixed, but over time they
can be developed or lost" (1995: 61). Keim and Baysinger

(1988) apply the qualities of imperfect imitation and value
to political tactics and argue that many political
competencies may be unique to a given firm, create value, and
be imperfectly imitable. While some political competencies
such as money, information, and sometimes access are a result
of human resources that may be imitated or hired away from a

particular firm, many political competencies may not be
imitable. Reputation and long-term dealings with political
decision-makers may not be so easily duplicated or
substituted. In addition, many aspects of political

competencies are embedded in past events, or are path
dependent (Arthur, 1989; North, 1990) . For example, a firm,
or interest group may develop a relationship with a
Reproduced with permission of the copyright owner. Further reproduction prohibited w ithout permission.
22
particular politician early in his/her career. Through time,
the politician learns to depend on the firm for credible

information and other resources. Later, this politician is
elected as a House Leader, or other position carrying more
influence or power. Because this relationship was developed

early on, the firm may enjoy access that a new firm
attempting to build a relationship with the leader may not.

As far back as 1970, Kindleberger asserted that a firm's
political power may be retained longer than economic power
because political changes are less frequent than economic or
market changes and political boundaries are more clearly

defined than are markets. This creates the possibility for
a sustainable political advantage (Boddewyn, 1993), and
potentially has an impact on the skills a firm and its
managers need in order to succeed (Leone, 1979) . This source
of competitive advantage, however, is not infinitely
sustainable in that the value of organizational strategies
and capabilities such as political competencies is context

dependent (Collis, 1994).
Success in political behavior is not limited merely to

success in Washington as Yoffie and colleagues argue, because
many businesses are increasingly international. Political

behavior constitutes an intrinsic part of international
behavior given the inherently political nature of MNE
operation across national borders (Boddewyn & Brewer, 1994;
Doz, 1986). While Aharoni (1993) argues that a domestic
23
firm that cannot catch up with MNEs can still command higher
than average profits by generating rents through political
action, the same potential for rents holds for any firm,
foreign or domestic, that is successful in creating a

political advantage (Boddewyn, 1993). In addition, crossing
national borders generates additional strategic options that
may be missing in uni-national settings because some

political behavior is possible abroad that is not at home,
and because international business activities offer leverage
through the opportunity to play one government off another
(Boddewyn, 1993) .
Given the importance of government to corporate
strategy and the necessity for political behavior to take

advantage of nonmarket opportunities or to neutralize
nonmarket threats, a more detailed examination of the

objectives of political behavior and the general categories
of political behavior developed in past literature will be

examined.
The Objectives of Corporate Political Behavior and Some
General Categories of Corporate Political Behavior
In general, corporate political behavior is an attempt
to use the power of government in order to gain private ends
(Mitnick, 1993). The overall objective of political behavior
is to produce public policy outcomes that are favorable to
the firm's continued economic survival and success
24
(Baysinger, 1984; Keim & Baysinger, 1988). Because

corporations cannot vote in the political process as distinct
entities and are prohibited from direct contributions to
political decision-makers, Shipper and Jennings (1984) argue
that firms must develop other strategies to become
politically involved and influence the policy process.
Baysinger (1984) identified three results of firm
political activity: domain management, domain defense, and
domain maintenance. The goal of the domain management
objective is to gain at the expense of others. These gains
may be the result of subsidies, rent-seeking, tariffs, or
other anticompetitive measures. Domain defense, on the other
hand, refers to challenging and rebuffing threats that exist
to organizational goals and purposes. Domain defense relies
primarily on public relations and other position defending
mechanisms. Finally, domain maintenance focuses on
challenging threats to the methods by which organizational
goals and purposes are pursued.
Domain management, defense, and maintenance may be
pursued through a variety of means, or tactics. One method
is through the electoral process by using PAC contributions,
in-kind support, or grassroots mobilization. Another method
is focused directly on the legislative and regulatory process
by using techniques such as lobbying, having a Washington
office, testifying at agency or committee hearings,
establishing good public relations, and belonging to trade
associations.
25
While these objectives and growing interest in

government explain why firms become active in politics, they
do not explain the particular strategies or forms of
political behavior that firms choose. Boddewyn and Brewer
(1994) make the assertion that business political behavior

may take one of two distinct forms: bargaining or
nonbargaining. Bargaining refers to direct participation in
the public policy process, either by creating a consultative

partnership with the government or through more conflictual
means, e.g., applying pressure against a proposed policy.
Nonbargaining political behavior does not involve political
decision-makers as targets. Rather, a nonbargaining form of
political behavior refers to compliance with regulation,

avoidance of regulation, or circumvention of regulation.
Similarly, Weidenbaum (1980) outlines three general

business responses to public policy: passive reaction,
positive anticipation, and public policy shaping. The first,
passive reaction is similar to Boddewyn and Brewer's

nonbargaining forms. No attempts are made to play a role in
policy formulation or implementation; rather, corporations

just react to new legislation post-hoc. Positive anticipation
denotes more of an active role in public policy, but still
does not include participation in the process. Rather,

positive anticipation refers to factoring government policy
into the planning process of the firm. In this response
method, firms try to anticipate future regulations and make
26
adjustments accordingly to their strategies, thereby, turning

regulation into a business opportunity. Finally, public
policy shaping is the method most similar to the bargaining
form discussed by Boddewyn and Brewer (1994) . The three

general objectives of political behavior discussed by
Baysinger (1984) also seem to fit into Weidenbaum's category
of public policy shaping. While Baysinger does not explicitly
discuss whether these objectives should be pursued reactively

or proactively, the tactics outlined to achieve these goals
and the nature of the goals themselves clearly implies a

proactive strategy.
While corporate political behavior may be proactive or
reactive in general, efforts to anticipate political problems

and to set political objectives have become essential for
firms today; simply imitating some competitor's move and

coping with a problem on an ad hoc or crisis basis are poor
ways of handling government relations (Boddewyn, 1993; Keim,
1981). As Weidenbaum so aptly put it, "public policy is no

longer a spectator sport for business" (1980:46). Purely
reacting to legislation is not sufficient if political

behavior is to become an integral part of firm strategy.
Instead, firms must become proactive in order to achieve the
objectives and potential benefits from political behavior
(Keim, 1981). Political behavior such as passive reaction or

using nonbargaining forms of responses negates the
possibility of firm influence in the policy process and its
27
resultant benefits. Therefore, this study will focus on the

strategic form of political behavior, or the proactive means
of influencing policy across nations. However, as alluded to

by the variety of tactics discussed by Baysinger (1984), a
proactive approach may entail a number of specific tactics
and strategies. Given this, a more detailed examination of
the particular tactics available to firms is necessary to

then predict when particular tactics may be used.
Corporate Political Tactics and Strategies
To date, no generally accepted or uniform classification

of corporate political tactics exists in the literature.
Scholars have previously categorized these tactics in a
variety of ways. Therefore, this review examines existing
types before identifying the chosen classification scheme for
the present study. In addition, the reviewed studies do not
make a distinction between "strategies" and "tactics" as is
commonly made in strategic management research. Therefore,

these terms will be used interchangeably throughout my review
in accordance with the use chosen by the author(s) cited,

while the development of a classification scheme for the
present study will discuss the difference between tactics and
strategies.
In general, most of the existing taxonomies of tactics

in the literature may be classified into three implementation
levels as discussed by Schollhammer (1975): collective
28
action, action by individual corporations, and action taken

by individuals within the organization such as executives.
Leone (1969) argued that political savvy was a necessary

resource for managers to succeed in an increasingly regulated
environment. Indeed, even recent surveys of key legislative

assistants have identified lobbying by executives or direct
contact by executives as the second most effective political
tactic (Lord, 1995). Therefore, general strategies may be

implemented at three different levels within and among firms.
Similar to these three levels of implementation are the
three general approaches to corporate political strategy

outlined by Oberman (1993). These approaches are delineated
as: bottom-up approaches, which include efforts to use
individual voter pressure such as grassroots building, or

advocacy advertising; top-down approaches, such as PAC
contributions or lobbying efforts instigated by the top
levels of an organization; and evolutionary approaches, which
emphasize developing a pattern of behavior over time.

Yoffie (1987) develops a list of five general political
strategies at the collective and individual firm levels that
organizations may adopt: l) free rider, 2) follower, 3)
leader, 4) private goods, and 5) entrepreneur, each of which

Oberman would classify as top-down approaches. Given the
nature of the public policy process where many organized
groups compete for their policy preferences, it is rational
for some of these groups, or organizations, to free-ride or
29
leave participation in politics to others. Many aspects of

public policies are collective in nature; that is,
consumption cannot be determined based on who contributed to
the production of the policy. For example, if a group of
steel companies lobbied for trade restrictions against
imported steel and succeeded, these restrictions would
benefit all firms in the steel industry, not only the firms
that participated in the lobbying effort. Thus, given the
collective nature of the good, and the low marginal
probability of being able to affect the policy, many firms
may opt out of the political process. However, private goods
are also a part of more collective action; that is, some

firms may benefit more from these collective goods than
others, e.g., market leaders. Yoffie contends that
corporations will follow a free-rider strategy only if the
political issue is of low salience or if resources for
political action are limited.
Alternatively, firms may choose to be followers or
leaders in group political activity. Firms are likely to
participate in group political action, or be followers, as
long as they perceive some strategic salience and they are

not seriously constrained in terms of resources. However,
for a firm to be a leader depends largely on the salience of
the issue for the firm, as well as having sufficient
resources for political action.
30
The private goods strategy, on the other hand, focuses

on the production of purely private goods for an individual
firm. When group activities are difficult due to a lack of
consensus, or monopoly rents are possible, firms may have the
motivation to seek private goods. However, to pursue a
private goods strategy, a large amount of financial and human
resources is necessary, making this a more short-term

strategy.
Finally, Yoffie asserts that firms may use a political
entrepreneur strategy. Political entrepreneurs may use
limited resources to mobilize ad hoc coalitions to secure

access to key decision-makers and influence the policy
process on an issue specific basis.

For Yoffie, these five types of political strategies
depend upon two variables: issue salience and resources
(financial, human, and relational). However, Buchholz takes
a different approach to the types of strategies used.
Instead of salience and resources being the primary
determinant of strategies, Buchholz (1992) ties corporate
political tactics to the issue life-cycle. The concept of the
issue life-cycle states that public policy issues go through

distinct stages: public opinion formation where the general
public is getting interested in an issue and the issue is
becoming a part of the political agenda; public policy
formation in which the issue is actually being considered by

legislatures and voted upon; and public policy implementation
31
wherein the policy has been passed by the legislature and is

being implemented as law.
During these distinct stages of the issue life-cycle,

Buchholz argues that different types of political strategies
will be effective. During public opinion formation bottom-up
approaches (Oberman, 1993) or tactics such as: advocacy
advertising (Sethi, 1982) (public advertising of the

company's position in the media); public image advertising
(advertisements are not focused on the issue per se but on
the overall image of the company, such as the
environmentally-friendly commercials Exxon used after the

Valdes oil spill); economic education (attempts by the
company to educate the public as to potential costs and/or
benefits of certain issues); or other "communication
strategies" may be used to help shape public opinion and
influence the political agenda. While the issue is in the
formation stage, however, Buchholz recommends that

"participation strategies," or more top-down approaches
(Oberman, 1993) be used. These include lobbying individually,

lobbying as a part of a trade association, making PAC
contributions, or other constituency building techniques
(Baysinger, Keim, & Zeithaml, 1985; Keim, 1981) such as
grassroots mobilization by firm employees, suppliers, or
retirees, or coalition building with other companies and
interest groups on an ad hoc basis rather than through trade
associations. Both communication strategies and participation
32
strategies are primarily proactive in that they focus on
affecting an issue before the policy is drafted. Buchholz
recommends that compliance strategies, on the other hand, be

used as a reactive response once a law has been passed and is
in the implementation stage. Compliance strategies may

include strategies such as fighting the issue through the
court system, complying with the regulation, noncompliance,

or perhaps, creating a new issue (cycling back through the
issue life-cycle) that changes the position of the first one.

Aplin and Hegarty (198 0) also develop a categorization
of political strategies for the political influence process.
Their categories of influence strategies include information,
public exposure/appeal, direct pressure, and political. The
information strategy includes activities such as serving as
expert witnesses, making personal visits to policy makers,

providing specific arguments or positions to decision-makers,
and writing technical reports on issues. Public exposure/
appeal tactics, on the other hand, are focused not on the

decision-makers but on the public, who in turn influence the
policy-makers. These tactics include such activities as
publishing politicians' voting records, using third party

influence, mounting letter-writing campaigns, and media
campaigns such as the advertising and communication

strategies discussed by Buchholz (1992). Direct pressure
tactics include PAC contributions or other types of financial
support and threat of harm. Finally, political tactics of
33
influence consist of constituent contact and colleague

contact.
Keim and Zeithaml (1986) use a similar logic in

discussing the choice among these strategies as did Yoffie
(1987). The authors argue that a firm's political strategy is
influenced in part by the salience of the political issue and
by the reelection goals of legislators. They further assert
that the probability of political action is based upon the

probability that individual action will lead to collective
benefits, the value of the collective benefit, the expected
value of the collective benefit to the individual firm, the

value of any private or select benefits, and the costs of the
political action. Although the authors suggest that
political strategies are a result of a cost/benefit analysis
and rely on issue salience and the goals of legislators, no
specific theory is developed on how cost/benefit analysis
leads to the choice of a particular tactic. Rather, the
calculation of cost and benefit leads to the decision of
whether or not to take political action.

Getz's (1993) taxonomy of political tactics contains
many of the tactics considered by other scholars: lobbying,
reporting research results, reporting survey results,

testifying at hearings, building constituencies, and taking
legal action once a regulation is passed, but also includes

a seventh type of tactic not mentioned in previous literature
— personal service. Getz defines personal service as having
34
a firm member serve in a political capacity. Examples of
personal service include firm members running for local,

state, or federal office or as a state or federal appointee.
Hillman, Bierman, and Zardkoohi (1995) theorize that firm

benefits may accrue from such a strategy through a possible
increase in influence or access to political decision-makers.
Although these authors do not contend that personal service
is always a conscious strategy used by firms to influence the
policy process, it nonetheless is a method for influence

and/or access.
Ricks, Toyne, and Martinez (1990) also identify
frequently used political approaches used by businesses, but
their emphasis is on international rather than domestic

firms. These authors identify four approaches commonly used
by international businesses: international political risk
forecasting, lobbying for favorable host government
treatment, lobbying for home government assistance, and
attempting to protect local operations from host government

intervention. While the two forms of lobbying clearly fit
into other commonly discussed political strategies, risk

forecasting is not a strategy used to influence public
policy, but is rather a tool of country analysis. Similarly,
the fourth approach of protecting operations from government
intervention seems to be more of an objective than a

political approach.
35
Given the previous research identifying types of
political strategies, it may seem unnecessary to add yet
another classification scheme to research in this area.
However, the diversity of current classifications indicates

the lack of consensus among scholars as to an appropriate
categorization. Furthermore, a review of existing

classifications suggests that no one taxonomy is truly
comprehensive of all the tactics/strategies identified
throughout the literature. Therefore, for the purpose of this

study, several aspects of each of these classifications have
been combined for a taxonomy that categorizes political

tactics into four mutually exclusive sets of strategies (Doty
& Glick, 1994) .

It is important to note that while previous literature
on corporate political behavior has used the terms
"strategies" and "tactics" interchangeably and failed to
differentiate between the two terms, traditional strategic
management research has defined the terms quite differently.

Traditional strategy research has referred to "strategies" as
more long-term and involving a great deal of resources and
commitment. "Tactics," on the other hand, generally refer to
a more short-term activity designed to fine-tune strategy and
that does not involve as large a commitment of resources. In
keeping with this tradition, the following taxonomy is based

on four general types of strategies to affect political
policy — information, direct access/pressure, constituency
36
building, and cooperative strategies. The information

strategy seeks to affect public policy by providing policy
makers specific information regarding the costs and benefits
of an issue and/or arguing the firm's position on the issue.

Direct access/pressure, on the other hand, is a strategy that
attempts to influence public policy by directly altering the
incentives of the policy-makers through the provision of
financial support. While in both the information strategy
and direct access/pressure the direct target of the

strategies is political decision makers themselves,
constituency building and cooperative strategies target

others with the goal that these individuals or groups will
then contact political decision makers. Constituency building

as a strategy attempts to influence public policy through
gaining support of individual voters who, in turn, will
express their policy preferences to political decision
makers. Finally, a cooperative strategy is utilized by
working with other interest groups that represent shared
policy preferences to political decision-makers. The

categorization of strategies below is based upon my
interpretation of the strategic methods that firms use to
affect public policy. Firms themselves may not recognize the
specific type of strategy used, but will be able to identify

the behavioral tactics that constitute such strategies. Each
of these four types of strategies incorporates a variety of
specific behaviors or tactics that may be used by firms.
37
These tactics are specific political behaviors that may be

used repeatedly, but do not necessarily constitute a strategy
individually.
1) Information Strategy. This includes tactics such as

lobbying, both professionally and by executives; reporting of
research and survey results; testifying as expert witnesses

and before hearings, etc.; and supplying decision-makers
with position papers or technical reports.
2) Direct Access/pressure Strategy. This includes such
tactics as providing financial support either through PAC
contributions or other means, e.g., honorariums for speaking,

paid travel expenses, etc.; personal service; and hiring
personnel with direct political experience. This category of
political strategy is similar to that of "absorption"
described by Ring, Lenway, and Govekar (1990) in that these
actions attempt to absorb a part of the external political

environment into the firm, either by hiring or direct
financial incentives.
3) Constituency Building Strategy. This includes such
tactics as grassroots mobilization of employees, customers,
suppliers, retirees or other individuals linked to the firm;
advocacy advertising; public image advertising; and economic

or political education. The targets of a constituency
building strategy are individuals linked to the firm or
individual societal members.
38
4) Cooperative Strategy. This includes tactics such as
forming coalitions with other interest groups as opposed to

individuals; joining trade associations or other associations
of industry members and working through these groups to
affect policy. A cooperative strategy differs from
constituency building in that it targets other groups instead

of individuals to work with.
Discussions of corporate political behavior generally

fail to distinguish between relatively long- and short-term
approaches to affecting public policy. Many corporations are
pursuing political strategies over the long term, rather than

on an issue-by-issue basis. Instead of monitoring public
interest and becoming involved only in specific issues, many

firms are attempting to build relationships with key
political decision-makers in the U.S. and in other countries

across issues and over time.
One trend that supports political behavior across issues
is the existence of a Washington office. In the U.S., the
number of firms with Washington offices has risen

dramatically over the last two decades (Walker, 1991). The
existence of these offices (given the expense of having full
time representation in the Capital) implies that firms are

concerned with government relations across issues and across
time.
In addition to the growing number of Washington offices,
government relations functions within firms are receiving
39
increased attention (Fleisher, Brenner, Burke, Dodd-McCue, &

Rogers, 1993). This long-term political emphasis (as
witnessed in practice) has not been explicitly discussed in
the literature on corporate political strategies although the

increase in Washington offices and in the perceived
importance of the government relations function within firms
is widely accepted (Baetz & Fleisher, 1994). One exception is

Yoffie, who asserts that executives must bring to politics
the same long term perspectives they apply to marketing and
investment decisions (1988:80). Especially when one removes
him/herself from a purely U.S.- focused view of political

activity and considers the variety of political institutions
and cultures around the world, one sees that this distinction
between ad hoc or transactional attempts to influence policy

and the more long-term or relational attempts to influence
policy is critical to our understanding of the use of
political strategies.
One article that does make the distinction between
frequent and infrequent interactions in the policy process is

Marcus, Kaufman, and Beam (1987). These authors propose a
two-by-two matrix for classifying tactics, with interaction
frequency and the specificity of assets as the two axes.

(They define specific as requiring industry-wide managerial
skills to win collective benefits, non-specific as requiring
investments pertaining to expertise in instituting and
monitoring interactions in the government, and dichotomize
40
frequency as "frequent" or "infrequent"). However, this

distinction between specific and nonspecific assets and the
frequency of interaction variables identified by Marcus, et
al. (1987) is still primarily an issue-specific or tactical

determination (i.e., on a given issue, a determination is to
be made concerning whether it is necessary for nonspecific or

specific assets to be used to affect the policy). Therefore,
although the authors acknowledge that the frequency of
interactions may be an important determinant of the type of

political tactic used, they do not discuss the role of
relationships over time and issues per se or the difference
between political tactics and strategies. As each of the
four types of political strategies categorized above may be
used on an ad hoc basis either by issue or in an on-going

manner, in this study I distinguish both between
transactional and relational approaches to the four general
types of political strategies listed above.
With this more comprehensive classification of corporate
political strategies, attention may now turn to the
circumstances under which each type of strategy may be used
and the possible variables that may affect the choice of such
actions.
The Choice of Corporate Political Strategies
Although some of the research reviewed above identifies

variables that may affect the use of one type of political
41
strategy/tactic over others (Buchholz, 1992; Keim & Zeithaml,
1986; Yoffie, 1987), Boddewyn states that "more research

should be paid to the process of political strategy formation
in international firms" (1993:92). This call for a better

understanding of political strategy formulation within
international firms has been paralleled by a call for more

understanding of the choice of political strategies
domestically (Getz, 1993; Yoffie Se Bergenstein, 1985).

Mitnick argues that although corporate political activity has
been a subject of attention in many areas, we still cannot
explain why certain strategies are adopted under certain
conditions (1993).
As noted earlier, Yoffie (1987) argues that two

variables affect the choice of political strategies: issue
salienceand firm (both financial and human) resources.
Buchholz (1992), on the other hand, ignores both issue
salience and firm resources and bases his theory of the
choice of tactics upon the stages of the issue life-cycle.

Getz (1993) develops a model in which both of these theories
are combined in a principle-agent context.
For Getz, the choice of corporate political tactics

depends upon the existence of agency problems. She bases her
theory on the problems that occur as a result of the
separation between principal and agent (Jensen & Meckling,
1976; Fama & Jensen, 1983), where, in this case, the
principal is the firm and the government is the agent charged
42
with passing policy in the interest of the principal. The

convergence of interests between the principal and the agent,
however, is difficult in that the government is the agent not
only of business, but also of many different groups and

individuals. Getz identifies four types of agency problems
that may exist between the firm and government: 1) knowledge
problems wherein the government does not know the interests
of business or the cost/benefits of proposed policies; 2)

disposition problems where policy-makers must be induced
either implicitly or explicitly to support a firm's cause; 3)
capacity problems wherein policy-makers lack the skill to

form policy in the interest of the firm; and 4) effort
problems where getting an issue of interest to the firm on
the political agenda is difficult.

Getz's model of the choice of political tactics is shown
in Figure 2.1. Getz theorizes first that the policy type and
the stage of the issue life-cycle interact with one another

to affect, and also independently affect, the target type of
the political tactic (legislative, judicial, or executive
branch). Then, the type of agency problems discussed above

mediates this target type to determine the type of political
tactic chosen. Getz also theorizes that firm and industry
variables such as the degree of regulation in the industry
and the resources of the firm may moderate the type of agency
problems that exist and the choice of political tactics given
the agency problems and target type. However, Getz develops
FIGURE 2.1
Getz's Model of Political Tactic Choice
Target
Type
Corporate
Agency
Political
Problems
Policy Tactic
Life Cycle
Type Stage
Organizational
&lndusty Variables
U>
44
propositions without consideration of these industry and
organizational variables and without formally stating what

these variables are likely to include. In addition, the
propositions and theory Getz develops do not specify whether

the model is indicative only of the U.S. process, or whether
it also may apply to the interaction between business and

government in other countries.
While her work represents a positive step in our
understanding of the choice of political strategies, the lack

of clearly defined industry- and company-specific variables
leaves significant unanswered questions, particularly in the
case of international firms. Each country's policy process

is distinct and has idiosyncratic institutional variables
that may affect the choice of strategies. Baron (1995) argues

that a global or international nonmarket strategy seems
unlikely to be successful, because strategy must take into
account the institutions and other country-specific factors.
Government relations are "polycentric" or locally-oriented

functions in that the choice of political strategies will be
greatly influenced by country-specific institutions (Hillman
& Keim, 1995a). Situations differ as to the political
response needed to policy in light of such factors as the

size, age, experience, and tradition of the company, its
industry and the market it serves, as well as the political-
ideological configuration and the stage of development of the
host country (Boddewyn, 1975) . In other words, each nonmarket
45
environment creates distinct political responses and behavior

(Doz, 1986). Thus, institutional variables as well as
organizational and industry variables are likely to affect
the choice of corporate political strategies.
Another criticism of Getz1s model stems from the
implication of agency problems as a mediating variable.
While the type of agency problems that may exist between a
firm and the government is helpful in the abstract to our

understanding of why principal-agent problems exist in this
context, Getz develops her model as a tool for prediction.
Humans are boundedly rational (March and Simon, 1957) and by
virtue of the fact that organizations are comprised of
individuals, organizations cannot be viewed as totally

rational.
The incorporation of a mediating variable in Getz1s
model based on types of agency problems that exist across
situations seems to imply that organizations are rational.
Because firms cannot directly vote for or contribute money to
an individual policy- maker, and because of the multitude of
constituent interests a politician must attempt to represent,
agency problems no doubt exist. However, in formulating
political strategies and choosing one tactic over another, a

firm in Getz's model must be able to identify the exact type
of agency problem that exists between the firm's interest and
the representation of each individual politician involved

with the issue.
46
In Getz's model, the type of agency problem mediates the

effect of the issue type, life-cycle stage, and target. The
implications of this model are that firms not only must have
information with regard to any given issue of interest in
terms of how each politician is representing its interests,

but also must understand how to "fix" the agency problems.
That is, if the firm believes that knowledge problems exist,
executives will then supply knowledge. Similarly, if the
firm perceives that an individual policy-maker lacks the
skill to represent its interest, executives will choose to
educate this individual or select a new person to replace
him/her. Each type of agency problem in the taxonomy is

useful theoretically in understanding the potential existence
of agency problems, but the assumption that the firm is
capable of identifying the type of agency problem created in
every issue context for each individual decision-maker
assumes an unreasonable amount of rationality. Instead, the

types of agency problems identified by Getz provide a
persuasive argument for why firms must try to affect public
policy — politicians may not be acting in the firm's

interest because of these agency problems — but not for a
mediator role in determining choice of political tactic.
Another concern over Getz's model stems from the lack of

distinction between ad hoc approaches (transactional) and
more long-term approaches (relational). Getz's adoption of
Buchholz's (1992) issue-life cycle concept indicates that the
47
choice of corporate political strategies is made on an issue-

by-issue basis. For any given issue, the choice of political
tactics depends upon the issue type (whether it is a social,
economic, political, or technological issue (Wilson, 1977)),

the target of the corporate political action, and the stage
of the issue life cycle in which an issue exists. Thus, the
context of each issue is evaluated in order to choose
corporate political tactics. This model does not leave room
for predicting the choice of long-term corporate political
strategies that exist over time and across issues as the case
with a more relational approach to the policy process. For
example, the decision to join a trade association may not be
re-evaluated with each issue that may potentially affect the
firm. Instead, this strategy may be a long-term approach to

the policy process and not based on any specific issue.
By adopting Buchholz's (1992) life-cycle model of
issues, we see that other simplifying assumptions are

presumably being made by Getz. Given that the interest in
the study at hand lies in proactive political strategies, I
will focus on the stages of public opinion formation and
public policy formulation in my critique of Buchholz's issue
life-cycle model and the adoption of such by Getz. (Oddly,
although Getz adopts this life cycle-concept, she only
includes one of the possible strategies reviewed by Buchholz

for use in the policy implementation stage — the legal
action tactic.) The difference in the tactics used during
48
the two stages of public opinion and public policy

formulation lies in the target of the strategies. Buchholz
argues that in the public opinion stages, firms should target

the general public and other individuals who will then
express their policy preferences to their legislators.
Buchholz's simplifying assumption, and that by Getz through
her adoption of Buchholz's model, is that constituents'

pressure for their policy preferences is no longer effective
once legislators put the issue on the agenda. Although it
seems clear that constituent pressure may play a great role

in the form an issue takes on the agenda, it may also
influence the formulation of the actual public policy. No
research to date has suggested that the influence of

constituents wanes after the issue has become part of the
political agenda.
Another simplifying assumption made by Buchholz in
distinguishing between tactics used during these two "stages"

is that the tactics recommended during policy formulation
such as lobbying are not effective in putting issues on the
agenda and shaping public opinion. But, some policy issues

are considered by policy-makers without a groundswell of
public opinion or pressure (Baumgartner & Jones, 1993) . For
example, polls showed that prior to the Clinton's election in
the U.S., crime was the number one issue for the general
public. However, after the Clinton administration's intense
focus on healthcare and the pressure the administration put
49
on Congress to make healthcare a priority, healthcare became

a major issue for legislators and the public. This practical
example shows that while public opinion may provide the
impetus for some policy considerations, it is possible for

policy to be placed on the political agenda without strong
public opinion or in tandem with growing public interest.
Therefore, the assumption that different strategies are

appropriate at distinct stages (the point at which an issue
crosses from one stage to the other is never clearly
characterized by Buchholz) may be misleading.
Furthermore, Getz agrees with Buchholz that each stage
of the issue life-cycle is differentiated from the others in
terms of the target of the corporate political activity.

Buchholz argues that during public opinion, the public should
be targeted. During the stage of public policy formulation,
the decision-makers should be the target of political
tactics. Instead, both types of strategies advocated by
Buchholz during these stages, communication and
participation, may be used interchangeably, or as complements
during any stage of policy formation (proactive strategies).

Finally, during implementation, the courts become the target
of the strategy. Thus, the issue life-cycle concept
explicitly includes a consideration of targets that Getz then

depicts as a separate independent variable interacting with
issue type and life-cycle stage in her model. By adopting
both the issue life-cycle and target as independent variables
50
in her model, Getz appears to discount the role of target
within the issue-life cycle and unfortunately, does not
explicitly discuss why her choice was made or the theory
behind including both variables. In summary, while Getz
provides a needed starting point for a theory of corporate

political strategy formulation, questions are left unanswered
and simplifying assumptions are made which may reduce the
predictive validity of the model.
Oberman (1993) also develops a model of political action
choice, represented in Figure 2.2. For Oberman, firms can
treat social and political institutions as firm resources,
effectively creating what he terms "institutional resources."
He asserts that particular influence activities are chosen by
firms on the basis of the perception of their own political
resources and the resources of potential political opponents,
although Oberman fails to identify these resources.
Oberman's model is basically a depiction of the SWOT
(strengths, weaknesses, opportunities, and threats) analysis
in a political action context. Within the environmental
context, external institutional resources and perceived
threats and opportunities are evaluated along with internal
political resources of the firm to form objectives or
strategic choice. These internal resources as well as the
resources of policy antagonists combined with these
formulated objectives result in an action policy choice and
eventually the path of evaluation results in tactic choice
(activity and the collective versus coalitional setting).
Figure 2.2
Oberman*s Model of Political Strategy Formulation
Objectives
Resources
Strategy Choice Action Tactic Choice
External Institutions Policy -Activity Type
Choice -Collective/
Actor’s Coalitional
Threats Political Setting
Opportunites Resources
Politcy Antagonist’s
Political Resources
U1
52
While both Getz's and Oberman's models depict firm and

industry variables in the path of political tactic choice,
Oberman's model explicitly includes institutional variables
specific to the policy process within which the firm
operates. Clearly this model incorporates the polycentric
institutional variables called for by scholars in
international strategy. However, Oberman's model does not add
anything new to common depictions of the strategy formulation
process found in many strategic management textbooks, aside
from applying strategy formulation concepts to political
strategy. In addition, it is unfortunate that Oberman does
not explicitly identify specific firm, industry, or
institutional variables that may affect this choice in the
context of political strategies. Rather, the Oberman and Getz
theoretical models do not provide sufficient specificity to
allow for empirical testing.
A General Model of the Choice of Proactive Corporate

Political Strategies
Given the relative lack of attention paid to the
variables that may affect the choice of political strategies
in past literature, this area is a fruitful one for research.
Therefore, I propose a general model based on the work of and
questions posed within Getz (1993) and Oberman (1993) in
which firm-specific, industry, and country-specific or
institutional variables affect the choice of corporate
political strategies as depicted in Figure 2.3.
FIGURE 2.3
A General Model of Proactive Political Strategy Choice
Firm-Specific
Variables
Choice of Political
Tactics/Strategies
Industry -Information
Variables -Direct Access/
Pressure
-Constituency Buildinc
-Cooperative
Institutional/
Country-Specific
Variables
Ul
CO
54
Due to the desire to develop a model which allows for
the formulation of long-term relational approaches as well as

transactional approaches to political strategy and to focus
on proactive approaches rather than reactive, I have chosen

not to incorporate the concept of the issue life-cycle. As
asserted in the review of Getz's model, the simplifying

assumptions of the issue life-cycle with regard to when a
particular proactive tactic is effective devalues the utility
of defining a stage as either public opinion formation or
public policy formulation. Because of both my focus on
proactive strategies and the difficulty in distinguishing

between whether a given issue is in one stage or the other,
the model depicted in Figure 2.3 does not incorporate the
issue-life cycle.
Instead, the model depicted in Figure 2.3 represents
three categories of independent variables: firm-specific,
institutional (country-specific), and industry which
independently may affect the likelihood of choosing a

particular category of political tactic or strategy. It is
important to note that the choice of one particular type of
strategy or tactic does not preclude the use of others.
Mahon (1993) notes that several types of political behavior
may be used simultaneously. Grant's study of political
interest groups including business in the European Union
states that "of course, interest groups are not so naive as
to rely solely on one channel of access" (1993: 129).
55
Therefore, the model depicted in Figure 2.3 is not intended
to portray a choice of one strategy over another. Rather,
the relationship between the independent variables and the
choice whether to use each type of strategy is discussed.

Each category of independent variables is discussed
separately in the remaining sections of this chapter. The
hypothesized relationships between each category of
independent variables and the choice of corporate political
strategies are examined. Specific variables within each
category are identified and formal hypotheses developed as to

their effect on the choice of each type of political strategy
or tactic. This method of organization was adopted to

identify which variables within the three general levels of
firm, institutional, and industry may affect the choice of
the four types of political strategies, as well as the

potential effects of such variables on the overall relational
versus transactional approach to political behavior.
Firm-specific Variables
A critical part of strategy formulation is an internal
analysis of strengths and core competencies that affect the

relative success or failure of certain strategies relative to
others. These internal variables are no less important to

the formulation of political strategies. Although the
literature to date does not specifically address the
relationship between firm variables and specific strategy
56
choice, many firm-specific variables have been linked to

corporate political activity in the past.
Financial Resources. Finer (1955) developed a list of
five factors that create political power, one being the
amount of disposable funds within the organization. Many

authors since this time have similarly argued that firm
resources have an impact on the decision to be politically
active, and/or theorized that financial resources may affect
the choice of strategies (Getz, 1993; Keim & Baysinger, 1988;
Masters & Keim, 1985; Salamon & Seigfried, 1977; Yoffie,
1987) . While firm resources, in general, may affect the
decision to become politically active, the different types of

strategies available to firms in the political process entail
varying commitments of financial resources. For example,
Masters and Keim (1985) assert that the financial resource
base of a firm will have an affect on the formation of PACs

through the existence of more slack resources to be devoted
to political activity such as the solicitation of donations
and administration of PACs.
In general, participating in public policy on an ad-hoc
or transactional basis entails a smaller commitment of
financial resources than does a relational approach.

Attempts to maintain access and/or influence with groups of
individuals (as in constituency building) or with political
decision-makers (direct access/pressure, or information), or
other groups (cooperative) over time, is much more resource
57
intensive than one-time attempts. Therefore,
Hypothesis 1: The larger a firm's financial resources,
the greater the likelihood of the firm using a
relational approach to political strategies.
However, in addition to affecting the general approach

to political activity, financial resources may also affect
the use of certain types of strategies. Cooperative
strategies are based on collective action between a firm and

other firms or interest groups. Whether firms cooperate on an
issue-specific basis with other groups from society with a
similar policy preference, or over time within a trade

association, one of the benefits of collective action is a
reduction in cost for each individual firm (Olson, 1965) and
the pooling of resources (Chong, 1991). For example, by
joining a trade association, all of the member firms enjoy
policy participation at a lower cost than they would

individually. Instead of each firm monitoring the political
process and then attempting to influence this process alone,
the trade association performs these functions, thereby

creating economies of scale. The information that the
association gathers is disseminated to all of its members at
a lower cost per member than would be possible with

individual participation. Typically, the membership dues for
individual firms within a trade association vary with the
58
size of the firm. The larger members of the interest group

usually bear a proportionate (greater) burden of the costs
(Walker, 1991). While the costs of membership may vary,
however, the group is still able to achieve results at a

lower cost per member than individual efforts.
Information strategies, on the other hand, are
financially intensive if these activities are conducted
individually. Instead of working to affect policy as a group,
individual firms must bear the cost of hiring lobbyists or

internally developing lobbyists, conducting research, writing
technical reports, and disseminating this information to

individual policy-makers. Not only is this more financially
intensive with regard to monetary payments to researchers,

lobbyists, etc., but also with regard to the time spent to
gather information and to gain expertise.
Similarly, direct access/pressure entails making
financial contributions, giving other financial incentives,
or hiring personnel with direct political experience, all of
which are more dependent on financial resources than

cooperative strategies. While U.S. firms may be prevented
from legally donating campaign financing or other financial

benefits to a candidate for political office, in many other
countries firms may donate an unlimited amount to the
candidate of their choice, thus increasing the price of this

strategy. In addition, while cooperative strategies may only
entail paying dues to a trade association, if they involve
59
hiring an individual with the desired political expertise,

they may be expensive. Often, individuals leaving high-
ranking political positions are solicited to join many

private firms, which bids up the price of that resource
(Brady, 1993).
Finally, constituency building is based on sending a
message or educating a large number of individuals.

Advertising expenses to send these messages may vary, but are
nonetheless expensive. Coalition building entails locating
and communicating with individuals and thus, is more
expensive than communicating with other groups. As in the

case with many grassroots building programs, education about
the political process is a part of managerial training.
Newsletters and/or other methods of relaying information

about potentially important issues to individuals may be sent
regularly; even long-distance telephone charges of
individuals contacting their representatives may be incurred

by the firm. Therefore, cooperative strategies require the
least amount of financial resources of all types of political
strategies. Accordingly,
Hypothesis 2: The smaller a firm's financial resources,
the greater the likelihood of the firm using a

cooperative strategy.
60
Hypothesis 3: The greater a firm's financial resources,

the greater the likelihood of the firm using an
information strategy.
the greater the likelihood of the firm using direct

access/pressure as a strategy.

the greater the likelihood of the firm using
constituency building as a strategy.
Firm Size-Number of Employees. Boddewyn and Brewer
(1994) , Keim and Baysinger (1988), and Masters and Keim

(1985) argue that a minimum employment base, or a large
number of employees, is essential to many types of political

strategies. Keim and Baysinger (1988) assert that the greater
the employment base, the greater the potential for

constituency building. The ultimate goal of constituency
building by a firm is not merely to educate individuals as to
policies, but also to give these individuals the incentive to
become politically active on these issues or across time. By

giving these individuals the incentive to contact their
elected officials, firms hope to influence the policy process
in their favor. Therefore, a larger employment base will tend
to increase the ability to form constituency groups, whereas
61
a smaller number of employees may prohibit the use of

constituency building.
Hypothesis 6: The larger the number of a firm's
employees, the greater the likelihood of the firm using
The use of information and cooperative strategies,

however, is not greatly affected by the number of employees.
Firms may hire external lobbyists or researchers no matter
how many people they employ. Firms may also join trade
associations or cooperate with other groups regardless of the
number of employees. Therefore, the use or non-use of these
types of strategies may not be related to the number of firm
employees.
Firm Experience/Legitimacy. When a firm is new to a

country or market, it will often suffer from what population
ecologists call the "Liability of Newness" (Baum, 1994).
This liability stems from a firm's lack of legitimacy within

society and leads to an increase in failure rates among new
organizations. Firms that lack any sort of reputation in

society are at a disadvantage compared to those that have
survived some time. Reputation may affect the success of a
firm's political behavior as well (Baron, 1995; Boddewyn,
1993; Boddewyn & Brewer, 1994; Hull, 1993; Keim & Baysinger,
1988). A firm's reputation may directly affect how credible
62
its preferences will be perceived to be by political
decision-makers and society. A firm's legitimacy stems from

survival in the market; therefore, the longer a firm has
existed within a country or market, the greater its
legitimacy. Reputation, on the other hand, may not
necessarily be enhanced the longer a firm operates because

reputation depends on past actions and business practices.
Rao (1994), however, argues that an organization's reputation
is itself a product of societal legitimacy. Thus, the
legitimacy a firm gains by surviving across time may actually
help reputation in some cases. Although the relationship

between legitimacy and reputation may be debated, firms that
have existed in the market are, at the margin, more credible
than new firms, because political decision-makers have no
basis to evaluate reputation for the latter. Recent studies
of U.S. political decision-makers and those within the

European Union (EU) have found that credibility is the most
important characteristic of a lobbyist (Heinz, Laumann,
Nelson, & Salisbury, 1993; Hull, 1993). Firms with more

positive reputations and greater legitimacy, therefore, may
be more likely to gain wide support or develop trust with

policy-makers.
In addition, the credibility of the firm will also be

important to building constituent support among individuals
linked to the firm or other members of society. Sethi (1982)
found that the most important determinant of the success of
63
advocacy advertisements was the credibility of the source.

Firms deemed to be credible will have an advantage using this
tactic. Similarly, grassroots mobilization is also based on
good relations with employees (Keim & Baysinger, 1988), so
that credible firms again may have an advantage in using

grassroots mobilization. Therefore,
Hypothesis 7: The longer a firm has existed within a
country or market, the greater the likelihood of the

firm using an information strategy.
Hypothesis 8: The longer a firm has existed within a

country or market, the greater the likelihood of the
firm using constituency building as a strategy.
A cooperative strategies does not rely to such a great
extent on reputational capital or legitimacy. The use of

cooperative associations does not generally depend upon the
legitimacy of the firm. Trade associations and other industry
groups do not discriminate against new members. In fact,
Oliver (1990) and Hillman and Keim (1995b) argue that many
new firms actually join trade associations to increase their
legitimacy as competitors within an industry. So, in addition

to the potential influence that cooperative strategies have
over the policy process, joining these associations may
result in increased legitimacy for new firms. Therefore,
64
Hypothesis 9: The newer a firm is to a country or

market, the greater the likelihood of the firm using a
While strategies such as information strategies and

constituency building may be strongly related to firm
reputation and legitimacy, other strategies may have little
relationship to reputation and legitimacy. Financial
contributions are generally not differentiated by a firm's
reputation (unless the firm or organization is connected to
illegal activity, e.g., organized crime). However, aside from
the financial contributions, direct access/pressure tactics
also include hiring individuals with political experience
and/or a firm member serving in a political capacity. These

types of direct access/pressure tactics may depend heavily on
firm legitimacy and reputation. If a political appointee, for
example, is leaving political office and searching for
private placement, the longevity of the firm may affect his
or her employment preferences. Presumably, individuals with
specific political capital that may be time dependent (i.e.

his/her connections may not exist indefinitely due to a
change in political control or the value of his/her

information may decrease with time as regulations and
policies change) often will choose not to work for newly
established firms without legitimacy and/or potential

longevity. Therefore, although financial tactics, or the
65
"pressure" component of these tactics, may have little
relationship to firm tenure in the market, a more direct
"access" component may be related to firm legitimacy.
Therefore, on the margin,
Hypothesis 10: The newer a firm is to a country or

market, the greater the likelihood of the firm using
direct access/pressure as a strategy.
Institutional/ Country-specific Variables
Many scholars interested in international corporate
political strategies acknowledge that each nation has
different ways of doing things and that different strategies

of political behavior may result from the differences across
countries (Fleisher, et al., 1993; Lenn, Brenner, Burke,
Dodd-McCue, Fleisher, Lad, Palmer, Rogers, Waddock, &
Wokutch, 1993; McLaughlin & Jordan, 1993; Maitland, 1987;

Mazey & Richardson, 1993). Hillman and Keim (1995a) argue
that the institutional settings within which political
organizations, including interest groups as well as political
parties, and government interact influence the types of
strategies chosen. North (1990) defines institutions to
include not only "formal constraints," or the extent to which

the diversity of interests in the environment influence the
rule structure, but also to include "informal constraints"
(i.e., the "rules of the road," culture, norms). North
66
argues that if institutions are the rules of the game,
organizations and entrepreneurs are the players (1994: 361).

The formal rules and structures likely to affect the
choice of corporate political strategies include
parliamentary versus presidential-congressional forms of
government, differences among government agencies-ministries
versus cabinet agencies, and the existence of organizations
for the coordination of business interests ranging from PACs
to umbrella associations.
Formal rules, however, do not include all the important

aspects of institutional settings, as North notes. Meyer and
Rowan (1977) argued that norms and values may also become
institutionalized and thus difficult to change. These norms

and culture are the informal aspects of institutions that may
affect the choice of corporate political strategies. For
example, culture and norms of key decision-makers in the
political process may affect the choice of strategies used by
a firm.
In some economies like those of Japan, Germany, and
France, civil service careers in ministries are among the
most prestigious professions. The best students from the
most reputable universities compete for jobs in these

government agencies (Wilson, 1990). In some cases, like in
Germany, most of these career officials work in one ministry
their entire working life (Patterson & Southern, 1991). In

the United States, however, the career civil service
67
positions that compose the permanent staff of cabinet
departments and federal agencies often have lower salaries

than the private sector and are associated with low prestige
(Rieck, 1990). Even career U.S. government officials argue
that the "best and brightest" are not frequently attracted to

public service in this country (Rieck, 1990). Certainly,
differences in the norms of behavior between the ministries
in countries like Germany and the civil service of the U.S.

may explain differences in the choice of strategies used to
influence public policy.
A further example of informal constraints may be seen in

the differences in behavior between bureaucrats. The formal
structure of the bureaucracies in Italy and Germany are very
similar, but the individuals who are employed behave rather

differently. In Germany the civil servants are viewed with
significant prestige and generally view their
responsibilities quite seriously; in Italy as many as twenty
percent do not report for work on a regular basis (Grant,

1990). These norms of behavior may again contribute to the
overall effect of the institutions on strategic choice.
North (1990) asserts that the institutional framework
affects both transformation costs and transaction costs.
Thus, the individual groups vying for benefits from the

policy process are affected by the institutions they
encounter. March and Olsen (1989) argue that politics are

influenced by and influence institutions. They argue,
68
similarly to North, that institutions transcend moral
currents and define the norms, interests, and beliefs of
society. Institutions act to reduce ambiguity, simplify the

potential confusions of action by providing alternatives,
create a structure for interpreting history and anticipating
the future, as well as shape the preferences of participants
in the political process.
Dahl (1956) contended that political institutions are

significant in the political process primarily because they
help determine what groups are given advantage or handicaps
in the struggle (political process) , thus creating the

opportunity for special interest group pressure. Pierson and
Weaver (1993) argued that party government parliamentary

systems tend to concentrate both power and accountability,
while the U.S. system of democracy diffuses power and divides
and targets accountability among individual politicians. As
a result, the opportunities for special interest groups
differ along these formal institutional lines, in that

politicians in systems like the U.S. are not disciplined to
follow the party position on any one issue and may vote
according to interest group/constituency preferences. This
lack of party control creates an opportunity for interest
groups to influence individual policy-makers. Pierson and

Weaver assert that political institutions, like parties, are
only one of several factors that affect politicians' choices,
and they are often not the most important ones. Past policy
69
processes and influence from interest groups are particularly

important. Mazey and Richardson (1993), in a study of
political activity in the EU, contend that there is no doubt

that institutional and structural factors are of considerable
importance in determining the role of groups in the policy
process. These authors, in essence, make the same argument
as North — formal institutions and informal institutions

lead to constraints on political decision making. Therefore,
failure to include this type of variable may result in an
inaccurate portrayal of the choice of political strategies

used by firms.
Corporatist versus Pluralist Systems. Weaver and

Rockman (1993) suggest that in the more corporatist
parliamentary systems (i.e. Austria, Germany, and Sweden),
the centralization of legislative power presumably decreases
the alternatives open to interest groups. Corporatist
nations are based on reaching consensus on policy. Many
corporatist structures are a result of national cultural

trends that promote consensus and cooperation among
relatively homogeneous interests. Rather than promoting the
interests of one group at the expense of another group,
corporatist nations, in general, promote more positive sum

policies in the electorate (Hillman & Keim, 1995a).
Therefore, the opportunity to affect public policy in
corporatist nations on any specific issue is more limited
than in systems that are open to individual special interest
70
group pressure and that have a greater probability of passing
negative sum or zero sum policies (where one group may

benefit at the expense of another) (Hillman & Keim, 1995a).
A long-term approach across issues is often the emphasis of
more corporatist structures of policy making, which may
affect the success and the probability of using relational

versus transactional approaches to political behavior. In a
transactional approach, firms attempt to gain influence for
their preferences on one issue, without regard to the effect
across time. In corporatist nations, however, this type of

approach may backfire because the political system focuses on
long-term effects of issues and how specific issues are
related to one another. Corporatist nations are centered
around formal repeat dealings or negotiations between
societal interests and governments.
In more pluralist structures, such as the U.S., however,
the institutional arrangements guarantee that a variety of
interests come into play in the policy arena (Hayes, 1992).

The ability to gain support for issues may be affected by the
fragmentation in a society (Coleman, 1988). In pluralistic
nations, interest groups or firms in the political process do
not have to compromise with other groups. The policy-maker
may write or vote for policy that is a compromise between

his/her constituents, but the actual groups do not have to
reach consensus on their own across a variety of issues.
Thus, more pluralistic nations create the incentive for
71
groups and firms in the political process to assert their own

interests on specific issues (Murtha & Lenway, 1994). No
long-term formal agreements between groups must be reached.
Therefore, in pluralistic nations firms are given an
incentive to participate in the political process, even on a

short-term basis. The ability to gain influence over a policy
is not based on a continuing relationship with either policy
makers or other groups. Thus, in nations where a more
pluralistic, fragmented population has a variety of
conflicting interests, ad hoc attempts to influence policy

may be more successful. Therefore,
Hypothesis 11: The greater the degree of corporatism in

a country, the greater the likelihood of a firm using a
relational approach to political strategies.
Most corporatist nations have formal structures wherein
all policies must go through negotiations between the

government, business, and employees. Additionally, over
arching trade associations, or umbrella associations, are an
institutional feature of many other Western democracies (e.g.
Germany, U.K., and Italy). In many cases, cooperation between
firms not only in the same industry, but across industries,
is mandated by law (e.g., systems of Tripartite) or

facilitated through the existence of these umbrella
associations. These over-arching associations emphasize
72
cooperation between firms, whereas in the U.S. system, each

firm and trade association is in competition with the others.
The system of consensus building within corporatist nations
creates a condition where interest groups must agree. That
is, sometimes a particular group will achieve its preferred
policy goal, and other times the group must compromise.

These institutionalized cooperative structures then may
affect the legitimacy of certain types of political tactics
and strategies. Because corporatist nations are based on
cultural traits of cooperation and consensus, competition
among firms or a perception of self-interest seeking behavior
by an individual firm is generally viewed with suspicion

(Wilson, 1990). Therefore,
a country, the greater the likelihood of a firm using a


a country, the greater the likelihood of a firm using
Pluralist systems, on the other hand, create the need

for information on the part of political decision-makers.
Because of the fragmentation of interests in these societies,
the policy preferences of many groups may be unknown to
73
policy-makers. In corporatist nations, and in nations with

formal systems for consensus between business, government,
and employees, the preferences over interests are known
through the negotiating process. In pluralist nations,
however, the lack of any formal system of participation in
policy formation creates a situation where individual firms
may not be known by policy-makers. In this situation, firms
and other interest groups potentially affected by a policy
will find it in their best interest to provide policy-makers
with information regarding their policy preferences. In
addition, because a variety of interests may be heard on any
given issue, firms in pluralistic nations may want to ensure
a sympathetic ear for their preferences by obligating a
policy-maker to listen and consider their viewpoint (e.g.
through financial support). Hence,
Hypothesis 14: The greater the degree of pluralism in a

country, the greater the likelihood of a firm using an
Hypothesis 15: The greater the degree of pluralism in a

country, the greater the likelihood of a firm using
direct access/pressure as a strategy.
Industry Variables
Pittman (1976, 1977) and Zardkoohi (1985) examine the

role of industry in political activity and find that the more
74
an industry is affected by government, the more it will

attempt to influence government. Also, Hitt and Tyler (1991)
argue that industry affects strategies employed by firms.

Masters and Keim (1985) link the degree of regulation in an
industry and the size of an industry with PAC activity, where
the more regulated and larger an industry is, the greater the
potential for PAC activity. Yoffie (1987) also examines
political behavior at the industry level and contends that

firms that are a part of concentrated, regulated industries
and are strongly affected by macroeconomic policies or
government decisions will be more likely to engage in
political activity. While each of these studies is helpful
in predicting which types of industries are more likely to
engage in political activity and the effect of industry on

strategic choice, these findings and theories do not help us
understand which type of political or strategies will be used
by certain types of industries.
Mature of the Industry. Each type of political tactic
is based on different targets and goals. Constituency

building is based upon targeting a broad number of
individuals and educating them about a particular issue
and/or policy preference. Thus, the effectiveness of this
tactic or strategy may be affected by the nature of the

message to be conveyed. Highly technical issues (e.g.,
standard-setting within the telecommunications

infrastructure) may not be easily conveyed to the general
75
public. Therefore, the type of industry may, indeed, affect
the use of this type of tactic. More technical industries
may find direct access more feasible in that the targets of

this strategy are individual policy-makers who are fewer in
number and may have more experience in such issues than the
general public. In addition, information strategies may be
much more important for highly technical issues/industries in
that policy-makers' need for information on these issues may

be greater than on issues of a less technical nature.
Therefore,
Hypothesis 16: The greater the technical nature of an
industry, the greater the likelihood of firms in the

industry using direct access/pressure as a strategy.
industry, the greater the likelihood of firms in the
industry using an information strategy.
industry, the lower the likelihood of firms in the

industry using constituency building as a strategy.
The Role of Competitors' Tactics and Strategies.
Oberman's (1993) model for choice of political action
asserted that the type of tactic or strategy a firm adopts is
76
related not only to the perceived political capabilities of
the firm, but also to the perception of competitors'
capabilities and strategies. The dynamics of strategic action

and response to competitors has been a subject of great
interest in strategy research. For example, Smith, Grimm,
Gannon, and Chen (1991) assert that many firm variables may
affect the likelihood and timing of competitive action and
responses. Boddewyn (1993) asserts that firms will be more
likely to implement a strategy that is not being commonly

employed by its competitors in order to achieve a competitive
advantage. Recently, however, some scholars have found a
tendency for firms within the same industry to have a

"macroculture," or norms of strategic behavior (Abrahamson &
Fombrun, 1994; Chatman & Jehn, 1994). This macroculture
reinforces imitation and will lead to increased strategic
similarities within an industry over time. These two lines
of argument would seem to lead to contradictory findings, one
in which political tactics or strategies are adopted based on

what direct competitors are not doing and one based on what
a firm's competitors are doing. The resolution of this
apparent conflict, however, may lie in the institutional

context.
In a study of the automobile industry in the U.S.,
Shaffer (1992) found that automobile firms tended to use

different and opposing political strategies within the
industry, which would seem to support the Boddewyn line of
77
logic. However, this finding may be a result not only of a
strategic decision to do what competitors are not, but also
of an interaction with the country within which the study was

conducted. In more pluralist structures, such as that of the
U.S., political competition is more conflictual than it is in
corporatist nations. In more corporatist nations, the culture
and the political systems enforce the cooperative ideal;
companies, even competitors, tend to cooperate. In more
corporatist nations, the "macroculture" effect may be found,
wherein the industry members imitate each other's political
behavior so as not to appear as self-interest seeking at the
expense of the group. Thus, the degree of corporatism/

pluralism may affect competitors' strategy choice.

a country, the greater the likelihood firms will match
the perceived strategies of their competitors.
Summary/Conclusion
Based on extant literature in the areas of international
strategy, corporate strategy, and political behavior, three
general levels of variables that may be theoretically related
to the choice of corporate political strategies have been

identified and their relationship to each type of political
strategy and to the choice of transactional versus relational

approaches is hypothesized. As indicated in the model
78
depicted in Figure 2.3, the three categories of variables,
firm, industry, and institutional are likely to have
independent relationships to the choice of political

strategies. The relationship between the industry variable
of competitors' strategies/tactics, however, may be moderated
by the type of political system in the country. This model
is an attempt to identify the internal and external variables
which may affect a firm's choice of political strategies as
depicted in the overall model of strategy formulation adopted
by Oberman (1993) and many others in the field of strategy.
The following chapter will identify my method for quantifying
the identified variables and for testing the hypotheses
developed above.
79
CHAPTER III
RESEARCH DESIGN AND METHODOLOGY
Research Design
Because the focus for this project is current firm
political strategies, archival data are not available to test
the developed model and hypotheses. Instead, the data for
this study has been obtained largely through surveys and

through external sources where possible.
The current study is cross-sectional in nature. Thus,

the data collection focuses on the types of strategies and
approaches to political strategies the firm is currently
using or has used within the last year. The hypotheses

formulated within this study are not temporal in nature; past
strategies are not of interest in the current study.
Sample Selection
The population from which the sample was taken for this
project was U.S. multinational corporations operating in the
European Union (EU). An estimated 49.2% of U.S. foreign
direct investment is in European nations, and literally
thousands of U.S. firms are operating in some capacity in

Europe (U.S. Department of Commerce, 1993).
The rationale behind limiting the sample to U.S. firms
is to avoid one of the variables that may affect the choice
of corporate political strategies not explicitly considered
80
to this point — the role of home country culture. Due to

shared norms within the home country, home country culture
may influence the types of strategies used by firms operating
outside the home country. For example, in the United States,

it is not uncommon for a firm to offer employment to
individuals who have recently served in a political position.

While some news reports condemn such behavior, the shift from
public to private employment is generally accepted in the
U.S. culture. In Germany, on the other hand, when a career
ministry official left political office to work for Daimler
Benz, society as a whole was outraged. These cultural norms

of behavior may affect the types of strategies U.S. and
German firms use abroad. Shane (1994), in a study of modes
of entry for international expansion, found that national

differences in attributes, such as the level of trust, affect
the choice of strategies employed by firms. Similarly,

Bartlett and Ghoshal (1989) and Schneider and Meyer (1991)
assert that national culture or "administrative heritage" may
affect perceptions, interpretations, and responses to

strategic issues and strategic choice. Thus, these norms of
behavior within a home country may affect the choice of
political strategies used in other nations.
Alternatively, American and German firms may adopt a
strategy of cultural relativism — in essence "When in Rome,

do as the Romans do" — and choose strategies based on what
is accepted in the host country without regard for home
81
country practices. Given this concern, the population for

this study was U.S.-based multinationals in order to hold the
effect of home country culture constant.
Another concern in sample selection was the scope of the

research project. Because Country-specific variables are
key to testing a large number of the hypotheses, variables
were identified and measured (to be discussed in the
following section) for each country in which responses were
received. While ideally an international study such as this

would survey many parts of the world, the feasibility of such
a survey for the project at hand would be limited.
Therefore, the initial focal group consisted of companies
operating in the member state countries of the European

Union. Targeted respondents were either the senior public
affairs/government relations officer in each subsidiary or
the top subsidiary manager in each country. Thus, while my
sample includes only U.S. multinational companies, each

subsidiary of these firms responding to the survey
constituted an individual response and contributed to the

total number of responses.
Endorsement was sought from organizations representing

U.S. firms meeting the criteria discussed above. Two groups
were initially contacted as possible sources for endorsement,
the Public Affairs Council in Washington, D.C. and the

American Chamber of Commerce in Brussels, Belgium. A meeting
with the director of the Public Affairs Council led to
82
support in the form of a mailing list of its members to be
sampled. The Council was unwilling to provide any additional
endorsement, such as a letter of sponsorship to be included
in the survey mailing. Stronger endorsement, however, was

obtained from the American Chamber of Commerce E.U. (European
Union) Mission in Brussels. The AmCham (as the organization
is known) E.U. Mission in Brussels represents over 150 U.S.
multinational corporations and law firms operating in various

European nations and at the E.U. level. While these firms do
not all operate in each of the 15 E.U. nations, these firms

are typically large organizations that have a strong European
presence and are often politically active in the EU.
Because of a concern raised by the AmCham over low
participation if a response was sought from each member state

that a firm operated in, five surveys were sent to firm
representatives from each of the organization's member firms.
These representatives typically are the firm's government
relations coordinators for the E.U. area. These
coordinators were asked for help in obtaining the completion

of the surveys by government affairs managers or subsidiary
managers in five subsidiary locations of their choice. The
contact people were encouraged to participate in the study by
a cover letter provided by the AmCham's E.U. Mission
(Appendix A) and by a cover letter explaining the benefits to

them as participants from the researcher (Appendix B).
Each location completing the survey was asked to fax or
83
mail the survey directly back to the researcher. The
responses were primarily sent via fax, with a few being

returned by mail. The final number of returned responses
totalled 178, representing 52 companies and 12 countries in

the European Union. This response rate is approximately 29.6%
of the sample. Missing data reduced the number of usable
responses to 169 or 28.2%. In examining potential non

response bias, t-tests were conducted to examine the
differences in the control variable of international

diversification. In addition, the responding firms were
compared with those firms that did not respond to the survey
along the variables of ROA, average number of employees, and

industry R&D intensity. There were no significant differences
in international diversification level, ROA, average number

of employees, or industry R&D intensity, suggesting that
nonresponse bias is not a problem.
Development of the Survey Instrument
After an initial draft of the survey had been developed,
John Russell, Executive Director of the E.U. Mission of the
AmCham, provided guidance for question wording and

sequencing. From this point, the survey was sent to the
Executive Committee of the AmCham E.U. Mission for their
input. These individuals, who constitute the governing board
of the organization, come from a variety of organizational

backgrounds and provided extensive feedback again for
84
question wording and clarity. They also suggested additional

questions of interest to the organization (outside of those
used to test the theory and hypotheses developed herein).

Once a draft had been formed that incorporated these
suggestions, a further pre-test was administered to a set of
government relations representatives from U.S. companies

recommended by the Public Affairs Council. These individuals
completed the questionnaire and were then queried as to
completion time, the content of the survey (wording,
instructions, layout) and any other concerns regarding the
instrument. Perhaps due to the extensive comments provided
by representatives of the AmCham, this pre-test confirmed
that the survey was in its final form for administration to

the sample. A copy of the final survey may be found in
Appendix C.
Dependent Variable Measures
Political Strategy Approach. The measure of the approach

a firm takes to political strategies (i.e. whether it is
relational or transactional) was measured by the survey
instrument. Because the terminology used herein that labels
each approach "transactional" or "relational" is a product of
the researcher's theory and these terms would not be known or
accepted terminology for the respondents, neither label was

identified in the survey instrument. Respondents were asked
to what extent they agreed/disagreed with statements designed
85
to depict the two approaches to political strategy, scaled
along a 5-point scale of "Strongly Agree" to "Strongly
Disagree." Two statements depict the relational approach and

two depict the transactional approach. The average score was
taken from the two statements describing each approach.
Because the two approaches may be conceptualized as opposite
ends of a continuum, these two averages were then compared

and a score for the overall approach was used for each
response, with transactional approach coded as 0 and

relational approach coded as 1. The overall score was
determined by the researcher after comparing the average

score for the two relational questions and the two
transactional questions. If the average of the transactional
questions was greater than 3.0 and the average of the

relational questions was under 3.00, the approach was coded
as "transactional," with the reverse criterion for the coding
of "relational." The majority of the responses (156/169)
indicated a distinct approach. In the thirteen cases where

the averages were more similar for both approaches, the
approach was categorized based on the higher of the two
averages. Because this variable is based on current firm
strategy and approaches, external verification of this

measure is not available.
Use of Political Strategies. The use/non-use (choice)
of each of the four types of political strategies was also
measured by the survey instrument. Each of the four distinct
86
strategy types includes a variety of tactics as described in
Chapter II. As in the case of the political strategy

approaches, the four general categories of political strategy
have been labeled by the researcher and as such, these labels

are not common terminology for the respondents. In addition,
some of the labels for the four strategies may denote

specific meaning that may or may not invoke response bias
(i.e. "Direct Access/pressure" may denote a pressure tactic
that may be viewed negatively by some). Therefore, the survey

inquires as to the use of individual tactics within each
strategy type. For example, the measure of use/choice of an

information strategy includes five questions (Appendix C Part
II, Questions 1-5 on the survey instrument) about internal
lobbying, external lobbying efforts, reporting research
results, testifying before hearings, and commissioning
research or a think-tank project. Similarly, Direct

Access/pressure corresponds to Questions 6 through 10,
Constituency Building Questions 11 through 16, and
Cooperative Strategies Questions 17 through 20 in Part II.
No source is available for external validation of the

responses found herein.
As a result of the AmCham's interest in frequency of use
of the various strategies, the final questionnaire was not

formatted as a binary choice of whether the tactic in
question had been used in the past year or not. Instead, a 5-
point scale was used to denote frequency in the past year
87
along uneven intervals of never, once a year, once a month,

once a week, and once a day. For any tactic identified as
being used in the last year, its corresponding strategy

category was coded as being used, or equal to 1. If no tactic
within a strategy category had been used, the category was
coded as 0. That is, if any one tactic in a category was

used at all within the past year, regardless of frequency,
the strategy was coded as used, else it was not used.
Competitors' Strategies. The perception of competitors'
strategies was measured by the survey instrument. Because the

variable is based solely on perceptions of competitors'
strategies, external validation for this method is not
available. Respondents were asked if they believed that "your

pattern of political strategies differs from that of your
competitors." "No" answers were coded as a 0 and "yes"
answers as 1. This variable was operationalized in the
aggregate due to a concern by the endorsing agency over the

length of the survey if respondents were asked whether they
perceived their competitors' using each individual tactic.
As a result, it became a measure of perceived matching of

strategic pattern, aggregated across all four strategies.
Given this, Hypothesis 19 was tested by treating this as a
dependent variable with corporatism/pluralism as the
predictor.
88
Independent Variable Measures
Firm Variables- ROA. Financial resources of each firm

were measured by return on assets for each parent company.
While the strategies measured are those used at the
subsidiary level, the financial resources (ROA) of the
corporation as a whole were measured. This level of

measurement waschosen because of the potential to use
corporate resources to fund these strategies, i.e., none of

the sample firms are structured as holding companies. To
measure ROA at the subsidiary level would not only be
difficult due to limitations in disclosed information, but
it also is not in keeping with the theory that the firm may
have resources at its disposal to enable the use/nonuse of
certain strategies across countries. While Yoffie's (1987)
work used sales as a measure of financial resources, this

study focused on a cash flow measure of return on assets.
Although financial resources may also be measured by slack

resources, the use of slack as a measure of resources that
may be allocated to political activity assumes that political
strategies are not an integral part of a firm's strategic
process. Thus, slack resources was considered a poor proxy
for firm resources. ROA information was gathered through

COMPUSTAT annual data tapes.
Size. The number of firm employees in the subsidiary
country (including employees and contractors) was measured by
the survey instrument (See Appendix C, Question 4).
89
Unfortunately, the sample firms rarely publicly report

individual country-level information on the number of
employees that could be used to validate the information
provided in the survey. COMPUSTAT data, however, reports the
number of employees in specified market segments aggregated
across a number of countries. The data for Europe was used to
verify that the totals of the employees for each responding
company did not exceed COMPUSTAT information. In addition,
although not a part of this research project, additional
surveys were sent to the same sample companies inquiring
about political strategy use at the supra-national E.U.
level. These surveys asked for the total number of employees
in the EU. Again, the totals from each firm responding at the
member state levels were compared to this information to make
sure that no discrepancy was found. Although an imperfect
method of external validation, no discrepancies were found
for the sample firms.
Firm Experience. Firm experience, or number of years in
each country, was also gathered in the survey instrument.
These numbers were compared with the year that operations had
begun in that particular country, as indicated by Annual
Reports. These data were found for approximately 18% of the
sample firms. In 27 of 30 cases, there were no discrepancies
found between the survey and the annual report information.
In the remaining three cases the survey responses were
incomplete (e.g. 30+ years) and the annual report data was
used.
90
Institutional/ Country-specific Variable: Corporatism/

Pluralism. As a measure of pluralism and corporatism, a four-
point scale of pluralism/ corporatism was adopted from
Schmitter (1982) and Schmidt (1982): l=pluralism, (e.g., the
United States) where interest group politics dominate and

fragmented and competing interest groups lobby government
agencies and parliament; 2=weak corporatism, where labor
participates in the formation and implementation of policies
only within certain restricted policy areas or at certain
stages of consultation and decentralized collective
bargaining exists; 3=medium corporatism, where collective
bargaining takes place at a plane broader than the firm; and

4=strong corporatism, where organized labor and business
participate effectively in policy formulation and

implementation across those interdependent policy areas
crucial for management of the economy (Coleman, 1988) . These
corporatism/pluralism ratings by Schmidt were used for this
project.
Industry Variables: Technical Nature. The technical
nature of the industry was measured by R&D intensity,

calculated by an industry ratio of average research and
development expenditures to average number of employees
(Hitt, Hoskisson, & Kim, 1996). R&D intensity has been used
as a proxy for innovation (Hitt, et al., 1996) and has been
found to be related to measures of innovative outputs and new
product introductions (Hitt, Hoskisson, Ireland & Harrison,
91
1991; Hitt, Hoskisson, Johnson, & Moesel, 1996). Thus, this

measure should serve as a good proxy for the technical nature
of the industry, with firms having a higher R&D intensity
reflecting a more technical industry. Data for this measure

was taken from COMPUSTAT tapes of industry average as
reported for 2-Digit SIC codes. In addition, firm-level data
on R&D expenditures and total number of employees were
gathered from COMPUSTAT for 38 of the 48 firms with usable
responses to make sure that these numbers did not differ
substantially from the range of values given in the COMPUSTAT

industry information.
Control Variables. Prior research has argued that level

of international diversification plays a significant role in
the strategic behavior of large firms (Hitt, Hoskisson, &
Harrison, 1991; Hitt, Hoskisson, & Ireland, 1994).
Therefore, in order to control for the effect of these
levels of diversification, a measure of international
diversification has been used as a control variable. The

measure used is an entropy measure designed to capture the
extent of diversification across different foreign market
areas measured by:
ID = E, [Pi x In (1/Pi) ]
where Px is the sales attributed to global market area I and
In (1/Pi) is the weight (the natural log of the inverse of its
sales) given to each global market area. This measure
considers both the number of global market areas in which a
92
firm operates and the relative importance of each global

market area in total sales (Hitt, et al, 1996). The entropy
measure was calculated using international market sales data

available on COMPUSTAT geographic segment tapes and in
Hoover's Book of U.S. Corporations.
Although size, such as sales volume or number of

employees, may also be a variable that affects the choice of
political strategies, it has not been included as a control
variable in the study for three reasons. First, firm size or

number of employees is theoretically linked to the choice of
one type of strategy use and this relationship is
hypothesized herein and not theoretically linked to the other

three strategies. Second, the size control variable may not
be appropriate because of the lack of variation in size among
the sample firms. Each of the sample firms is within the
Fortune 500, indicating that this sample is of large
organizations. Because of this, there is little variation to
be gained by controlling for size.
Validity and Reliability
Construct validity was sought for this study by

extensive use of extant literature to create the four types
of political strategies and through the use of a pre-test and
interviews in the creating of the survey instrument. As

Carmines and Zeller (1979) argue, construct validity is by
necessity theory-laden and it is impossible to "validate" a
93
measure of a concept in this sense unless there exists a

theoretical network that surrounds the concept. The validity
of many of the measures obtained from the survey, such as
years in each country, number of employees, etc. has been

verified through external sources as noted (Kerlinger, 1986) .
Data Analysis
Each hypothesis was framed in terms of relative

likelihood, and therefore was tested using logistic
regression. For each type of general political strategy
(Information, Direct Access/pressure, Constituency Building,
Cooperative), the use was coded in a binary manner, as
previously mentioned. Because of the categorical nature of

the dependent variable, logistic regression provides an
appropriate method of analysis.
Because the use of one type of political strategy does
not preclude the use of others, separate equations have been
run for each category of strategy. Thus, four separate
dependent variables are of interest: the selection of an
information strategy, the selection of a direct

access/pressure strategy, the selection of a constituency
building strategy, and the selection of a cooperative
strategy. The appropriateness for doing this is supported by
the evidence that the strategies are not highly inter
correlated (see discussion in Chapter IV). In addition, a

separate equation was run to evaluate political strategy
94
approach. Results for these analyses and for tests of
dependence among the dependent variables are discussed in

Chapter IV. In addition, in order to test Hypothesis 19, a
separate logistic regression equation was run with perceived

competitors' strategic pattern as a dependent variable.
Results of this analysis are also discussed in Chapter IV.
95
CHAPTER IV
RESULTS
This chapter discusses specific tests of underlying

assumptions and the hypotheses developed in Chapter II. The
results of all statistical analyses are reported here.
Descriptive Statistics
Frequency analyses of the four strategy dependent
variables, the tactics each includes, approach, and

competitors1 strategy pattern may be found in Table 4.1. As
these data show, two of the four strategy types have

significantly less variation in use than the other dependent
variables. Only 12% of the respondents failed to use an
information strategy and only 5.3% failed to use a
cooperative strategy in the last year. This lack of
variation in use (which will be discussed more in the next

two sections of this chapter) may create problems for
interpretation across the five dependent variables. When
referencing the frequency of the individual tactics, one

finds considerable variation in the use of tactics within
each category. While a majority of the respondents used an
information strategy within the last year, tactics in

questions 1 and 2 of the category were much more widely used
than the others within an information strategy. Of the five

questions (tactics) that comprise a direct access/pressure
96
TABLE 4.1
Dependent Variable Frequency
Approach-AP
Value Frequency Percent Cum Percent
Transactional .00 76 45 45
Relational 1.00 93 55 100
Total 169 100
Information Strategy-IN
Non-Use .00 20 11.8 11.8
Use 1.00 149 88.2 100
Total 169 100
Direct Access/pressure-DA
Non-Use .00 72 42.6 42.6
Use 1.00 97 57.4 100
Total 169 100
Constituency Building-CN
Non-Use .00 55 32.5 32.5
Use 1.00 114 67.5 100
Total 169 100
Cooperative Strategy-CO
Non-Use .00 9 5.3 5.3
Use 1.00 160 94.7 100
Total 169 100
Perceived Competitors' Strategy Pattern-CM

Does Not Vary .00 131 77.5 77.5
Varies 1.00 38 22.5 100
Total 169 100
Information Strategy Tactics

Tactic 1: Question 1 Value Frequency Percent Cum Percent
Non-Use .00 33 19.5 19.5
Use 1.00 94 55.6 75.1
2.00 39 23.1 98.2
3.00 3 1.8 100
Total 169 100
97
TABLE 4.1 Continued
IN Tactics Continued
Non-Use .00 71 42.0 42.0
Use 1.00 62 36.7 78.7
2.00 35 20.7 99.4
3.00 1 0.6 100
Total 169 100

Non-Use .00 87 51.5 51.5
Use 1.00 62 36.7 88.2
2.00 15 8.9 99.4
3.00 5 3.0 100
Total 169 100

Non-Use .00 99 58.6 58.6
Use 1.00 57 33.7 92.3
2.00 13 7.7 100
Total 169 100
Tactic S : Question 5 Value Frequency Percent Cum Percent

Non-Use .00 96 56.8 56.8
Use 1.00 65 37.9 94.7
2.00 7 4.1 98.8
3.00 2 1.2 100
Total 169 100
Direct Access/pressure Tactics

Non-Use .00 124 73.4 73.4
Use 1.00 41 24.3 97.6
2.00 4 2.4 100
Total 169 100

Non-Use .00 122 72.2 72.2
Use 1.00 38 22.5 94.7
2.00 7 4.1 98.8
3.00 2 1.2 100
Total 169 100

Non-Use .00 126 74.6 74.6
Use 1.00 32 18.9 93.5
2.00 7 4.1 98.8
3.00 4 2.4 100
Total 169 100
98
TABLE 4.1 Continued
DA Tactics Continued
Non-Use .00 135 80.5 80.5
Use 1.00 25 14.8 95.3
2.00 4 2.4 97.6
3.00 4 2.4 100
Total 169 100

Non-Use .00 106 62.7 62.7
Use 1.00 32 18.9 81.7
2.00 20 11.8 93.5
3.00 11 6.5 100
Total 169 100
Constituency Building Tactics

Non-Use .00 121 71.6 71.6
Use 1.00 35 20.7 92.3
2.00 12 7.1 99.4
3.00 1 .6 100
Total 169 100

Non-Use .00 124 73.4 73.4
Use 1.00 38 22.5 95.9
2.00 6 3.6 99.4
3.00 1 0.6 100
Total 169 100

Non-Use .00 137 81.1 81.1
Use 1.00 25 14.8 95.9
2.00 7 4.1 100
Total 169 100

Non-Use .00 105 62.1 62.1
Use 1.00 55 32.5 94.7
2.00 8 4.7 99.4
3.00 1 0.6 100
Total 169 100

Non-Use .00 105 62.1 62.1
Use 1.00 55 32.5 94.7
2.00 8 4.7 99.4
3.00 1 0.6 100
Total 169 100
99
TABLE 4.1 Continued
CN Tactics Continued
Non-Use .00 126 74.6 74.6
Use 1.00 33 19.5 94.1
2.00 8 4.7 98.8
3.00 2 1.2 100
Total 169 100
Cooperative Strategy Tactics

Non-Use .00 53 31.4 31.4
Use 1.00 75 44.4 75.7
2.00 39 23.1 98.8
3.00 2 1.2 100
Total 169 100

Non-Use .00 42 24.9 24.9
Use 1.00 57 33.7 58.6
2.00 48 28.4 87.0
3.00 21 12.4 99.4
4.00 1 0.6 100
Total 16 100

Non-Use .00 32 18.9 18.9
Somewhat Active 1.00 31 18.3 37.3
2.00 40 23.7 60.9
3.00 48 28.4 89.3
Very Active 4.00 18 10.7 100
Total 169 100

Non-Use .00 16 9.5 9.5
Somewhat Active 1.00 24 14.2 23.7
2.00 39 23.1 46.7
3.00 48 28.4 75.1
Very Active 4.00 42 24.9 100
Total 169 100
100
strategy, the first four tactics had limited use and even
more constricted frequency (those responding with use one a

month or more frequently) while question 10's tactic,
providing financial contributions, was much more likely to be
used. Within the constituency building strategy, the

variation of use/non-use among the six tactics was much more
uniform. For the four questions (tactics) comprising the

cooperative strategy, each of the four exhibits greater
frequency of use than the tactics within the other

categories, but have similar frequency within the strategy.
Table 4.2 show means, range, and standard deviations for

the continuous variables.
Tests of Underlying Assumptions
Two main underlying assumptions are made in the
theoretical development found in Chapter II. The first
assumption is that the four types of strategies (and the

tactics included within the categories) are mutually
independent. This assumption is critical to the four separate
logistic regression models. First, pairwise correlations of
use of strategies and tactics were examined in order to check
for mutual independence. Table 4.3 reports the pairwise

correlations of use of strategies and tactics. As this table
shows, the four dependent variables and the individual
tactics are not significantly correlated with one another,
and thus may be considered independent. Mutual independence
101
TABLE 4.2
Independent Variable Frequency
Firm Resources-ROA
Mean 7.036
Std Dev 6.600
Minimum -19.9
Maximum 21.37
Valid Cases 169
Firm Experience-EX
Mean 32.325
Std Dev 25.105
Minimum 5.00
Maximum 170.0
Valid Cases 169
Number of Employees-SZ
Mean 1.627 (000s)
Std Dev 2.285
Minimum 0.100
Maximum 15.00
Valid Cases 169
Corporatism/ Plural ism-CP

1.00 0 0.0 0.0
2.00 82 48.5 48.5
3.00 59 34.9 83.4
4.00 28 16.6 100
Total 169 100
Technical Nature of the Industry-TC

Mean 13.191
Std Dev 13.775
Minimum 0.440
Maximum 62.28
Valid Cases 169
102
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TABLE 4.3 Continued

CN Qll Q12 Q13 Q14 Q15 - KENDALL CORRELATION COEFFICIENTS
Qll .4375
N( 169)
SIG .000
Q12 .4184 1846
N( 169) N( 169)
SIG .000 SIG .017
Q13 .3357 0975 .4947
N< 169) N( 169) N ( 169)
SIG .000 SIG .206 SIG
Q14 .5423 .2928 .1368 .1520
N( 169) N ( 169) N( 169) N ( 169)
SIG .000 SIG .000 SIG SIG .049
Q15 .5287 .3646 .1525 .1962 .3928
N ( 169) N ( 169) N ( 169) N ( 169) N ( 169)
SIG .000 SIG .000 SIG SIG .011 SIG .000
Q16 .4058 — .0968 .2321 3072 1601 .3164
N( 169) N( 169) N( 169) N{ 169) N( 169) N ( 169)
SIG .000 SIG .210 SIG .003 SIG .000 SIG .038 SIG .000
CN Qll Q12 Q13 Q14 Q15
CO Q17 Q18 Q19 Q20 - KE N D A L L C O R R ELATION COEFFICIENTS

Q17 .3509
N ( 169)
SIG .000
Q18 .4124 .3491
N( 169) N( 169)
SIG .000 SIG .000
Q19 .4907 .1616 .1764
N ( 169) N( 169) N( 169)
SIG .000 SIG .036 SIG .022
Q20 .7334 .2606 .2350 .4628
N( 169) N ( 169) N( 169) N( 169)
SIG .000 SIG .001 SIG .002 SIG .000
104
CO Q17 Q18 Q19
105
also requires more than mere pairwise independence. Three-

way and higher forms of independence could still be a
problem, but these forms of independence are difficult to

examine. Given this, I have used pairwise measures of
association as the best indicator of mutual independence.
Another consideration in conducting separate logistic

models is whether each strategy type is as likely to be used
as the others. Fairly equal strategy use is necessary for
each of the logistic equations to have equal power and to
compare results across the separate equations. To test this,
a Chi-square analysis was calculated for each of the four
strategies, resulting in a value of 20.05. The Chi-square

tabled value for a=.05, df=3 is 7.81473. Thus, the four
strategy types are not equally likely. As the frequency data
in Table 4.1 reports, certain strategies (the information
strategy and the cooperative strategy) are more likely to be
used than others. Because the information strategy and the
cooperative strategy seem to have been used more than the
other two (the direct access/pressure strategy and the

constituency building strategy), the logistic equations may
differ slightly in reliability of information as a result.
The second assumption that underlies the theory
developed in Chapter II is that firms may use either
approach, relational or transactional, to any of the four
strategies. That is, the approach adopted for any given firm
in any given subsidiary is independent of the use/non-use of
106
strategy types. The inter-correlation matrix showing the
pairwise independence of strategies and approach may be found
in Table 4.3. As this table shows, approach and the use of

each of the four strategies are not significantly correlated
with one another and thus, the assumption of independence
cannot be rejected. In addition, a Chi-square statistic was
calculated from the observed and expected frequencies of each
strategy type at both levels of approach (O=transactional,

l=relational). The calculated value was 5.62, with df=7. At
the a=.05 level, the tabled Chi-square value is 14.0671,
indicating that the assumption of independence cannot be

rejected.
Tests of Hypotheses
In order to test the hypotheses developed in Chapter II,
logistic regression analysis was performed for each of the
four strategy dependent variables, the approach dependent
variable, and the competitors' strategic pattern dependent
variable resulting in six separate models. Although each

individual hypothesis pertains to the effect of one
independent variable on the dependent variable in question,
each model contains all of the independent variables
theorized to affect the likelihood of use of the dependent
variable of interest. The control variable is included in
all models. Each of the full models is presented in Table
4.4 along with appropriate goodness of fit and coefficient
107
TABLE 4.4
Full Logistic Models
Model A
AP WITH ROA CP ID
Chi-Square df Significance
-2 Log Likelihood 179.769 165 .2043
Variable B S.E. Wald df
ROA .0196 .0283 .4815 1
CP 1.8401 .3136 34.4268*** 1
ID 1.2280 .5405 5.1628 1
Constant -5.7643 1.0446 30.4492 1
Model B
IN WITH ROA EX CP TC ID
-2 Log Likelihood 104.482 163 .9999
ROA -.0427 .0403 1.1207
EX .0217 .0165 1.7194
CP -1.1647 .3479 11.2067***
TC .0070 .0191 .1323
ID -1.3399 .8179 2.6833
Constant 6.2245 1.4705 17.9174
Model
DA WITH ROA EX CP TC ID
-2 Log Likelihood 211.199 163 .0066
ROA -.0767 .0306 6.3066***
EX -.0005 .0067 .0045
CP -.7182 .2299 9.7593***
TC -.0038 .0215 .0906
ID .7684 .4912 2.4474
Constant 2.2079 .8171 7.3022
Model
CN WITH ROA EX SZ CP TC ID
-2 Log Likelihood 206.029 162 .0110
ROA .0123 .0261 .2215
EX .0089 .0069 1.6851
SZ .0842 .0860 .9596
CP .3859 .2408 2.5679
TC .0109 .0139 .5108
ID .3502 .4900 .6003
Constant .6488 .8374 .6003
108
TABLE 4.4 Continued
Model E
CO WITH ROA EX CP ID
-2 Log Likelihood 51.299 164 1.000

ROA -.0470 .0562 .7001
EX .0226 .0243 .8596
CP 9.2232 36.169 .0650
ID -2.9205 1.6529 3.1219*
Constant -13.7925 72.3611 .0363
Model F
CM WITH CP ID
-2 Log Likelihood 170.630 166 .3866

CP -.7362 .2943 6.2590** 1
ID -.9192 .5243 3.0734* 1
Constant 1.4263 .9086 2.4641 1
* P=<.10
**P=<.05
***P=<.01
109
statistics. For each of the six models, residual analyses

were conducted. Studentized residuals, leverage values, and
Cook's distance measures were examined for potential
outliers. No significant outliers or departures from
assumptions in any of the models were detected.
It is common in logistic regression and in exploratory
work such as this to use a higher cut-off value for Type I
error probability than the common cut-off of .05 (Hosmer and
Lemeshow, 1989). While Hosmer and Lemeshow recommend using a
cut-off as high as .20 in logistic regression, a cut-off of
.10 has been used for determining statistical significance of
individual coefficients throughout the analyses.
In order to examine potential multicollinearity among
the variables, the inter-correlation matrix (Table 4.3) and
the eigenvalue structure (Table 4.5) for each variable was
analyzed. As Table 4.3 shows, none of the variables are
severely inter-correlated with one another. In examining the
eigenvalues in Table 4.5, one can see that the variability
between the eigenvalues is limited, which does not suggest
multicollinearity. An examination of individual eigenvalues
shows that none of the values are near zero (which would
indicate linear dependencies) . The square root of the ratio
of the largest to smallest eigenvalue, or condition number,
is also reported in Table 4.5 (the last number in the column
labelled condition number). These values do not indicate
severe multicollinearity, using a criterion value of 30 as an
indicator of serious multicollinearity.
110
TABLE 4.5
Tests of Multicollinearity
AP= ID CP ROA
Collinearity Diagnostics
Number Eigenvalue Condition
Index
1 3.46664 1.00
2 .38613 2.996
3 .11810 5.418
4 .02914 10.908
IN= ID CP ROA EZ TC
Index
1 4.66877 1.000
2 .55838 2.892
3 .39885 3.421
4 .22859 4.519
5 .11735 6.308
6 .02804 12.903
DA= ID CP ROA EZ TC
Index
1 4.66877 1.000
2 .55838 2.892
3 .39885 3.421
4 .22859 4.519
5 .11735 6.308
6 .02804 12.903
CN= ID CP ROA SZ TC EZ
Index
1 5.04921 1.000
2 .69335 2.699
3 .49372 3.198
4 .39365 3.569
5 .22399 4.748
6 .11638 6.587
7 .02700 13.676
Ill
TABLE 4.5 Continued
co= ID CP ROA EX
Number Eigenvalue condition
Index
1 4.13587 1.000
2 .43247 3.092
3 .28622 3.801
4 .11735 5.937
5 .02809 12.135
CM= ID CP
Index
1 2.85160 1.000
2 .11869 4.902
3 .02970 9.798
112
In order to determine the power of the statistical tests

herein, a chi-square power analysis may be performed. For
the present study, however, multiple chi-square analyses were
performed, thus making assertions about the overall power
level difficult. Unfortunately there are no good procedures
readily available for determining power for logistic

regression analyses. The power estimates from OLS regression,
however, can provide an estimated range of power for the
study at hand. While not equivalent to power tests in
logistic regression, the OLS estimates suggest approximate
power levels for each of the equations. Using an a level of
.05 criterion, in order to have power at .80 with a small
population effect size, N should equal approximately 686 for

six independent variables (the maximum number of independent
variables in the five separate equations), a medium
population effect size N should equal 97, and a large
population effect size N should equal 45 (Cohen, 1988) . With
a total N of 169, the statistical power of the analyses
performed in this study may be limited for a small effect

size. This response size, however, is within the range for
statistical power at the medium and large population effect
size. In addition, the higher cut-off value for Type I error
probability of .10 adopted herein may help to compensate for

the low power.
While the statistical analysis was focused around each
dependent variable, in order to report results consistent
113
with the order of hypothesis development, each independent
variable will be discussed in turn by examining each of the

six full models. Supporting analyses will be presented as
relevant. Because all hypotheses are one-sided, all reported
p-values are one-tailed. Correspondingly, the significance
criterion (corresponding to a=.l) for the hypothesized

results is the chi-square tabled value of 2.70554, df=l.
Because the Wald statistic has a chi-square distribution, the
Wald statistic reported in the referenced tables is used and
presented throughout the discussion of results as the chi-
square value for each coefficient.
Firm Variables: Firm Resources-ROA

Hypothesis 1 posited that the greater the firm
resources, the greater the likelihood of firms using a
relational approach. The Wald statistic reported in Table
4.4, Model A, shows that the measure of firm resources, ROA,
is not statistically significant in the full model (x2=.4815;

.25<p<.50). In order to determine whether the effect of ROA
on approach is being dampened by the presence of the other
independent variables, a separate model was run to examine
the effect of ROA on approach, controlling for international
diversification. Statistics for this partial model may be
found in Table 4.6, Model A. Again, using a one-sided test,
the variable ROA is not significant (x2=.1112; ,25<p<.50),
and thus, Hypothesis 1 is NOT SUPPORTED.
114
TABLE 4.6
Approach Dependent Variable Models of Separate Effects
Model A
AP WITH ROA ID
-2 Log Likelihood 229.690 166 .0008

ROA .0080 .0238 .1112 1
ID .7207 .4516 2.5469 1
Constant .4720 .4316 1.1960 1
Model B
AP WITH CP ID
-2 Log Likelihood 180.254 166 .2126

CP 1.8304 .3130 34.2025*** 1
ID 1.2667 .5375 5.5547** 1
Constant -5.6321 1.0205 30.4572 1
*P=<.10
**P=<.05
***p=<.01
115
Hypothesis 2 asserted that the smaller a firm's

resources, the less likely a firm would be to use a
cooperative strategy. The Wald statistic reported in Table
4.4, Model E, indicates that the independent variable ROA is
not statistically significant in the full model (x2=.7001;

.25<p<.50) . Because ROA also has an insignificant effect in
the reduced model (See Table 4.7, Model A) (x2=.5600;
.25<p<.50), Hypothesis 2 is NOT SUPPORTED.
Hypothesis 3 posited that the larger a firm's resources,
the greater the likelihood that a firm would use an

information strategy. As Table 4.4, Model B shows, ROA is not
a significant predictor of the use of an information strategy
(X2= 1.1207; .25<p<.50). To examine the marginal effect of

ROA alone, a separate model was run for ROA on information
strategy use, controlling for international diversification

(Table 4.8, Model A). Here again, ROA was not found
statistically significant (x2=.4144; .25<p<.50). Therefore,

Hypothesis 3 is NOT SUPPORTED.
Hypothesis 4 asserts that the greater a firm's

resources, the greater the likelihood of a firm using a
direct access/pressure strategy. In the full model, Table
4.4, Model C, the variable ROA is statistically significant

in magnitude (x2=6.3066; p<.10), but is not in the
hypothesized direction. As ROA increases, the use of a direct
access/pressure strategy becomes less likely, with odds less
than 1. Thus, Hypothesis 4 is NOT SUPPORTED.
116
TABLE 4.7
Cooperative Strategy Dependent Variable
Models of Separate Effects
Model A
CO WITH ROA ID
-2 Log Likelihood 65.368 166 1.000

ROA -.0421 .0562 .5600 1
ID -2.4396 1.4332 2.8975* 1
Constant 5.5967 1.5749 12.6285 1
Model B
CO WITH EZ ID
-2 Log Likelihood 65.671 166 1.000

EX .0095 .0183 .2713 1
ID -2.6556 1.4447 3.3786* 1
Constant 5.1717 1.6146 10.2601 1
Model C
CO WITH CP ID
-2 Log Likelihood 52.815 166 1.000

CP 9.1988 36.7604 .0626 1
ID -2.6471 1.5124 3.0636* 1
Constant -13.7094 73.5399 .0348 1
* P=<.10
117
TABLE 4.8
Information strategy Dependent Variable Models
of Separate Effects
Model A
IN WITH ROA ID
-2 Log Likelihood 120.582 166 .9968

ROA -.0245 .0380 .4144 1
ID -.9427 .7840 1.4456 1
Constant 3.0460 .7946 14.6944 1
Model B
IN WITH EX ID
-2 Log Likelihood 117.680 166 .9983

EX .0247 .0155 2.5395 1
ID -1.2297 .7764 2.5085 1
Constant 2.4195 .7991 9.1668 1
Model C
IN WITH CP ID
-2 Log Likelihood 107.572 166 .9999

CP -1.1693 .3345 12.2211*** 1
ID -1.2490 .8183 2.3294 1
Constant 6.5537 1.3960 22.0398 1
Model D
IN WITH TC ID
-2 Log Likelihood 120.350 166 .9970

TC -.0139 .0165 .7109 1
ID -.9935 .7912 1.5768 1
Constant 3.1098 .8300 14.0367 1
***P=<.01
118
Hypothesis 5 focuses on the effect of firm resources on

the constituency building strategy and asserts that the
greater a firm's resources, the more likely a firm will be to
use constituency building. By examining the Wald statistic in

Table 4.4, Model D, one sees that ROA does not appear to be
statistically significant (x2=.2215; .25<p<.50). When
considered in isolation (Table 4.9, Model A), and controlling
only for international diversification, ROA is again not
statistically significant (x2 =. 3 2 0 6 ; .25<p.50). Thus,
Number of Employees
Hypothesis 6 looks at the effect of number of employees

(variable=SZ) on the use of a constituency building strategy.
The full model, reported in Table 4.4, Model D, does not
support number of employees as a significant predictor of
constituency building use (x2=.9596; .25<p<.50). To check
whether the effect of firm employee size is dampened by the

presence of the other independent variables, a separate model
was run to examine the effect of number of employees on

constituency building, controlling only for international
diversification. This model, found in Table 4.9, Model C

also shows that the size variable is not statistically
significant (x2=.3103; .25<p<.50). Thus, Hypothesis 6 is

NOT SUPPORTED.
119
TABLE 4.9
Constituency Building strategy Dependent Variable
A
CN WITH ROA 10
-2 Log Likelihood 212.589 166 .0085
ROA .0141 .0249 .3206 1
ID .2397 .4673 .2630 1
Constant .4262 .4454 .9157
B
CN WITH EZ ID
-2 Log Likelihood 210.910 166 .0105
EX -.0091 .0065 1.9769 1
ID .3612 .4736 .5818 1
Constant .7201 .4600 2.4506 1
c
CN WITH SZ ID
-2 Log Likelihood 212.580 166 .0085
SZ .0428 .0768 .3103 1
ID .2859 .4640 .3796 1
Constant .4164 .4488 .8607 1
D
CN WITH CP ID
-2 Log Likelihood 209.992 166 .0118
CP .3912 .2339 2.7968* 1
ID .3245 .4692 .4782 1
Constant -.5824 .7704 .5714 1
E
CN WITH TC ID
-2 Log Likelihood 210.830 166 .0106

TC .0185 .0134 1.9054 1
ID .1637 .4705 .1210 1
Constant .3571 .4361 .6706 1
*P=<.10
**P=<.05
***p=<.01
120
Firm Experience/Legitimacy
Hypothesis 7 posits that as the number of years a firm

has operated within a country increases, so will the
likelihood of a firm using an information strategy. In the
full model (Table 4.4, Model B) firm experience (EX) is not
a significant predictor variable (x2= 1.7194; .10<p<.25). In
a model controlling only for international diversification

(Table 4.8, Model B), firm experience is also not significant
(X.2= 2.5395; .10<p<.25) . Hypothesis 7 is NOT SUPPORTED.

Hypothesis 8 asserts that as the number of years a firm
has operated in a country increases so will the likelihood of
the firm using constituency building. The full model, found

in Table 4.4, Model D, does not indicate that the variable
firm experience (EX) is statistically significant (x2=

1.6851; .10<p<.25) . In addition, a separate model run with
only firm experience and controlling for international
diversification (Table 4.9, Model B) does not show
significance for the variable (x2=1.9769; .10<p<.25). Thus,

Hypothesis 9 posits that the newer a firm is to a
country, the more likely it is that the firm will use a

cooperative strategy. The full model, found in Table 4.4,
Model E, does not find that firm experience is a significant
predictor of the likelihood of using a cooperative strategy

(X2=.8596; .25<p<.50). In order to see if the effects of firm
experience are dampened by the presence of the other
121
independent variables, a separate model was run (Table 4.8,
Model B) to examine the effects of firm experience on

cooperative strategy use, controlling only for international
diversification. Again, no significant relationship was found

(X2=.2713; .25<p<.50). Thus, Hypothesis 9 is NOT SUPPORTED.
Hypothesis 10 examines the relationship between firm

experience and the use of a direct access/pressure strategy.
According to this hypothesis, when a firm is newer to a
country, the firm is more likely to use direct
access/pressure. The results of the full model for direct
access/pressure may be found in Table 4.4, Model C. Firm

experience is not found to be a significant predictor of this
strategy use (x2=.0045; .10p<.25). In examinint the reduced
model (Table 4.10, Model B), these results are confirmed.
Thus, Hypothesis 10 is NOT SUPPORTED.
Institutional Variable: Corporatism/Pluralism

Hypothesis 11 examines the role of an institutional
variable on the approach used to political strategies. The

supporting theory for this hypothesis contends that the
greater the degree of corporatism in a country, the greater
the likelihood that firms will use a relational approach to
political strategy. The full model for the approach dependent

variable may be found in Table 4.4, Model A. This model
indicates that corporatism/ pluralism is a significant
variable in predicting the use of a relational approach
122
TABLE 4.10
Direct Access/pressure Dependent Variable
Model A
DA WITH ROA ID
-2 Log Likelihood 222.190 166 .0023

ROA ,0696 .0290 5.7585** 1
ID ,7838 .4655 2.8344 1
Constant ,1377 .4360 .0998 1
Model B
DA WITH EZ ID
-2 Log Likelihood 228.745 166 .0009

EX .0025 .0064 .1542 1
ID .5503 .4501 1.4947 1
Constant .2539 .4396 .3336 1
Model C
DA WITH CP ID
-2 Log Likelihood 219.279 166 .0035

CP -.6655 .2194 9.1966*** 1
ID .5210 .4582 1.2929 1
Constant 1.6484 .7356 5.0219 1
Model D
DA WITH TC ID
-2 Log Likelihood 227.377 166 .0011

TC .0142 .0116 1.4942 1
ID .6536 .4531 2.0812 1
Constant .0732 .4231 .0299 1
* P=<.10
**P=<.05
***p=<.01
123
(X2=34.4268; p<.01). For greater values of the corporatism

variable (moves away from pluralism to more corporatist
institutions), the odds that a relational approach is adopted
are significantly greater than 1. Thus, Hypothesis 11 IS

SUPPORTED.
Hypothesis 12 examines the relationship between
corporatism and cooperative strategies, asserting that the

greater the degree of corporatism in a country, the greater
the likelihood that firms will use a cooperative strategy.
Both the full model for cooperative strategy (Table 4.4,

Model E) and a separate model examining the marginal effects
of corporatism on cooperative strategy use, and controlling

only for international diversification (Table 4.8, Model C)
report that corporatism/pluralism (CP) is not statistically

significant in predicting the use of cooperative strategies
(X2=.0650; .10<p<.25 and x2=.0626; .10<p<.25, respectively).
Thus, Hypothesis 12 is NOT SUPPORTED.
Hypothesis 13 asserts that the greater the degree of
corporatism in a country, the greater the likelihood that

firms will use a constituency building strategy. The full
model for constituency building (Table 4.4, Model D)
indicates that corporatism/pluralism (CP) is a not
significant variable (x2= 2.5679; ,10<p<.25). A separate

model (Table 4.9, Model D) controlling only for international
diversification, however, indicates that corporatism/
pluralism is a significant predictor of constituency building
124
use in isolation (x2= 2.7968; p<.10). In this separate model,

as the degree of corporatism increases, so does the
likelihood that a firm will use constituency building with
odds significantly greater than 1. Thus, while Hypothesis 13
is NOT SUPPORTED, this is an area requiring future study in

that no evidence of severe multicollinearity is present to
explain the dampening effect of the other independent

variables.
Hypothesis 14 focuses on the relationship between
pluralism and the use of an information strategy: As the
degree of pluralism in a country increases, so should the

likelihood of firms using an information strategy. The full
model found in Table 4.4, Model B indicates that

corporatism/pluralism is a significant variable (x2= 11.2067;
pc.01). The use of an information strategy is more likely in
more pluralist countries, with odds significantly greater
than 1. Thus, Hypothesis 14 IS SUPPORTED.
Hypothesis 15 asserts that as the degree of pluralism in
a country increases, so will the likelihood of firms using a
direct access/pressure strategy. The full model for the
dependent variable direct access/pressure may be found in

Table 4.4, Model C. The results of the logistic regression
for this model indicate that corporatism/pluralism is a

significant predictor of the use of a direct access/pressure
strategy (x2= 9.7593; p<.01). The odds of a firm using the

direct access/pressure strategy for more pluralist countries
125
are significantly greater than 1. Thus, Hypothesis 15 IS

SUPPORTED.
Industry Variable: Technical Nature
Hypothesis 16 asserts that the greater the technical
nature of the industry (TC), the greater the likelihood that

firms will use a direct access/pressure strategy. The results
of the logistic regression for the full model on direct
access/pressure may be found in Table 4.4, Model C. These
results indicate that technical nature of the industry does
not have a significant relationship with the likelihood of
use of a direct access/pressure strategy (x2=.0906;
. 10<p<. 2 5 ) . To ensure that the effect of technical nature

was not being dampened by the presence of the other
independent variables in the full model, a separate model was
run for the effect of the independent variable on direct
access/pressure alone, controlling only for international
diversification. The results of this model (Table 4 . 1 0 ,

Model D) confirm that no significant relationship is present
(x2=1.4942; .10<p<.25). Thus, Hypothesis 16 is NOT SUPPORTED.
Hypothesis 17 posits that as technical nature of the
industry increases, the likelihood of firms using information
strategies will also increase. The results of the full model
for the use of an information strategy may be found in Table

4.4, Model B. These results suggest that the technical nature
of the industry is not a significant predictor of the
126
likelihood of the use of an information strategy (x2=.1323;
.25<p<.50). When a separate regression model for technical
nature, controlling only for international diversification,
was run with the dependent variable information strategy use

(Table 4.8, Model D), lack of significance again resulted
(X2=.7109; .25<p<. 50) . Thus, Hypothesis 17 is NOT SUPPORTED.
Hypothesis 18 asserts that as technical nature of the
industry increases, the likelihood that firms will use

constituency building will decrease. The results of the full
model may be found in Table 4.4, Model D. These statistics
indicate that technical nature is not a significant predictor

of likelihood of constituency building strategy use
(X2=.5108; .25<p<.50). To examine the separate effect of

technical nature, a model was run with the variable alone,
controlling only for international diversification (Table

4.9, Model E). The results of this logistic regression also
indicate that the technical nature of the industry is not a
significant predictor of the use of constituency building

(x2=l . 9 0 5 4 ; . 2 5 < p < . 5 0 ). Therefore, Hypothesis 18 is NOT
SUPPORTED.
Competitor's Perceived Use of Strategy
Hypothesis 19 focused on the degree of corporatism in a

country and the likelihood that firms will adopt political
strategies that they perceive their competitors are using
(matching strategies). This hypothesis was tested by a
127
logistic regression using perception of competitors' strategy

pattern as a dichotomous dependent variable with corporatism/
pluralism as a predictor and international diversification as
a control variable. The results of the model may be found in
Table 4.4, Model F. These results indicate that corporatism/
pluralism is a significant predictor of the likelihood of
firms matching political strategy patterns to those they
perceive their competitors are using (x2=6.259, p<.01). In
particular, in more corporatist nations, firms are more
likely to perceive their strategies as similar to those of
their competitors, but they are less likely to do so in more
pluralist nations. Thus, Hypothesis 19 IS SUPPORTED.
Additional Analyses
When examining the frequency distribution of the use of
the four strategy types, one can see that there is relatively
little variation in the use of two types of strategies: the
information strategy and the cooperative strategy. This may
be, as discussed earlier, a result of the sample firms
sharing common perceptions about the value of these strategy
types. This may also result from the fact that information
strategies tend to be the strategies most commonly used in
the U.S. (Lord, 1995) (with the exception of PAC
contributions) and that institutionally, the majority of the
countries in the E.U. have either formally or informally
stressed the importance of cooperative strategies such as
employers groups.
128
Whatever the explanation, these two strategies have much

less variation in use than the direct access/pressure
strategy or the constituency building strategy. This lack of
variation may be causing the lack of significant

relationships between the independent variables and the
likelihood of these two types of strategies. In order to

examine this possible effect, an exploratory analysis was
done to better understand the effects of the independent

variables of interest on the individual tactics that comprise
both the information strategy and the cooperative strategy.
This analysis consisted of logistic regression analysis of
each individual tactic within the two strategies and the
effect of the independent variables hypothesized to affect

each strategy type. These results will be discussed based on
the full logistic regression models for each of the
individual tactics in each strategy type. Frequency reports
on individual tactics in each category may be found in Table

4.1.
Information strategy
Tactic 1 (Question 1) of the information strategy is
contacting, initiating discussions or providing information

to public policy makers by members of the company (internal
lobbying). In examining Table 4.11, Model A, with all
independent variables and the control variable for an

information strategy, one finds that the independent
129
TABLE 4.11
Information Strategy Tactics Dependent Variable
Full Models
Model A
Q1 WITH ROA EZ CP TC ID
-2 Log Likelihood 143.582 163 .8608

ROA -.0049 .0307 .0258
EX .0225 .0130 2.9858*
CP -1.1034 .2826 15.2436***
TC .0058 .0153 .1420
ID -.8732 .6252 1.9503
Constant 4.6413 1.1065 17.5958
Model B
Q2 WITH ROA EZ CP TC ID
-2 Log Likelihood 182.664 163 .1390

ROA -.0301 .0286 1.1072
EX .0178 .0086 4.2558*
CP -1.4604 .2700 29.2556***
TC .0064 .0138 .2164
ID .6718 .5341 1.5820
Constant 3.2741 .8913 13.4727
Model C
Q3 WITH ROA EX CP TC ID
-2 Log Likelihood 218.854 163 .0023

ROA -.0046 .0250 .0344
EX .0079 .0068 1.3495
CP -.7339 .2302 10.1601***
TC -.0099 .0129 .5944
ID .1202 .4749 .0641
Constant 1.6975 .7929 4.5827
* P=<.10
**P=<.05
***P=<.01
130
TABLE 4.11 continued
Model D
-2 Log Likelihood 212.677 163 .0054

ROA .0181 .0267 .4608
EX .0128 .0069 3.4378*
CP -.7141 .2408 8.7961***
TC -.0084 .0135 .3901
ID .0734 .4903 .0224
Constant 1.0267 .8095 1.6088
Model E
-2 Log Likelihood 211.599 163 .0062

ROA .0263 .0269 .9509
EX .0133 .0070 3.5772*
CP .6247 .2367 6.9656***
TC .0147 .0140 1.0954
ID .7432 .5056 2.1611
Constant ,2954 .8113 .1326
*P=<.10
**P=<.05
***p=<.01
131
variables of firm experience (EX) and corporatism/pluralism
(CP) may be judged significant, (x2=2.9858, pc.10 and
X2=15.2436, p<.01, respectively). The effect of increased

pluralism is positive for the likelihood of use of this
tactic, as is the effect of an increase in firm experience.

Thus, while corporatism/pluralism was found to be significant
for the general strategy, the firm experience variable is
also statistically significant in the modelling of this

tactic individually.
Tactic 2 (Question 2) of the information strategy is

contacting, initiating discussions or providing information
to public policy makers by external professionals (external
lobbying). In examining Table 4.11, Model B, with all
independent variables and the same control variable as for
information strategy, one sees that firm experience and

corporatism/pluralism again are statistically significant
(X2=4 . 2 5 5 8 , p<.10 and x2=29.2556, p<.01, respectively).
Firms that operate longer in a given country are more likely
to use this tactic, as are firms operating in more pluralist
nations. Thus, as before, while corporatism/pluralism is
significantly related to the strategy use overall, experience
is also a significant predictor of this particular tactic.

Tactic 3 (Question 3) involves reporting of research
results and publishing position papers, or technical reports.
The results of the logistic regression model containing all
independent variables and the control variable are presented
132
in Table 4.11, Model C. For this particular tactic, firm

experience is not statistically significant (x2=1.3495,
.25<p<.50), but the effect of corporatism/pluralism remains
a significant predictor in this model (x2=10.1601, p<.01).
Thus, corporatism/pluralism is significant not only to the

strategy overall but also to this particular tactic.
Tactic 4 (Question 4) is company members testifying
before hearings/committees of government bodies. The results

of the logistic regression model for this tactic, with all
independent and the control variable for the information
strategy, may be found in Table 4.11, Model D. These results

show that corporatism/ pluralism and firm experience are
statistically significant in this model (x2=8.7961, p<.10 and

X2=3.4378, p<.01, respectively). Thus, while corporatism/
pluralism was the only independent variable found
significantly related to the likelihood of strategy use
overall, firm experience is also a significant predictor of

this individual tactic.
Tactic 5 (Question 5) is commissioning research/think-

tank research projects. Results for the logistic regression
model for this tactic, with all independent variables and the
control variable for the strategy, may be found in Table
4.11, Model E. These results show that while corporatism/

pluralism is a significant predictor of the use of an
information strategy overall (x2=6.9656, pc.oi), firm
experience is also a significant predictor of this tactic
133
individually (x2=3.5772, p<.10), with increased likelihood of

tactic use the longer a firm has operated in a country.
These individual analyses indicate that some independent

variables not considered significant in explaining the use of
an information strategy on the whole are significant at the
individual tactic level. In addition, the sample variation

in frequency across between these five tactics (Table 4.1)
suggests that the frequency of use of the information
strategy as a whole results primarily from the use of
particular tactic(s) within the strategy. As discussed

earlier in this chapter, tactics in Questions 1 and 2 are
much more widely used than the other three tactics in the
category (Table 4.1).
Cooperative Strategy
Tactic 1 (Question 17) under the cooperative strategy is
forming coalitions with other organizations not in the firm's
horizontal or sectoral trade associations (i.e.,

environmental groups, social groups). The results of the
logistic regression model for this tactic with all

independent variables and the control variables for the
cooperative strategy may be found in Table 4.12, Model A.
These results show that the degree of corporatism/pluralism

is a statistically significant predictor of the likelihood of
use of this tactic (x2=6.8361, pc.Ol). A higher degree of
corporatism increases the likelihood of forming these
134
TABLE 4.12
Cooperative strategy Tactics Dependent Variable
Full Models
Model A
Q17 WITH ROA EX CP ID
-2 Log Likelihood 201.384 164 .0249
ROA .0174 .0258 .4528
EX -.0051 .0065 .6192
CP .6604 .2526 6.8361***
ID -.1258 .5018 .0628
Constant -.7809 .8450 .8541
Model B
-2 Log Likelihood 178.623 164 .2058
ROA -.0082 .0280 .0868
EX .0051 .0083 .3786
CP .8417 .2892 8.4720***
ID -.3797 .5505 .4758
Constant -.8248 .9304 .7858
Model C
-2 Log Likelihood 154.091 164 .6990
ROA -.0207 .0290 .5090
EX .0362 .0144 6.2821**
CP .2004 .2765 .5252
ID -.7921 .6017 1.7329
Constant .7726 .9862 .6137
Model D
-2 Log Likelihood 76.405 164 1.000
Variable B .E . Wald df
ROA -.1315 .0538 5.9800**
EX .0271 .0202 1.7923
CP 2. 8071 .0411 7.2707***
ID -1.4134 .1252 1.5779
Constant -2.4583 2.4094 1.0410
*P=<.10
**P=<.05
*** P=<.01
135
coalitions. Thus, while corporatism/pluralism was not a

significant predictor of cooperative strategy use overall, it
is a significant variable related to the likelihood of use of
this particular tactic.
Tactic 2 (Question 18) for the cooperative strategy is
joining business advisory groups to governments and
regulatory bodies such as standard setting committees. The
results of the logistic regression for this tactic with all
independent variables and the control variable for the
cooperative strategy may be found in Table 4.12, Model B.
Similar to the results for Tactic 1, these results show that
corporatism/pluralism is a statistically significant variable
(X2=8.4730, p<.01). Here again, the relationship is positive,
so that in more corporatist nations, the likelihood of a firm
using this tactic is higher (2.38 odds). Thus, while
corporatism/pluralism is not a significant variable for the
strategy overall, it is an significant predictor for this
individual tactic.
Tactic 3 (Question 19) deals with how active the company
is in vertical trade associations from 0= Not at All to 4=
Very Active. Because membership in vertical trade
associations is either informally or formally mandated in
several of the E.U. nations, a different scale of frequency
was required for this question. By the scale being phrased
in this manner, firms that do not belong to such
organizations (which are present in every sample nation)
could answer 0 as could those that perhaps are mandated to
136
membership but are not active in the associations. The

results of the logistic regression for this tactic with all
independent variables and the control variable for
cooperative strategy are presented in Table 4.12, Model C.
These results show that firm experience is a significant
predictor in the equation (x2=6.2821; p<.025). The effect of
firm experience on how active a firm is in these associations
is positive, with odds of increasing activity slightly
greater than 1 as firm experience increases (1.04). Thus,
while firm experience may not be a significant predictor of
the use of the strategy overall, it is a significant
predictor of the degree of activity in vertical trade
associations.
Tactic 4 (Question 20) is similar to that of Tactic 3
(Question 19) in that it asks how active the firm is in
horizontal trade associations and is scaled identically. The
results for the full model for this tactic, including all
independent variables and the control variable for
cooperative strategies, may be found in Table 4.12, Model D.
These results show that firm resources and corporatism/
pluralism are significant independent variables (x2=5.98;
p<.025 and x 2=7.2707; p<.01, respectively). The effect of ROA
on association activity is negative. As ROA increases, firms
are less likely to be active in horizontal trade
associations, with odds less than 1 (.88). The effect of
corporatism/pluralism on association activity is positive
with odds significantly exceeding 1 (16.20). Thus, as the
137
degree of corporatism increases so does the likelihood that

firms will be more active in horizontal trade associations.
While neither corporatism/pluralism nor ROA were found to be
significant predictors of cooperative strategy use in the
aggregate, these independent variables are significantly
related to the use of this particular tactic— the activity
level of horizontal associations.
Similar to the case of the information strategy, while
none of the hypothesized independent variables were found to
be significant at the aggregate level of cooperative strategy
use, many are significantly related to the use of individual
tactics within the strategy. In the case of the cooperative
strategy, the skewness of use may be driven by the frequency
of use of particular tactics that comprise the strategy and
may be masking the effect of certain independent variables
found to be significant at the tactic level. Although the
four tactics that comprise the cooperative strategy exhibit
common frequencies (Table 4.1), the frequency of use of the
strategy overall has low variation. In addition, because of
the nature of the two different scales in measuring these
four tactics, the lack of results may be skewed by the
institutionally mandated tactics (Table 4.1).
138
CHAPTER V
DISCUSSION AND CONCLUSIONS
Discussion
This study was undertaken to explore the role of firm,

industry, and institutional variables on the choice of
political strategies. As discussed in Chapter II, this area
of research has received relatively little attention in the
management and strategic management literature in the past.
Most existing research in the area of corporate political
strategy and strategic business-government relations has been
theoretical in nature and focused more narrowly on either
specific tactics firms use or the effect of such tactics on
particular issues. Studies of political strategy formulation
at the aggregate have been even more limited. The exceptions
to this (Getz, 1993; Oberman, 1993; Buchholz, 1992) have
developed theoretical models of the choice of political
strategies. These models, however, are either transactionally
based (i.e. they model decisions to use particular tactics
based on an issue-by-issue calculus) (Getz, 1993; Buchholz,
1992) or are general theoretical models depicting types of
variables (e.g. firm characteristics) that may affect the
choice of political strategies without specifically
identifying these variables (Getz, 1993; Oberman, 1993). This
study was an attempt to take the first step in filling the
void in our understanding of political strategy formulation.
The intent was to develop and test a general model of
139
political strategy formulation across issues and by

identifying and quantifying specific variables that may
affect the choice of political strategies.
By the exploratory nature of this study, I hoped to gain
insight into the role of variables at three separate levels
of analysis- firm, industry, and institution, to the use or
non-use of the four specific strategy types, and to the
overall approach to political strategies. The results of
each hypothesis may aid in this understanding.
Discussion of Results
To conduct this study, a well-established taxonomy of
political strategies was necessary to advance our
understanding of the phenomenon. While the taxonomy
developed herein may not be the definitive list or
conceptualization, comparatively it is much more
comprehensive and exhaustive than many others identified in
the literature. By examining the inter-correlation statistics
in Table 4.2, one can see that the tactics that comprise each
of the four strategies are not only theoretically based, but
are also highly related to one another. In short, this is a
good first step to a broader look at the various options
available to firms in the political arena.
140
TABLE 5.1
Summary of Results
HI: The larger a firm's financial resources, the greater the Not
likelihood of the firm using a relational approach to political Supported
strategies.
H2: The smaller a firm's financial resources, the greater the Not
likelihood of the firm using a cooperative strategy. Supported
H3: The greater a firms's financial resources, the greater the Not
likelihood of the firm using an information strategy. Supported
H4: The greater a firm's financial resources, the greater the Not
likelihood of the firm using direct access/pressure as a Supported
strategy.
H5: The greater a firm's financial resources, the greater the Not
likelihood of the firm using constituency building as a strategy. Supported
H6: The larger the number of a firm's employees, the greater the Not
likelihood of the firm using constituency building as a strategy. Supported
H7: The longer a firm has existed within a country or market, the Not
greater the likelihood of the firm using an information strategy. Supported
H8: The longer a firms has existed within a country or market, Not
the greater the likelihood of the firm using constituency Supported
building as a strategy.
H10: The newer a firm is to a country or market, the greater the Not
likelihood of the firm using direct access/pressure as a Supported
strategy.
Hll: The greater the degree of corporatism in a country, the

greater the likelihood of a firm using a relational approach to Supported
political strategies.
H12: The greater the degree of corporatism in a country, the Not

greater the likelihood of a firm using a cooperative strategy. Supported
H13: The greater the degree of corporatism in a country, the Ambiguous

greater the likelihood of a firm using constituency building as a NS-Full
strategy. S-Separate
H14: The greater the degree of pluralism in a country, the Supported

greater the likelihood of a firm using an information strategy.
HIS: The greater the degree of pluralism in a country, the Supported

greater the likelihood of a firm using direct access/pressure as
a strategy.
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TABLE 5.1
CONTINUED
H16: The greater the technical nature of an industry, the greater Not
the likelihood of firms in the industry using a direct Supported
access/pressure as a strategy.
H17: The greater the technical nature of an industry, the greater Not
the likelihood of firms in the industry using an information Supported
strategy.
H18: The greater the technical nature of an industry, the lower Not
the likelihood of firms in the industry using constituency Supported
building as a strategy.
H19: The greater the degree of corporatism in a country, the Supported

greater the likelihood firms will match the perceived strategies
of their competitors.
Theoretically, the distinction between transactional and

relational approaches to political strategies is a unique one
to the research project at hand. By finding support for the
independence of the two approaches and the four distinct
strategy types, this project has moved the discussion of
political strategies from an issue-based focus to a broader
understanding of political activity.
A summary of the results of the hypotheses may be found
in Table 5.1. Hypotheses 1 through 5 examined the role of
firm resources, operationalized as ROA, on the likelihood of
use of the two approaches to political strategy and the four
strategy types. Firm resources were not a significant
predictor of the use of a particular approach to political
strategy or the likelihood of use of a cooperative or
142
The lack of findings for the relationship between firm
resources and approach (Hypothesis 1) is surprising in that
the original assumption was that the relational approach is
more resource-intensive than the transactional approach. In
hindsight, however, this assumption may not be necessarily
true. While a relational approach has a relatively constant
investment, in terms of ma intaining contacts, on-going
education, etc. to ensure that the relationships are in place
once an issue arises that greatly affects the firm, this may
not mean that a transactional approach is less costly in sum.
For example, if a firm does not have the relationships and
c o ntacts developed and maintained so that when an important
issue arises that requires intensive political action, the
firm m a y have to expend more resources in order to gain any
influence or access. That is, a firm may have to lobby or
contact proportionately more political decision makers in
order to gain the support of a limited few on the issue.
Likewise, a firm may have to undertake an expensive
advertising campaign to gain public support for its position
on an issue as a substitute for a phone call to an
influential decision maker or h ead of its grassroots effort.
Therefore, the transactional approach may, in some cases, be
mor e financially costly than a relational approach in that
capital is needed to substitute for underdeveloped relational
capital.
143
The lack of significance for the relationship between
firm resources and the likelihood of cooperative and
information strategy use (Hypotheses 2 and 3) may stem from
the lack of variation in use of the two strategy types
overall asdiscussed previously. Due to the overwhelming use
of these two types of strategies, there m a y not be enough
variation to fully explore the predictive ability of firm
resources. Because firm resources were found to be a
significant predictor of the activity level of firm
participation in horizontal trade associations, Tactic 4 of
the cooperative strategy, firm resources may still play a
role in the use of the strategy type overall. However, the
frequency limitations of the present study hinder a more
complete test of this relationship.
A l t h o u g h firm resources were found to be a significant
predi cto r of the likelihood of use of a direct
access/pressure strategy, Hypothesis 4 was not supported
because the effect was negative instead of positive as
hypothesized. Firm resources did not have predictive ability
for the likelihood of use of constituency building
(Hypothesis 5). The direction of the effect of firm
resources on the likelihood of use of a direct
access/pressure strategy was surprising and an explanation
for the result is difficult post-hoc. One possible
144
explanation may be that the relationship between the use of
a direct access/pressure strategy and ROA is not linear.
That is, diminishing effects may occur after a set level of
firm financial resources. As financial resources or ROA
increases beyond a certain level, the likelihood of use
actually is reduced. Another possible explanation for these
results may be found in the use of ROA as a measure of firm
financial resources. If firms are engaging in direct
access/pressure and making large expenditures for this
strategy currently in anticipation of future benefits, these
expenditures may actually be affecting present ROA. That is
to say, if firms are heavily investing in a direct
access/pressure strategy, this investment may be impacting
ROA such that those firms with lower ROA are those most
likely using the strategy. Unfortunately, a study would have
to be longitudinal to pick up this effect.
The lack of relationship between firm financial
resources and constituency building (Hypothesis 5) is also
surprising in that the initial assumption is that
constituency building is resource intensive. One of the
tactics, however, that comprises the constituency building
strat eg y may be affecting the results of the category
overall. Constituency building tactics target other
individuals in an attempt to induce individuals to send a
145
message of a policy position to political decision makers.
Typically, reaching these individuals is costly — using
advertising, press conferences, education programs,
grassroots programs. One of the tactics most commonly used
by the respondents, however, is less resource intensive.
Ap p r o a c h i n g representatives of the U.S. government to
advocate pol ic y positions with the host country government
may not be as financially intensive as the other tactics.
Given that this tactic was one of the two most commonly used
tactics and that this tactic is not as related to firm
financial resources as the others, this may partially explain
the lack of results.
Hypo th esi s 6 examined the role of firm size and the
likelihood of use of constituency building. While no support
for this hypothesis was found, the lack of significance may
be a result of the aggregation of these tactics into the
general category of strategy. Of the six tactics included in
a constituency building strategy, only two directly refer to
mobilizing employees and others related to the firm.
Questions 11 and 15 refer to tactics primarily directed at
employees and other individuals linked to the firm. The
other four tactics- public relations advertising in the
media, holding press conferences on public policy issues,
approaching U.S. representatives to support positions, and
146
advocacy advertising- all target societal members or
individuals linked to the home government. In addition,
although the pre-test indicated that a common understanding
existed about what economic and political education programs
and grassroots mob il ization programs mean, i.e. that these
tactics target individuals linked to the firm, a broader
m e a n in g could be construed for these two items in that
n e i t h e r explicitly state who the target is. Therefore, the
lack of results m a y stem from the fact that several of the
constituency building tactics are not related to the size of
the workforce or from a possible variation in the
respondents' definition of the two tactics directed towards
employees.
Hypotheses 7 through 10 focus on the theorized
relationship between firm experience and the likelihood of
use of the four strategies. Firm experience was not a
significant predictor of the likelihood of use of an
information strategy at the aggregate level (Hypothesis 7).
Firm experience was, however, a significant predictor of the
likelihood of use of four of the five tactics that comprise
the information strategy when examined separately. In the
tactic level analyses, firm experience was found to be
significantly related to the use of lobbying by internal firm
members, lobbying by external professionals, companies
147
testifying before hearings/ committees, and commissioning
research/think-tank research projects. Again, the lack of
variation in the use of the information strategy at the
aggregate may be masking the significance of firm experience
as the individual tactic analyses suggest that firm
experience is a significant predictor of four of the five
tactics in the information strategy.
F irm experience was not a significant predictor of the
l i kelihood of the use of a constituency building strategy
(Hypothesis 8) . The lack of results for the relationship
b e t w een the number of years a firm has operated in a given
country and the use of a constituency building strategy is
surprising. Given prior evidence that supports the
relationship between credibility and legitimacy and the
effectiveness of such efforts, the relationship was expected
to have been significant.
Among the possible reasons for the lack of results, the
f ollowing two may be most relevant. First, the number of
years a firm has operated in a country may be a poor proxy
for firm legitimacy or credibility. Just because a firm has
survived in a given country for a long period of time m ay not
mean that society views the firm as more or less legitimate
or credible than a new organization. In a geographic area
such as the EU, where a number of relatively small nations
148
exist wit h a high degree of communication and coordination,
firms may have reputations for legitimacy or credibility that
p e rme ate borders. That is, a firm m a y have a similar
reputation across the E.U. nations regardless of how long
operations have been in place in specific nations. For
example, over a number of years Greek legislation constrained
the ability of fast-food restaurants to locate in the country
(e.g., McDonald's, a firm not in the present sample). But,
mos t of the residents of Greece knew about McDonalds and
thus, may have inferred a reputation for the firm independent
of the fact that the firm was not currently operating in
their country. That is, a firm's credibility or legitimacy
may transcend borders, thus contributing to the lack of a
direct relationship between the proxy, or number of years a
firm has operated in the country, and the perceived
effectiveness of a constituency building strategy that
targets societal members.
A seco nd possible reason no significant results were
found for the relationship between firm experience and
co n sti tu enc y building may be that some firms do not
understand the relationship between credibility and
legitimacy and the effectiveness of this strategy. That is,
firms may not know that their credibility m a y greatly affect
the success of this strategy. Exxon after the Valdes oil
149
spill in Alaska, continued public relations advertising in
the media, despite the fact that its credibility (or lack
thereof) may have affected the public's perception of the
credibility of the message. In a related vein, it is
possible that some firms do not have an accurate perception
of their credibility or legitimacy within a nation.
Firm experience was not found to be a significant
predictor of the likelihood of the use of a cooperative
strategy either (Hypothesis 9) . As mentioned previously,
this m a y stem from the lack of variation in the use of the
cooperative strategy. When the role of firm experience was
examined at the individual tactic level, I found that firm
experience is significant in predicting the activity level of
a firm in vertical trade associations. While significant to
this particular tactic, the effect of firm experience on the
likelihood of the use of the strategy overall may be
insignificant due to the lack of variation of use by the
respondents or as a result of the aggregation of four tactics
into the general category.
Firm experience was not found to be a significant
predictor of the likelihood of the use of a direct
access/pressure strategy (Hypothesis 10) . The lack of
support for this hypothesis was surprising given the past
evidence that supports the connection between credibility and
150
success of this strategy. The lack of support, however, may
ag a i n be explained by a firm's reputation transcending the
borders of the sample nations. Improved technology has
sh ort ene d the distance between countries and could thus
c r e a t e a situation where firm credibility is independent of
ho w long a firm has been operating in any given nation.
Hypotheses 1 through 10 in aggregate represent an
att emp t to test the role of firm variables on the choice or
use of political strategy. While results for the hypotheses
were severely limited, financial resources were found to be
a significant predictors of the direct access/pressure
strategy although in the opposite direction of that
hypothesized. In addition, as the individual tactic analyses
shows, certain firm variables were found to be significant
predictors of many individual tactics within the information
and cooperative strategies.
Hypotheses 11 though 15 examine the role of an
institutional variable, corporatism versus pluralism, on the
li ke lihood of use of strategy approaches and the four
s t r a t e g y types. As hypothesized, the greater the degree of
corporatism, the greater the likelihood that firms will adopt
a relational approach (Hypothesis 11) . Given this finding,
the opposite is also necessarily true, that the lower the
degree of corporatism in a country (or a move towards
151
pluralism on the scale) the less likely a firm will be to use
a relational approach and the more likely a firm will be to
use a transactional approach to political strategies.
Corporatism/pluralism was not found to be a significant
p r e d i c t o r of the likelihood of using a cooperative strategy
(Hypothesis 12), perhaps again due to the lack of variation
of cooperative strategy use among the respondents. When
examined at the tactic level, corporatism/pluralism was found
to be significant in predicting the likelihood of using three
of the four tactics that comprise a cooperative strategy.
Here again, this indicates that the lack of variation in use
of the cooperative strategy m ay be masking the effect on the
s t r a t e g y use in the aggregate as each of the four tactics
within the category exhibit more variation in use.
The significance of the relationship between
corporatism/pluralism and the use of a constituency building
is ambiguous (Hypothesis 13). When examined in the presence
of the other independent variables, corporatism/pluralism was
not found to be a significant predictor of the likelihood of
using of constituency building, but was found significant in
the reduced model. Given that no indication of
multicollinearity between corporatism/ pluralism and any
other independent variable was found, explanation of the
ambiguous results is not possible at this time.
152
Corporatism/pluralism was found to be significant in
pre d i c t i n g both the likelihood of use of an information
strategy (Hypothesis 14) and the likelihood of use of a
direct pressure/ access strategy (Hypothesis 15). Thus, the
more pluralist a nation, the greater the likelihood of a firm
using a information strategy or a direct access/pressure
strategy. Given that pluralist nations do not emphasize
cooperation and consensus building the way more corporatist
nations do, firms m ay be more likely to use these two
strategies that are not based on consensus.
Hypotheses 11 through 15 in aggregate are an attempt to
test the role of an institutional variable on the likelihood
of use of strategic approaches and the four strategy types.
Findings indicate that this institutional arrangement is a
significant predictor of political strategy approach, the use
of an information strategy, and the use of a direct
access/pressure strategy. While corporatism/pluralism was
not found to be significantly related to the likelihood of
use of a cooperative strategy on the whole, it was
significantly related to the use of three of the four tactics
that comprise it. In addition, the ambiguous results
regarding the relationship between corporatism/ pluralism and
constituency building indicate that this relationship is more
complex than previously thought and is an opportunity for
153
further research.
Hypotheses 16 through 19 revolve around the third level
of analysis, industry level. Hypotheses 16 through 18
examine the relationship between the technical nature of the
in dustry and the likelihood of using the direct
access/pressure strategy, the information strategy, and the
constituency building strategy. While technical nature was
not found to be a significant predictor of the use of any of
the three hypothesized strategies a rational explanation
exists for these results. The model developed in this paper
is meant to transcend issues and incorporate both the
transactional and the relational approaches to political
strategy. As Chapters I and II point out, firms are under
increasing government regulation, and public policies may be
a substantial threat or opportunity to firms. These
regulations and policies affect all aspects of a corporation,
fr o m human resources to trade issues. Thus, any given
corporation may be affected by a multitude of issues dealing
with a variety of aspects affecting the business. In
hindsight, however, Hypotheses 16 through 18 do not take into
account the variety of issues in which a firm m ay choose to
be politically active. The theory supporting these
hypotheses is based on the difficulty of transmitting
technical messages. This difficulty would make using a
154
constituency building strategy less effective and perhaps the
use of information and direct access/pressure strategies more
effective or attractive. That is the nature of my argument
b e h i n d the relationship between the technical nature of the
industry and strategy use. Therefore, it is not surprising
that no results were found for these hypotheses. At the
aggregate, firms that are generally politically active (as
the sample firms tend to be) may be active on a variety of
issues, not just those that are directly correlated to the
technical nature of their business. In retrospect, these
hypotheses are not in keeping with the attempt to develop a
model that goes beyond an issue-by-issue calculus.
Hypothesis 19 focuses on the concept of a macroculture
wherein firms in the same industry tend to imitate one
another's strategies. The theory to support the hypothesis
suggests that a macroculture is more likely to exist in more
corporatist nations where firms may not want to be construed
as outliers but rather want to be perceived as a part of the
majority or group. In more pluralist nations, the desire to
conform m ay not be as strong and firms may have a greater
tendency to choose strategies that competitors are not using
in an attempt to stand out from the group. The effect of
corporatism/pluralism, therefore, is for firms to choose
strategies similar to those they perceive their competitors
155
are using in more corporatist nations. Conversely, in more
pluralist nations, firms will be more likely to choose
strategies that they perceive are different from those of
their competitors. Corporatism/pluralism was found to be a
significant predictor of whether a firm perceived that its
strategic pattern differs from that of its competitors, in
essence creating a macroculture in more corporatist nations.
Hy po theses 16 through 19 in aggregate were designed to
test the role of industry variables on the choice of
corporate political strategies. While the technical nature
of an industry was found to have no bearing on the use of
political strategies, the perceived strategic pattern of a
firm's competitors was found to be related to the
institutional variable corporatism/pluralism and through this
relationship m ay affect the choice of political strategies.
Discussion of Other Factors Contributing to Study Results
In any study, regardless of the support for the
hypotheses, it is important to examine the factors that m a y
have contributed to the results or lack thereof. First, as
discussed in several places in the manuscript, the lack of
variation in use of the information strategy and the
cooperative strategy may be contributing to the lack of
significance for the independent variables hypothesized to
156
affect the likelihood of use of these strategies.
Unfortunately, there is not way to control for these effects
post-hoc.
Second, while one of the theoretical strengths of this
study is to remove political strategy formulation from an
issue-by-issue basis (supported by the frequency which
respondents characterized their approach as relational, or
spanning across issues and time), by aggregating the
strategies into those used within the last year, outside of
the issue context, I may be losing some of the richness of
political strategy formulation. For example, firms may use
similar strategies on an on-going basis. But, when a
particularly important issue arises, they may use entirely
different strategies or supplement their regular strategic
pattern in some way. Alternatively, firms may use a
particular strategy(ies) in an attempt to affect a social
issue that is important to them while using a different
strategy(ies) for economic issues. By aggregating across
issues, I lose all ability to discern which strategies that
are used for particular issue types or and which are used
across issues.
Third, aggregation across tactics m a y cause a related
problem. I have argued that the twenty tactics identified in
the study may be theoretically categorized into four distinct
157
a n d non-overlapping groups. While all tactics in a given
group share common characteristics and appear to be highly
intercorrelated within group, this aggregation may lose some
of the understanding that m ay be gained of the effect of
firm, industry, and institutional variables on the use of
specific tactics. As one can see in the exploratory analysis
of the effect of the hypothesized variables on the individual
tactics comprising the information and the cooperative
strategies, variables not found to be significant at the
s t rategy level are significant predictors at the tactical
level. This finding may be a result of the lack of variance
in the use of the two strategies as mentioned throughout this
discussion. Or, it may be a result of the aggregation of
tactics. Although they share certain theoretical
characteristics and are hi ghly intercorrelated, the tactics
may be affected differently by the independent variables in
question. Thus, while theoretically the four categories of
strategies may provide a parsimonious taxonomy of political
strategies and model development, the aggregation of tactics
may still be dampening the effects of the variables
identified herein.
Fourth, another reason for the lack of significant
results may be the operationalization of the dependent
variables as either 0 or 1. By binarily coding the dependent
158
variables instead of using a Likert-type scale, the variance
of use in each strategy type has been significantly reduced.
This lack of variation, in turn, may be masking the effects
of many of the independent variables. While the survey
asked the respondents to report use in terms of a five-point
frequency of never, once a year, once a month, once a week,
or once a day (at the AmCham's request), because these
intervals are unequal a polytomous logistic regression was
not recommended. Inaddition, because of the limited integer
scale (0-4) it is not possible to treat the dependent
variable as more continuous and to utilize other statistical
techniques such as multiple regression.
Finally, one additional reason for the lack of
significant results may be an artifact of the SPSSX logistic
regression methodology used. SPSSX uses Wald tests to
examine the contribution of individual coefficients (see
Hosmer & Lemeshow, 1989, for a discussion of Wald tests).
Because of the complex computational demands, the Wald test
does not behave consistently, and it often fails to reject
the null hypotheses when the coefficient is significant
(Jennings, 1986; Kleinbaum, 1993). The use of an increased
Type I error probability cut-off (here, .10 instead of the
more traditional .05) helps to offset this difficulty, but it
m a y have been inadequate to counter the unpredictability of
159
the Wald test. Future work could include the use of more
speci al ize d software so that problems associated with the
Wa l d test could be avoided.
Limitations of the Study
In addition to the above factors that may be influencing
the results of the study, this study m ay be limited in
several regards. First, causality in cross-sectional data
must be interpreted with extreme care. While theory would
in di cat e that the existence of the firm, institutional, and
i n dustry variables identified in the study affects the
likelihood of using particular approaches or strategies,
causality cannot be directly inferred from the data or the
methods used.
Second, the measurement instrument may be problematic.
Because a portion of the information gathered in the survey
cannot be validated by external sources, the measures gained
may suffer from response bias. Government relations, unlike
most other functional areas of a corporation, is often slimly
staffed, with the average number of people involved in
government/issue relations equalling just over three in the
sample of firms in this study (See Appendix C, Part I,
Question 10). Therefore, it was difficult to select a sample
including multiple people within any given subsidiary.
160
Third, the sampling method used for the study may also
pose some limitations. First, the sample was based on firm
me mb ership in one organization, the Am er i c a n Chamber of
Commerce, Brussels E.U. Mission. This sample was not random
and was chosen primarily to ensure a sizable response rate.
As a result, this sample may not be representative of the
p o p u lat ion of U.S. multinationals operating in the EU.
First, the membership list is dominated by Fortune 500 firms.
This means that the results of the study m ay not be
generalizable to smaller U.S. multinationals operating in
Europe. In addition, the E.U. Mission typically represents
firms that operate in a variety of E.U. nations. Therefore,
the results based on this sample ma y not be indicative of
political strategy formulation and use in firms (large or
small) with interests limited to only one or a few countries
within the EU.
A n o t h e r potential issue in the choice of sample may be
contributing to the lack of variation of cooperative strategy
use. Depending on the respondent, he/she m a y not construe
me mb ers hip in the E.U. Mission of the Ame ri can Chamber of
Commerce, Brussels as a cooperative strategy. In essence,
some people may perceive that the sample comes from a
cooperative association for political action. Given that
some variation did exist in the use of the cooperative
161
strategy, however, this may not be a large problem with this
sample.
A final sampling limitation is that this study focuses
only on U.S. multinationals operating in the E.U. and cannot
be generalized to the political strategic behavior or
formulation of political strategies for U.S. firms outside
the EU, or to firms from other home countries.
Finally, in exploratory work such as this, the
possi bi lit y exists that variables affecting the choice of
corporate political strategies have not been identified and
measured. Other firm, institutional, or industry variables
m a y predict the use of the strategic approaches or the four
political strategies. The variables chosen had theoretical
support in existing literature on corporate political
strategy and other areas of strategic management. The
identification of these independent variables did not entail
an exhaustive list of those that could potentially affect the
likelihood of using the four strategies or two approaches.
Implications for Theory
This study has several implications for theory. First,
as discussed throughout, political strategy formulation is a
ripe area for academic inquiry. Political strategy has for
the most part been an area based on two distinct streams of
162
research: the corporate strategy literature and the political
science or political economy literature.
As mentioned in Chapters I and II, strategic management
literature has focused little attention on political
strategies in the past. Clearly, as the supporting rationale
for this study points out, the theories of strategic
management must be widened to include more explicit
examinations of political or nonmarket strategies. This
st u d y was an attempt to contribute to this body of research
by theoretically placing corporate political behavior within
the domain of corporate strategy and by empirically testing
the effect of three different levels of variables on the
formulation of this type of strategy.
The results of this study clearly indicate that firms
are engaging in political strategic behavior. Firms are not,
presumably, engaging in this behavior for altruistic reasons.
Rather, firms are engaging in political strategy in order to
affect the rules by which economic competition is governed.
Descriptive information gained in the survey indicate that a
huge majority of respondents are politically active. M a n y use
a vari et y of political strategies, and many institute
strategic political management and issue management at the
regional, national, and worldwide level. This study, then,
supports the theoretical rationale developed in Chapters I
163
and II that argues for the inclusion of political strategies
into our theoretical understanding of corporate strategy.
While strategic management literature does, for the most
part, stress the importance of government regulations in
strategy planning, this body of research has largely
considered political issues to be exogenous to the firm. The
rich b o d y of literature in political science (and practical
observation) indicates that firms are able to affect
go ve rnment policy through political strategy. While this
study does not test or measure the effect of the political
strategies examined on specific policies or issues, the study
does indicate that firms are using a variety of different
methods to influence government policy and that the
formulation of these strategies is affected not only by firm
variables but also by industry and institutional variables.
Again, the implications of this study for strategic
management theory are to broaden the area to explicitly
include nonmarket political strategies.
One of the main findings of this study is that the
institutional variable, corporatism/pluralism (which is a
pr o x y for both informal and formal institutional
arrangements), is a consistent predictor of the likelihood of
use of political strategy approaches and political strategy
types. This finding has extensive implications for theory in
164
strategic management.
For example, this study may be considered as an
exploration of two much-mentioned different approaches to
international strategy: multidomestic strategy and global
strategy as applied to political strategy. In an increasing
global marketplace many managers have learned the benefits of
standardizing strategy to make it more global, benefits such
as economies of learning and scale. On the other hand, many
advantages come from a multidomestic approach where
strategies are customized in individual nations, e.g. local
responsiveness. Due to the variety of government regulations
and political systems and norms that exist across nations,
one might assume that political strategies would necessarily
need to be multidomestic or customized to the individual
nations. The results of this study confirm this assumption
in that the institutional variables were some of the most
significant predictors of strategy use. Therefore, the
results of this study indicate that strategy formulation
needs to more fully incorporate institutional differences
into the calculus that results in firm strategy. That is,
institutional variables may also be important predictors of
the likelihood of use of other types of strategies, market
and nonmarket.
In addition to the significance of the institutional
165
variable, firm variables were also found to be significant
predictors of certain types of strategies (firm experience
and use of the direct access/pressure stra teg y). This
indicates that the theoretical model that depicts market
strategy formulation as requiring examination of external
opportunities and threats (partly affected by institutional
arrangements) and internal strengths and weaknesses m ay also
be applicable to political strategy. That is, institutional
differences, while being the most consistent significant
predictors of strategy use and approaches, are not the only
significant predictors of political strategy use; firm
variables also play a role in political strategy formulation,
much like the case of market strategy formulation.
The institutional variable of corporatism/pluralism was
also found to be significantly related to a firm's political
strategic pattern overall as compared to the pattern of their
competitors. This indicates that the dynamics of competition
in terms of strategy may be affected by political
institutions. Theoretically, this implies that in modelling
competition and competitors' strategies, firms may encounter
differential strategic variation as a result of the degree of
corporatism versus pluralism. Therefore, the contradictory
findings in the past literature on macrocultures may be
part ly a result of institutional arrangements. Given the
166
findings of this study, existing theory in the area of
macroculture or industry culture and strategic imitation may
need to be broadened to include the role of institutional
arrangements on strategic isomorphism.
Because variables at all three levels of analysis were
foun d to be significant predictors of the likelihood of use
of strategy type and approach, this has implications for
theory as well. Studies that examine the effect of only one
level of analysis may be missing important variables at other
levels of analysis. Strategy formulation, then, m a y need to
explicitly consider all three levels of variables in order to
more fully understand and model predictors of strategy use.
This study provides support for the theory that firm,
industry, and institutional variables may all be affecting
strategy formulation.
In addition, the more comprehensive taxonomy of
political tactics may help frame the area for those
researchers in more traditional market strategic management
areas. Because the area of political or nonmarket strategies
has been studied relatively infrequently by strategic
m a n a g e m e n t scholars, the wide scope of political tactics is
often unknown or disregarded. For example, when most people
outside of the area are asked about political strategies the
most common response is "lobbying," as if no other political
167
tactics were available to firms. This study contributes in
a more systematic way to categorize and understand the
strategic options available to firms interested in gaining
access to or influencing public policy.
The area of political strategies has also evolved from
traditional literature in political science and political
economy. This study has implications for theory in these
areas as well. First, a majority of the literature that
ex amines how groups attempt to shape political policies and
issues has been based around groups representing individuals,
such as social interest groups. The cooperative strategy
explored in this study is quite different in that these
organizations represent a group of organizations rather than
individuals. In addition, firms are using strategies
individually to affect government policy. This study is a
step towards inclusion of political behavior by firms or
groups of firms into our understanding of political
participation.
As I argued earlier in this chapter, one implication of
this project is to remove discussions of political strategy
from an issue-by-issue calculus. It is evident from practice,
and n o w confirmed by this study, that firms vary in their
approach to political strategies. This distinction is an
important one to the progress of scholarly understanding of
168
political strategy.
This implication may be important for political science
and political economy literature in that the distinction may
also apply to our understanding of efforts made by
individuals or groups of individuals attempting to affect
government policy. That is, individuals or private interest
groups representing individuals rather than groups m a y also
approach political participation in transactional or
relational manners. This distinction may provide insight
into how strategies vary by approach or to what degree
approaches adopted by these different groups is related to
institutional arrangements.
From the political decision maker's perspective, the
removal of political participation from specific issues to a
repeat dealing has been an area of exploration in political
science. . For example, Heinz, et al. (1993) empirically
studied the influence private interest groups have on policy
making. This study examined four policy areas and found that
no key group of influential forces is dominant within any
given area of policy making. The implication of m a n y firms
using a relational approach may broaden the conceptualization
of private interest groups to include businesses and groups
of businesses and may lead to examination of the relative
influence of groups using relational versus transactional
169
approaches to political strategy.
In addition, a large portion of the rich body of
literature in political science and political economy
g e n e r a l l y focuses on the effect of institutions on economic
performance and national competitiveness (North, 1990) . This
st u d y provides insight into a more micro implication of
institutions in that these results show that institutional
arrangements also affect the choices (strategies) firms
employ. The results of this study supporting
corporatism/pluralism as a significant predictor of the
likelihood of use of certain strategies m ay also be linked to
economic performance and country competitiveness. For
example, if an information strategy and a direct
access/pressure strategy are more likely to be used in more
pluralist nations, this may affect the type of issues or
policies that are advocated and passed. Hillman and Keim
(1995a) argue in the tradition of Olson (1965) that more
pluralist nations create the opportunity for rent-seeking.
The information strategy and the direct access/pressure
st ra teg y are not based on consensus to the same degree as
constituency building and cooperative strategies. Therefore,
if the information and direct access/pressure strategies are
more likely to be used in more pluralist nations, rent-
s e e k in g is a distinct possibility. This possibility is
170
further expanded by the likelihood of firms using a
transactional approach (which is not based on repeat
dealings) in pluralist nations. In more corporatist nations
firms are more likely to take a relational approach and are
mo r e likely to use constituency building; rent-seeking is
thus somewhat more limited by the emphasis on repeat dealings
and consensus building.
The variables identified and measured in this study were
those that had existing theoretical support either in the
area of political strategy or in applicable theory from other
areas of literature, such as strategic management,
international business, and organizational theory. The lack
of results in this study, however, would seem to indicate
that in order to more fully understand political strategy
formulation, new theoretical avenues must be explored. For
example, only one institutional variable was considered in
this study. However, other institutional variables m a y also
be affecting the choice of political strategies and perhaps
even affecting other types of strategy formulation. Existing
t h eor y regarding strategy formulation may not enable a
comprehensive study of political strategy formulation. The
implication for theory is that new ways of looking at
strategy formulation are needed. Perhaps more integration
from a variety of academic disciplines is needed to further
171
theoretical understanding of the area.
Implications for Organizations
Practitioners have benefitted from the extensive
attention academics have paid to market strategies. To some
degree, academic theory and testing is a typeof learning for
firms that may not involve trial and error. Unfortunately,
practitioners have not had the same benefit from research
pertaining to political strategies. There are a small number
of studies of the phenomenon, a few articles on the topic,
and relatively fewer consultants in the area, all of which
may be attributed to the lack of systematic exploration of
corporate political strategy. This study is a first step
towards a more systematic study of political strategies.
First, the evidence found in this study is that a
majority of the firms in this sample are using political
strategies, and many of the firms are using a number of the
four strategies and a variety of the tactics within each
strategy. The implication of this for managers is that firms
not currently using political strategies should recognize
that political efforts are a part of their competitors'
strategies. This in turn may necessitate formulation of
political strategies for those firms who are not using
political strategies. Although the degree of regulation may
172
vary across firms, all firms are affected by government
re gu lation in a variety of organizational operations. For
firms not to become politically active means that the rules
of economic competition are being shaped in part by their
competitors and other interest groups that may not share
their goals.
In addition, practitioners may take a better
un de r s t a n d i n g of the variety of political tactics from this
project. The categories developed herein and the distinctions
made between the four categories in terms of target audience
and m eth od may be a useful framework for managers in the
development of political strategies.
For example, in choosing a particular political
strategy, the categorization and understanding of how the
four strategies vary along target audience and m e t ho d may
enable firms to more appropriately choose a strategy. Some
firms are extremely active in the political process and may
use every tactic available. Other firms, however, may remain
relatively ignorant about the various tactics available to
them and the identifying characteristics of each type of
strategy. This study can help the latter group of managers
identify alternatives and make more systematic judgements
about which strategies to implement.
Many managers have the benefit of business education to
173
aid them in m a n y aspects of their jobs. Yet, the typical
management education, whether it is transmitted in the
classroom or in practitioner targeted books and articles,
does not include examinations of political strategy. Thus,
the lack of readily available information on this topic to
managers may be inhibiting optimization of political strategy
use and choice. Political competition is directly related to
economic competition and the firms that remain ignorant of
the strategies available to them and those used by their
competitors will necessarily fall behind.
In addition, although the results of this study are not
based on an issue-specific strategy formulation, the target
and method of each political strategy and the theoretical
arguments linked to the firm, industry, and institutional
variables may help managers formulate strategies for specific
issues. For example, if a firm is active on a particularly
technical issue, it may not be appropriate to use media
advertising to sway public opinion because of the difficulty
of transmitting technical issues this way. Firms may use the
broad conceptualization of the four strategies and the
tactics that comprise them in order to evaluate the most
effective metho d and target for certain issues.
The two approaches to political strategy m a y also lend
themselves to more practical application in that managers may
174
no w have a conceptualization of how two distinct approaches
may be taken to political strategy efforts. C ertainly there
are advantages and disadvantages to both approaches to
political strategy depending on what type of nation the firm
is operating in. Aided by the results of this study,
m a nag ers may now evaluate the different approaches within
each type of country in which the firm operates in order to
determine which approach is most appropriate.
Managers may also take from this study an understanding
of the degree to which political strategies should be
customized by nation. Given that corporatism/pluralism was
the most consistent significant predictor of the likelihood
of using political strategies and approaches, political
strategies should be customized to the nation and not
approached globally. For firms, this implies that different
political strategies may be needed in different countries.
The strategies employed in the U.S. may be more applicable in
other more pluralist nations and less applicable in more
corporatist nations, giving further evidence to the notion
that it is necessary for firms to do business differently as
firms expand operations outside of their home country.
Finally, the findings regarding the relationship between
the institutional variable of corporatism/pluralism and
wh ether firms perceive that their strategy pattern differs
175
from that of their competitors may also have implications for
managers. This result indicates that competitive dynamics
m a y vary along the degree of corporatism or pluralism. In
more pluralist nations, firms are likely to encounter
competitors using political strategies different from their
own. This m ay have implications for how competitive
advantage m a y be won in the political arena. Conversely,
because more corporatist nations emphasize consensus building
and cooperation, firms m ay be less likely to encounter
competitors using political strategies that vary from their
own. Firms m ay tend to copy each other's strategic pattern
in more corporatist nations while attempting to set
themselves apart from their competitors by using a different
political strategy pattern in more pluralist nations.
In summary, this project is a very important step
towards compiling a more systematic discussion and study of
political strategy for managers. Despite the relative lack
of empirical support for a m aj ori ty of the hypotheses, this
study has many conceptual or theoretical implications for
firm political behavior and political strategy formulation.
Opportunities for Future Research
In addition to having implications for theory and
organizations, this study suggests many opportunities for
176
future research. Foremost, the relative lack of support for
the hypotheses may have resulted from measurement or sampling
error. This means that by extending the present study to
overcome the lack of variation in use of strategy types, a
more complete understanding of the variables identified and
measured herein may result.
One w a y to extend the current study is to include U.S.
multinationals operating in another geographic area such as
Latin America or Asia. By extending the study into other
areas, some of the problems of either shared business norms
or reputational issues discussed earlier may be better
avoided. The EU, while comprised of fifteen heterogeneous
countries in terms of social policies, economic performance,
and history or path dependence, has remained closely linked
due to geography and the movement towards economic unity. By
extending the study outside of the EU, the effect of common
norms that m ay exist across E.U. member states may be
minimized. In addition, the ease with which firms'
reputations may transcend borders may be restricted by
expanding the study to include other parts of the world not
geographically tied to the EU. Due to the fact that one of
the most consistent findings of this study was the
significance of the institutional variable
corporatism/pluralism, taking the survey to other geographic
177
parts of the world may also show interesting variation in
political strategy use.
Another way to extend the current study is to compare
the results of this study to a similar study of political
strategy formulation for multinationals based outside of the
US. By extending the study to non-U.S. multinationals, the
effect of home country culture on strategic choice may be
examined. For example, while most of the sample of the
current study used information strategies within the last
year, this ma y or may not be a result of U.S. home-country
culture. Including non-U.S. firms in a future study could
then study the effect of home-county norms on strategy
formulation.
The relative lack of significant results may also stem
from the existence of variables not identified in this study
that affect the choice of political strategies. Thus, the
lack of findings here create opportunity for future research
to more fully explain the variation in political strategy
formulation for international firms. Other firm, industry,
and institutional variables may be identified in future
theory and explored in future studies in order to examine
their relationship to the choice of political strategies.
The distinction between relational and transactional
approaches creates opportunities for continued study as well.
178
For example, what makes a firm choose one approach over
another? To what degree are relational approaches more
costly and difficult to imitate than transactional
approaches, and what are the implications of this? That is,
if relational approaches are more difficult to imitate than
transactional ones, then is a relational approach one way to
achieve sustained political advantage?
The four categories of political strategies also creates
opportunities for future study. The relative effectiveness
of these four strategy types and the two distinct approaches
to political strategy is an avenue for future study that
stems from this project. For example, if corporatism/
pluralism is a significant predictor of the likelihood of
using a direct access/pressure strategy, does this also
suggest that this type of strategy varies in effectiveness
along institutional differences? This study could be tied to
those studies examining the effectiveness of certain
political tactics. Lord (1995) has undertaken a project
surveying political decision makers in the U.S. as to the
relative effectiveness of five political tactics. To extend
this work into other nations and to a more comprehensive
listing of political tactics would enhance our understanding
of political strategy enormously.
One of the most important goals of this project for me
179
was to broaden strategic management to include a more
de t a i l e d understanding of other strategic options available
to firms— political strategies. Despite years of witnessing
firms actively participating in and attempting to influence
public policy around the globe, strategy scholars have
largely ignored the strategy of business-government
relations. The relatively scant attention that has b e e n paid
to political strategy in the past may be a result of the
difficulty in tying political strategy to one of its ultimate
goals— performance. Alternatively, the lack of attention to
political strategy in the strategy literature may be a result
of the lack of cross-fertilization of strategic management
and political science and political economy. Whatever the
reason, this project creates enormous opportunities for
future studies in the area. For example, questions such as
the following may be asked: What is the tie between
political strategy and performance? How can the benefits and
costs of political strategies be quantified, given that the
benefits may be the avoidance of future costs that are
difficult to estimate? Given the multidomestic nature of
political strategies, what is the most appropriate structure
for decisionmaking and for implementation of these
strategies? What is the role of institutional differences on
market strategies? How do institutional differences affect
180
the types of issues and political activities pursued within
a country, e.g. is rent-seeking more likely in pluralist
nations? How is political advantage affected by the two
different approaches to political strategy and the four
distinct strategy types? How is collective action among
organizations different from collective action of
individuals, i.e., what are the firm-specific benefits of
cooperative strategy? How do firms vary in terms of relative
influence in the political process as related to the choice
of approaches to political strategy? Do businesses that
adopt a relational approach to political strategy
consistently exert influence or is there a hollow core in
political decision making? In short, this study has taken an
exploratory leap into a vast area of research questions and
studies.
Conclusions
This study was a much needed exploration of an area that
has received little attention in strategic management
literature in the past. The results of this study confirm
that political strategy is currently an important part of
firm strategy. Firms are attempting to shape the rules of
the game for economic competition in their home country and
within the political systems of their subsidiary operations.
181
A more comprehensive taxonomy of political strategies
was developed in this study. Also, the distinction between
transactional and relational approaches to political
strategies was introduced. In addition, a general model of
proactive political strategy choice was proposed and
partially tested by identifying and m easuring three firm
variables, one institutional or country-specific variable,
and two industry variables. The conceptual model was
supported overall in that variables at all three levels were
found to be significant predictors of the likelihood of use
of the two distinct approaches to political strategy and the
likelihood of particular strategy types. While support for
the individual hypotheses themselves was rather limited (4 of
19 hypotheses), this study did confirm that variables at all
three levels have important relationships to strategy use and
the use of political strategy approaches.
The relative lack of findings in the current study
should not be construed as a lack of relevance or
contribution of the study. Measurement, sampling, and
methodological issues may have contributed to the lack of
results. Despite the lack of support for the majority of the
hypotheses, this study has implications to theory in
strategic management, international business, and political
science/economy. Most importantly, institutional arrangements
182
were found to be significant predictors of the likelihood of
using political strategies and approaches to political
strategy. This finding in itself is an important contribution
for academic theory and for practitioners alike.
In summary, any degree of results in an exploratory
study such as this should be considered important. The area
of nonmarket strategies should no longer be ignored by
strategy scholars. This study has been a first step towards
filling the void in our understanding of how nonmarket and
market strategies go hand in hand.
183
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APPENDIX A
COVER LETTER SENT FROM
AMERICAN CHAMBER OF COMMERCE BELGIUM, E.U. MISSION
196
Dear EU Committee member,
The EU Committee o f the American Chamber of Commerce in Belgium is pleased

to provide non-financial support for the enclosed study o f US multinational political
strategies used in the E U .
This study, conducted by a representative of Texas A & M University, is an attempt

to gather current information about how corporate political strategies axe chosen,
whether they are customized to individual nations, and the use o f such strategies
within the EU member states and at the EU level. The survey is designed to test to
what degree political tactics vary for different political cultures within the member
states or are “global" in nature. The aim is to give you greater insight into the
v.ays companies are participating in the public policy process and motivations for
the political strategies used.
All information gathered in the study w ill remain strictly confidential and only be
reported in the aggregate. The results o f the survey w ill be made available to EU
Committee members next spring. W e are asking you to complete the E U level
survey yourself and for your cooperation in completing a small number (3 or 4)
surveys o f your activity at the E U M em ber States o f your choice. Please feel free
to complete the individual nations surveys yourself or to pass it along to colleagues
directly responsible for that nation, whichever is most appropriate. Testing has
shown this survey to take only 10-15 minutes to complete.
Thank you for your continued support o f our activities and for your assistance in the
enclosed study.
Sincerely,
John Russell
European Affairs Manager
197
APPENDIX B
COVER LETTER SENT FROM
AMY HILLMAN, TEXAS A&M UNIVERSITY
198
Thank you for taking the time to complete the enclosed survey of
political activity at the European level and for your assistance
in the completion of a small number (4 or 5) member state level
surveys. All responses will be kept strictly confidential and
only be reported in the aggregate. The survey enclosed is a part
of a broader study which will use your responses and information
gathered elsewhere to study the choice of political strategies in
the EU and within member states.
My aim is to provide you with:

1) Good, current descriptions of the range of political
tactics used in the EU and in the member states.
2) Information on the role of country, firm, and industry
differences and their impact on political strategy. That
is, to what degree are political tactics standardized or
customized across nations.
3) From the member state surveys, how decision making in
political strategy is made by exploring where decisions
are made about political strategy (i.e. how centralized
decision making is, where decisions are made for more
resource intensive tactics, etc.).
Once complete, only the 3 page answer sheet of each survey need
be returned. Please return as soon as possible via fax to a
private number at 409-694-8499 - No cover sheet is necessary or
by ma 1 1 to:
Amy Hillman
Department of Management
College Station, TX 77843-4221
Again, thank you for your cooperation and participation. The

success and quality of the information gained depends upon you!
Sincerely,
Amy Hillman
199
APPENDIX C
SURVEY
200
EU MEMBER STATE CORPORATE POLITICAL STRATEGY SURVEY

Texas A&M Urn vers it)'
Department o f Management/ Attn.: A m y Hillm an
College Station, T X 77843-4221 U S A
Fax 409-694-8499
I . Company In fo rm atio n
1. Company N a m e _________________________________
2 Member Stale N a m e __________________________________
3. Number o f years company has operated in this country________________
4. Approximate size o f the company workforce in this country (employees & contractors)______________
5. Which sectors o f the economy does your company operate in? (Please list)
6. Respondents’ Title/Position:_______________
7. Number o f years employed by this company:_
8 Have you personally ever been employed by the E U or member states in any legislative, executive, administrative, or
regulatory position? Y N I f vcs. in what c a p a c i t y ? _______________________________________________
9. To what extent do you agree/disagree with the following statements
a Our company tends to wait until issues affecting us in this country arise before we dev elop plans and actions ir. an
attempt to influence these issues.
Stronelv Aerec SironcK Disagree

" 1 “ 2 3 4 5
b Our company attempts todevelop relationships over timeso that when issues arise that ma; affect the wa> our
company operates in this country,the contacts are already in place to attempt toinfluence these issues
Stronglv Agree Strongly Disagree

'\ 2 3 4 5
c Our company is generally interested in a variety o f public policy issues, and this facilitates on-going political
involvement in this country.
Strongly Agree Strongly Disagree

1 2 3 4 5
d. Relatively few public policy issues arise during any given year that our company is interested in so we tend to have
limited political involvement in this country.
Strongly Agree Strongly Disagree

1 2 3 4 5
10. Approximate number o f people involved in Government Relations/Issue Management for the company m this country
MEMBER STATESURIEYPAGE 1 O F 3
201
11 How frequently does your company interact in any given year with
Not at all O n c e /Y e a r O nce/M on th OnceAVeek O nce/D ay
-Members of Parliament 0 1 2 3 4
-Assistants to members
o f Parliament 0 1 2 3 4
-Ministers '0 1 2 3 4
-Members o f the Minster’s
Personal staff 0 1 2 3 4
-C ivil servants in the
national bureaucracy 0 1 2 3 4
-C ivil servants in local areas 0 1 2 3 4
-Local elected officials 0 1 2 3 4
12. From the list above, please list the five targets o f your company’s attempt to influence or gain access to public policy that
you consider most valuable, with l=M ost valuable.
1 _______________
2 ________________
3 _______________
4 .________________________
5 .________________________
I I . Political Strategy Inform ation

How frequently has your company used the following tactics in this country within the past year1
N ever O n c e /Y e a r O nce/M on th OnceAVeek O nce/D ay
l Contacting, initiating discussions or providing information to public policy makers bv members o f the companv
0 l 2 3 ’ 4 '
2 .Contacting, initiating discussions or providing information to public policy makers by external professionals
0 l 2 3 4
3 .Reporting o f research results, publishing position papers, or technical reports
0 l 2 3 4
4 .Company members testifying before hearings/committees o f government bodies
0 1 2 3 4
5 .Commissioning research/think-tank research projects
0 1 2 3 4
6.Hiring individuals with political or professional bureaucracy experience to work for the company
0 1 2 3 ’ 4
7.Company members serving in a political position at the local, county or equivalent, national, or E U level
0 1 2 3 4
8 .Paying elected officials or civil servants to speak at your organization
0 1 2 3 4
9 .Providing paid travel or other benefits to elected officials or civil servants
0 1 2 3 4
10.Providing financial contributions to candidates or panics
0 1 2 3 4
11.Using economic and/or political education programs
0 1 2 3 4
MEMBER STATESURIEYPACE 2 O F 3
202
N e ver O n c e /Y e a r O nce/M onth OnceANeek O nce/D ay
I2-Pubiic relations advertising in the media

0 1 2 3 4
13 .Holding press conferences on public policy issues
0 1 2 3 4
14.Approaching representatives o f the U.S. Government to support your programs
0 1 2 3 4
15.M obilizing grassroots political programs
0 1 2 3 4
16.Advocacy advertising in the media (e.g. a particular issue position)
0 1 2 3 4
17.Forming coalitions with other organizations not in your horizontal or sectoral trade associations (i.e. environmental
groups, social groups)
0 1 2 3 4
18.Joining business advisory groups to governments and regulatory bodies such as standard setting committees
0 1 '2 3 4
19 Hov. acuve is your company in vertical trade associations?
N ot at A ll Active Very Active
0 1 2 3 4
20.How active is your company in horizontal trade associations?
0 1 2 3 4
2 l.A re there other political tactics your company uses that you consider valuable not listed above1 I f so, please list.
22 From the list above, please list by number the five political tactics that you consider most valuable in your company's
efforts to influence or gain access to public policy in this country with l= M o s t valuable
1.____________________________
2.____________________________
3 ._________________
4 ._________________
5_________
23. A t what location in your company are decisions about the use o f the above tactics made1 Please check
Decisions are made completely at the Member State subsidiary
Decisions are made completely at the EU Level
Decisions are made completely at the home office in the US
Some decisions are made at all locations. I f you choose this, what is the basis for the decisions being made at
various levels? _________________________________________________________________________
24. How many competitors does your company have operating within this country1
None’ <5 <10 <20 2 0+
25. How frequently do you monitor the political strategies used by your competitors?
Never One/Year One/Month Once/Week Once/Day
26. Do you believe that your pattern o f political strategies differs from that o f your competitors?
Yes No
I f yes, in what manner? _____________________________________________________________________________
This is the end o f the member state survey. Thank you for completing this survey
MEMBER STATESURVEYPAGE 3OF 3
203
VITA
AMY JULIAN HILLMAN

Department of Management
College Station, TX 77843-4221
EDUCATION:
1987 B.A. Trinity University
Major: Political Science
1991 M.B.A. Incarnate Word College

Major: Management
1996 Ph. D. Texas A&M University

Major: Management
ACADEMIC EXPERIENCE:
1993-1996 Texas A&M University

Graduate Assistant Teaching
Strategic Management
International Business
Business and Government
1995 Trinity University

Part-Time Instructor
General Management
PROFESSIONAL EXPERIENCE:
1988-1992 General Manager

St. Agnes Uniforms, Inc.
Oversaw operations of retail
and manufacturing firm.

Political Strategy Formulation

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The quality of this reproduction is dependent upon the quality of the

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THE ROLE OF FIRM, INDUSTRY, AND INSTITUTIONAL VARIABLES

Submitted to the Office of Graduate Studies of

Major Subject: Management

UMI Microform 9701648

THE ROLE OF FIRM, INDUSTRY, AND INSTITUTIONAL VARIABLES

AMY JULIAN HILLMAN

Approved as to style and^content by:

Michael 'Hitt Barjfy "Basinger

Major Subject: Management

Political Strategy Formulation for International Firms:

The Role of Firm, Industry, and Institutional Variables.

Amy Julian Hillman, B.A., Trinity University;

Chair of Advisory Committee: Dr. Michael Hitt

This dissertation was an exploratory analysis of the

international firms. While market strategies, such as pricing

and promotion, have received a great deal of attention in

strategic management literature, nonmarket strategies, such

policy, have received scant attention in the literature.

This study was an attempt to more fully integrate political

comprehensive taxonomy of four political strategy types:

and cooperative strategies was developed along with the

From this theoretical development, a model was developed

to depict political strategy formulation and formal

hypotheses were formed regarding three specific firm

competitors' strategies; and one institutional variable:

strategies and the two types of approaches to political

An analysis of surveys completed by U.S. multinational

are using a variety of political strategies throughout

understanding of corporate strategy, as market and nonmarket

using an information strategy, the direct access/pressure

strategy, and transactional/relational approaches to

political strategy. In addition, corporatism/pluralism was

firm matching a competitors' strategy. Thus, the

industry variable and the use of political strategy and

approach type was confirmed.

This dissertation is dedicated to five very special

My mother, Barbara Kavanagh, has been an invaluable

support. She has supported and loved me through all my

mostly to pursue my dreams. Mom, your love means the world

My father, Bob Hillman, has been an inspiration. Your

my face. Marsha, thank you for showing me that being happy

is one of the greatest gifts of life. I love you.

My late stepfather, John Kavanagh, gave me the advice to

continue my education. He taught me that one of the greatest

pleasures is a life based on learning. Your memory remains

Finally, this dissertation is dedicated to my husband,

Many people have provided the wisdom, support, love, and

friendship that has made this dissertation possible. Although

project is not my accomplishment alone, for it belongs to all

First, I would like to thank my committee members. To my

committee chair, Dr. Michael Hitt, I owe a special debt for

mainstream research in our area. No matter how many other

projects Mike was working on, or deadlines he had, he always

believing in me and supporting my efforts to pursue a topic

Ramona Paetzold has served as my mentor throughout the

doctoral program. Without her guidance and friendship, this

program at times would have engulfed me. Ramona, your

treasure always; I will miss our escapes to Houston and chats

across the hall terribly. Dr. Barry Baysinger provided the

encouragement of my initial research idea in the back row of