Regulation, competition, and strategy: Evidence from the auto industry

The dissertation develops an analytical framework for understanding business political activity in terms of industry economic structure and corporate strategy. This strategic perspective emphasizes the relationship between corporate political behavior and the competitive agenda of the firm. It stands on contrast to theories of corporate political behavior that stress ideology, class unity and social responsibility.; The core conceptual chapter presents a framework for evaluating the linkages between industry structure and political behavior. Drawing from concepts of the economics of industrial organization (e.g. Scherer, 1980) and competitive analysis (Porter, 1980; 1985), the probable impacts of regulatory actions are interpreted in terms of competitive rivalry, product-market strategies, vertical buyer-supplier relations, potential entrants, substitutes, product complements, technology, geography, firm size, concentration, and other factors. This framework provides a basis for predicting the expected positions of firms in terms of their economic structure and competitive strategies.; The empirical portion of the dissertation considers the U.S. automobile industry, describing political organization and political behavior within the strategic framework. Following a general overview of the industry's relationship to government, case studies consider the strategic aspects of two public policy issues. One case study emphasizes aspects of horizontal industry structure (the political relationships between competitors). It traces the development of fuel economy regulation in the U.S. auto industry from 1973 to 1991. The second case study considers vertical strategic-political relationships (those between buyers and suppliers), in this instance the regulatory aspects of the relationship between auto manufacturers and auto dealers. The case studies emphasize the parallel evolution of competitive strategies and political strategies over long time periods.; A basic argument of the study is that government regulation transforms patterns of competition and rivalry in industries, and serves as an important determinant of interfirm relations. Business firms can and do play an active and self-interested role in shaping such regulations, and are not always passive adaptors to their regulatory environments.