Jean-Philippe Bonardi

Corporate political resources and the resource-based view of the firm

Several authors looking at firms operating in regulated markets or, more generally, attempting to influence public policies, argue that a critical aspect to consider is whether these firms possess specific political resources; i.e. a set of unique political assets and skills that might prepare these firms to participate in policy debates, face the rivalry of competing interest groups and shape policy decisions (Boddewyn, 1994; Dean and Brown, 1995). Similar to the resource-based view (RBV) of the firm, which holds that a firm’s resources that are rare, inimitable, non-substitutable and valuable may result in sustained competitive advantage (Wernerfelt, 1984), it has thus been argued that firms, in many cases, should also develop political resources with similar attributes. Baron (2003) argues, for instance, that ‘nonmarket assets, and the competencies that flow from them, can give a firm a nonmarket advantage. Distinctive competencies and firm-specific nonmarket assets generate value as a function of how costly it is for market and nonmarket rivals to replicate them’ (2003: 42). A similar proposition can be found, in different forms, in Dahan (2005), Keim and Baysinger (1988), Maijoor and Van Witteloostuijn (1996), Oliver and Holzinger (2008) or Wei (2006), suggesting that the RBV can be applied in a straightforward manner when it comes to studying corporate political resources. In this essay, I challenge this proposition and argue that important modifications to the original RBV analysis need to be considered to really develop a theory of political resources and why they matter for firms. Rare, inimitable and non-substitutable resources certainly exist in political environments; however, I show that these criteria are not necessary conditions for political resources to matter and that other criteria are in fact as important, or even more important, in political environments. Building a theory of firm political resources probably needs to start with a good theoretical understanding of the specificities of political arenas rather than with an attempt to directly extrapolate from the RBV as used for economic arenas.1 The first two sections that follow summarize the problems with a pure RBV view – and particularly its focus on hard-to-imitate resources2 – for political arenas, both at the empirical and the theoretical level. The last section offers directions which, I think, could set future research on a more promising path.

Corporate political activity, public policy uncertainty, and firm outcomes: A meta-analysis

Although significant scholarship has been devoted to the study of corporate political activity, contradictory messages emerge regarding its impact on public policy outcomes and firm performance. Using meta-analytic methods on a US-only sample of 93 studies, working papers, and books, we try to disentangle two mechanisms that explain why corporate political activity is not always beneficial to firms: (1) the uncertainty about the public policy process itself, that is, can firms get the policies they want through corporate political activity? and (2) the uncertainty about the policies’ impact on the firm, that is, whether firms effectively anticipate the implications of policies for their performance. Our results support the idea that these types of uncertainty play an important role in explaining the intermediary dynamics of corporate political activity. We find that in the United States, corporate political activity only weakly impacts public policy and at best has a (direct) weak effect on corporate outcomes.

Private politics daily: What makes firms the target of internet/media criticism? An empirical investigation of firm, industry and institutional factors

Abstract Private politics refers to situations in which activists or NGOs try to push firms to conform to social standards (regarding, for instance, human rights and environmental protection) without public policy intervention. The existing literature on private politics has focused on large campaigns such as consumer boycotts, and looked at the impact of those boycotts on firms’ financial performance and on the likelihood that firms comply with activist demands. Even though these large campaigns are important, focusing on them leads to neglecting the fact that a large portion of the time and resources that activists consecrate to private politics is used to monitor firms and criticize them through Internet posting and media statements, rather than to launch high profile campaigns. Little is known, however, about what drives these activists when they criticize companies, why they target certain companies and not others, and whether this criticism should be considered as a primary step in the production of full-fledged campaigns. In this paper, we fill this gap by exploring a unique international database of CSR-based criticisms against Fortune 500 companies for the 2006–2009 period. This database allows us to look at the impact of a broad range of factors including industry differences, country/institutional differences and firm-specific dimensions, on the likelihood that a certain firm will be targeted by activist critique. Results indicate that criticism is driven by strategic intents. Similar to previous literature, large and visible firms in certain industries are more targeted than others. In addition, these firms also tend to come from countries with strong institutions and high standards of living.

Firms, breach of norms and reputation damage

A large body of literature looks at how firms develop and maintain their reputation. Little is known, however, about factors leading to a damaged corporate reputation. In this article, the authors compare two sets of predictors of reputational damage following a reported breach of norms: the characteristics of the breach and the characteristics of the actor reporting the breach. Theoretically, the authors argue that the latter is likely to prevail over the former. The authors test this proposition in the highly normative context of corporate social responsibility (CSR). Building on a global data set of over 8,600 CSR-related norm breaches, directed against 451 firms on the Fortune ranking reputation over the 2006-2009 period, the authors find empirical support for the idea that reputation damage is not really driven by the severity and novelty of the allegation, but by the type of source reporting the issue as well as the credibility of this source. Hence, these results lend some support to a socially constructed view of reputational damage, in which being portrayed by prominent actors as deviating from the norm is more important than the actual deviation from the goal of the norm itself.