Political strategies in emerging economies

This dissertation consists of four essays about corporate political strategies. The overarching question I explore in the dissertation is, "how might firms use political strategies to mitigate the expropriation hazards that result from underdeveloped market-supporting institutions and weak constraints on government power in emerging economies?" More specifically, the chapters in my dissertation examine how indigenous firms' incentives to invest in political strategies in emerging economies vary with the firms' resources and capabilities. To address the general topic, I explore three specific research questions: (1) which firms (mainly in terms of their market capabilities) invest more in political strategy; (2) whether political strategy is indeed effective in alleviating the expropriation hazards; and (3) which political strategy (collective political strategy or individual political strategy) is more effective in a given institutional environment. The first two essays address the first research question of which firms are more likely to use political strategy. Chapter 2 "Political Strategy in Emerging Economies" provides empirical evidence to support the argument that firms with greater market capabilities are more likely to pursue political strategy in order to reduce the hazards of expropriation generated by weak market-supporting institutions. Chapter 3 "Rent-Seeking vs. Hazard-Reducing Political Strategies" complements the essay in Chapter 2 by using formal models to provide stronger theoretical foundations for the intuition developed in Chapter 2. Chapter 4 "Impact of Corporate Political Strategy on Expropriation Hazards" addresses the second research question and offers a direct empirical test of whether political strategies reduce public and private expropriation hazards in the context of the Chinese private sector. Chapter 5 "Collective Political Action and the Institutional Environment" examines corporate political strategy in greater detail and addresses the third research question and empirically explores under what circumstances corporate collective political strategy is more likely to emerge than individual political strategy. This dissertation project contributes to the literature on corporate political strategy particularly in emerging economies, the literature on institutional substitution, and the literature on nonmarket strategy.