David P. Baron
This paper provides a theory of private politics in which an activist seeks to change the production practices of a firm for the purpose of redistribution to those whose interests it supports. The source of the activist's influence is the possibility of support for its cause by the public. The paper also addresses the issue of corporate social responsibility by distinguishing among corporate redistribution as motivated by profit maximization, altruism, and threats by the activist. Private politics and corporate social responsibility not only have a direct effect on the costs of the firm, but also have a strategic effect by altering the competitive positions affirms in an industry. From an integrated-strategy perspective the paper investigates the strategic implications of private politics and corporate social responsibility for the strategies of rival firms when one or both are targets of an activist campaign. Implications for empirical analysis are derived from the theory.
David P. Baron
This paper presents theories of strategic nonmarket participation in majority-rule and executive institutions and develops from those theories a set of principles for nonmarket strategy. The theories are based on models of vote recruitment in client and interest-group politics and on models of common agency. The basic strategies developed are majority building, vote recruitment, agenda setting, rent-chain mobilization, majority protection, and competitive agenda setting and vote recruitment.
John M. de Figueiredo and Emerson H. Tiller
This paper examines the amount and organization (individual vs. collective) of lobbying by firms in administrative agencies. It explores the power and limitations of the collective-action theories and transaction-cost theories in explaining lobbying. It introduces a dataset of over 900 lobbying contacts covering 101 issues at the Federal Communications Commission (FCC) in early 1998. It finds that the structure and conduct of large-firm lobbying at the FCC is consistent with the predictions of theories of transaction costs and the main results of theories of collective action. Small firms show little sensitivity to collective-action issues or transaction-cost issues in the organization of their lobbying, but they do lobby less when having to reveal proprietary information. In sum, large firms behave in a manner largely consistent with theoretical predictions, while small firms do not.
Witold J. Henisz and Bennet A. Zelner
This paper demonstrates that a structurally derived, internationally comparable index of checks and balances on executive discretion created by variation in political structures and party systems affects relative rates of basic telecommunications infrastructure deployment in 147 countries during the period 1960–1994. Models of infrastructure investment that omit the political characteristics of a prospective host country confound countries whose economic and demographic characteristics point to rapid demand growth for infrastructure services with those that create a potential trap for investors due to a higher probability of arbitrary change in the policy environment. The econometric analysis exploits both cross-sectional and temporal variation in the panel. A robust covariance-matrix estimator based on that developed by Newey and West is used to compute valid standard errors in the presence of heteroskedasticity and within unit-serial correlation, two common characteristics in the error-term structure of panel datasets.
Timothy J. Feddersen and Thomas W. Gilligan
This paper contains a theoretical exploration of the potential effects of an information-supplying activist on a market for credence goods. Using a non-cooperative game-theoretic model with incomplete information, we find that such an activist can alter the decisions of firms and consumers and enhance the social welfare of market exchange.