Strategic leaders as determinates of corporate political activity

Date
2015
Authors
Johnson, Andrew F.
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Abstract

Corporate Political Activity (CPA) has become an increasingly prevalent and essential nonmarket strategic action available to firms. There has been a corresponding increase in scholarly attention devoted to understanding decisions involving firm CPA as well as the types of CPA undertaken by the firm. The CPA literature has considered a number of firm, industry, issue, and institutional antecedents to the extent and type of firm engagement in the political area of the external environment, or CPA (Hillman, Keim, & Schuler, 2004). An overlooked aspect of this literature is the individual level antecedents, or the variation represented by the demographic traits of actors within the firm, and the individuals' impact on strategic choices involving the nonmarket. Following the traditions of upper echelons theory (UET), I contend that powerful individuals with high levels of managerial discretion have significant latitude in the formation and execution of strategic choices. As a result, firms become reflections of their most powerful decision makers. This study examines individual and group level demographics of the Top Management Team (TMT) and the Boards of Directors (BOD). Then, I examine the boundary conditions by focusing on the moderating effect of CEO political ideology. This work seeks to address two research questions: (A) How do TMT and BOD demographics affects the intensity and type of CPA; and (B) How is this relation moderated by the CEO's political ideology? Drawing on eleven years of data from 100 large publically-held corporations in Texas, I undertake an empirical test of the effects of demographics of corporate decision-makers on the intensity and types of CPA. Using binomial regression models, I find mixed support for the hypothesized relationships.

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Keywords
Corporate Political Activity, Governance, Lobbying, Nonmarket, Political Ideology, Upper Echelons
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Department
Management