The political sources of business confidence: The impact of partisan politics, globalization, and institutional variation on the economic expectations of firms in advanced capitalist democracies

This dissertation seeks to advance our understanding of how the political environment in contemporary advanced capitalist democracies affects the economic expectations of firms, to which I refer as "business confidence" in the aggregate. I argue that there are two elements of the political environment that matter for business confidence in a general (not only industry- or firm-specific) way, namely political parties' policy positions on distributional issues (which make a Left-Right partisan categorization of the governing parties a meaningful proxy of policy differences) and the fit between business' and the main political parties' norms regarding the proper role of the state in the economy. Both factors suggest a partisan business confidence effect (higher levels under governments of the Right), but the relative importance of the two factors is a function of the institutions within which firms in a given country interact with each other and with the government, i.e., the country's "variety of capitalism," with the normative component playing a much greater role in liberal than in coordinated market economies. Consequently, the extent to which globalization leads to decline or persistence of the importance of partisan control of the government for business confidence is strongly conditioned by the institutional differences identified in the literature on varieties of capitalism since globalization imposes much tighter constraints on (re-)distributive policies than on norms regarding the role of the state in the economy.;I test this argument empirically using qualitative and quantitative information from the US and Germany, the two largest economies of North America and Europe and the prototypes of "liberal" and "coordinated market economies." Based on interviews with senior managers and various statistical analyses of survey-based time series data, I find indeed that business confidence has on average over recent decades been higher under governments of the Right than under governments of the Left, in both the US and Germany. In the prototypical coordinated market economy, Germany, however, this partisan effect has decreased under the influence of globalization in line with increased convergence of party positions on distributive issues (as perceived by the business community), whereas the partisan effect has persisted in the prototypical liberal market economy, the US, where it is more strongly based on the gap between business' antistatist norms and Democrats' commitment to government being part of the solution rather than being "the problem."...