Journal of Management Studies

doi: 10.1111/joms.12943pmid: N/A

Sun, Pei; Doh, Jonathan; Rajwani, Tazeeb; Werner, Timothy; Luo, Xiaowei Rose

doi: 10.1111/joms.13002pmid: N/A

Socio‐political issues and environments are becoming more complex and challenging. In this introduction to the special issue on ‘The Management of Socio‐Political Issues and Environments: Organizational and Strategic Perspectives’, we take stock of the burgeoning research on how firms interact with socio‐political actors and environments over the last few decades, specifically research on Corporate Political Activity and Corporate Social Responsibility. We then argue that the socio‐political environments and actors with which firms interact are in a state of flux, such that issues are more interrelated and dynamic, and actors are more diverse and demanding. As such, we propose a new concept of corporate socio‐political engagement (CSPE), which represents a more holistic perspective to understanding complex interactions among firms and their social/political stakeholders, incorporating and transcending conventional notions and tactics documented in the extant nonmarket strategy literature. Using a two‐dimensional framework that captures the identity of socio‐political actor or the nature of socio‐political issues (political, social, or both) as well as the relevant level of analysis at which the interactions unfold, we showcase the contributions of the special issue articles to this research agenda. Finally, we discuss and specify future research directions for revealing the multifaceted nature of CSPE.

Li, Jing; Xia, Jun; Zajac, Edward J.; Lin, Zhouyu

doi: 10.1111/joms.12818pmid: N/A

This study extends prior research on corporate political behaviour (CPB) and firms’ pursuit of political legitimacy in response to monolithic government pressures by developing and testing a framework for analysis of CPB in response to polylithic pressures. We suggest that traditional forms of CPB may be ill‐suited to polylithic governmental pressures, such as when firms need to navigate between conflicting home‐ and host‐country political worldviews and policies. We posit that in such complex political situations, firms will turn to a more subtle form of CPB (i.e., rhetorical commitment versus avoidance) as a hoped‐for solution to their international political legitimacy challenge. Our contingency perspective also highlights how geopolitical factors (i.e., whether governments of home and host countries are clearly aligned versus misaligned) will influence whether firms express their support for a home government’s foreign policy or avoid any such expression of support. We empirically test the predictive power of our framework by analysing how these political factors led Chinese firms to opt for rhetorical commitment versus rhetorical avoidance vis‐à‐vis the Chinese government’s Belt and Road Initiative (BRI). We conclude with a discussion of how our framework for analysis and our supportive findings can inform and extend research on CPB and political legitimacy.

Benischke, Mirko H.; Bhaskarabhatla, Ajay

doi: 10.1111/joms.12885pmid: N/A

Nonmarket scholars have paid limited attention to noncompliance as an alternative strategy to capture regulators; yet noncompliance is particularly consequential given its potentially significant negative externalities. We exploit rich data on price ceilings introduced in India in 2013 on 255 essential medicines to test whether noncompliance by other firms drives the focal firm's noncompliance decision. Our results indicate that noncompliance by other firms, particularly those with larger products in the market, is positively associated with a focal firm's noncompliance. The focal firm's scope and sales positively moderate this relationship. Overall, our study indicates that firms are more likely conclude that the potential benefits of regulatory capture using negative incentives outweigh the potential financial and social costs in the presence of a greater number of firms that are already noncompliant. As such, our study draws attention to negative incentives as an important yet largely overlooked nonmarket strategy.

Gounopoulos, Dimitrios; Loukopoulos, Georgios; Loukopoulos, Panagiotis; Wood, Geoffrey

doi: 10.1111/joms.12892pmid: N/A

We study how a regulator (Securities and Exchanges Commission; SEC) responds to IPOs that have a higher political profile. We find that IPOs with issuers (intermediaries) that actively pursue political strategies receive more (less) SEC comment letters than IPOs without such actors. Cross‐sectional analysis reveals that the IPO's political environment moderates the relationship between social pressure for more corporate transparency and SEC scrutiny. Additional tests indicate that the political activities of issuers (intermediaries) contribute to a less (more) efficient IPO process. Overall, our findings suggest that politically active intermediaries have stronger incentives to accurately portray the IPO financial reporting environment than politically active issuers because they have greater reputational and political capital at stake; quite simply, the former have more to lose. We draw out the implications for theory, in terms of agency and reputation.

Corciolani, Matteo; Giuliani, Elisa; Humphreys, Ashlee; Nieri, Federica; Tuan, Annamaria; Zajac, Edward J.

doi: 10.1111/joms.12877pmid: N/A

Prior research on the internationalization of firms from emerging countries has fruitfully invoked institutional theory to emphasize the legitimacy benefits that firms that obtain from showing isomorphism with international norms such as Corporate Social Responsibility (CSR). Without denying the intuitive appeal for these firms to communicate acceptance of CSR, we suggest that firms face a legitimacy trade‐off, where the hoped‐for legitimacy benefits of isomorphism must be weighed against other home‐country institutional considerations. We advance and test this notion that firms will navigate this institutional complexity by engaging in anisomorphism, i.e., espousing general acceptance with international values but with selective ‘translation’ based on home country differences. We test our predictions by analysing firms' communication of CSR, using a unique dataset comprised of 245 firms observed over the period from 2000 to 2018. Consistent with our predictions, we find that firms from countries more reliant on natural resource extraction (e.g., mining and fossil fuel industries) de‐emphasize the environmental component of CSR, and firms from more autocratic countries de‐emphasize the human rights component of CSR. Additionally, and consistent with our presumption of firms' weighing the international versus home‐country legitimacy trade‐off, we find that these main effects are sensitive to changes in firms' levels of internationalization.

Ho, Shuna Shu Ham; Oh, Chang Hoon; Shapiro, Daniel

doi: 10.1111/joms.12863pmid: N/A

The term social license (SL) refers to the acceptance or approval by a community of a company's presence. It is generally assumed in the literature that effective corporate social responsibility (CSR) actions will lead to an SL. In this study we examine the CSR‐SL relationship at the local community level and establish boundary conditions on the effectiveness of local CSR in creating an SL. Using consent‐based micro‐social contract theory, we theorize that commitment to local CSR improves the level to which a local community grants an SL to a multinational corporation (MNC), but the impact is moderated by the global legitimacy of the parent company, the nature of institutions in the host country, and the degree of polarization within the focal community. Based on 3696 articles regarding 43 global mining MNCs operating in 523 local communities between 2008 and 2020, we use natural language processing and sentiment analysis to evaluate the degree to which a local community grants an SL. Our empirical evidence indicates that local CSR does positively influence the granting of an SL, but the effect is reduced when there is strong rule of law or high community polarization and increased when the focal firm has strong global legitimacy.

Symeou, Pavlos C.; Kassinis, George I.

doi: 10.1111/joms.12958pmid: N/A

We study the outcome of the decision of a state‐controlled entity (SCE) to form an international joint venture (IJV) with a foreign partner in the SCE's country. Focusing on the perspective of the host SCE, we propose that in its search for a partner, the SCE will evaluate the sociopolitical legitimacy effect of a candidate partner's corporate social performance (CSP). Thereby, the SCE will consider CSP an important selection criterion because of its legitimacy effect on the selection decision, the SCE, the IJV, and the host state in the eyes of salient local and international stakeholders. Moreover, the legitimacy effect of a candidate partner's CSP will further influence the decision outcome through its interaction with the level of corruption in the candidate partner's home country, the extant sociopolitical legitimacy of the host state, and the number of neighbouring countries of the host country participating in international multi‐stakeholder initiatives. We find support for our hypotheses using a novel sample of extractive industries IJVs between SCEs from 48 countries and 203 foreign partners from 22 countries for the period 2000–15.

Blake, Daniel J.; Markus, Stanislav; Martinez‐Suarez, Julio

doi: 10.1111/joms.12859pmid: N/A

Although recognized as a defining feature of the current political era, populism and its implications for non‐market strategy remain undertheorized. We offer a framework that (a) conceptualizes populism and its progression over time; (b) outlines the risks populism generates for firms; and (c) theorizes effective nonmarket strategies under populism. Our framework anchors the political risk profile of populism in three interdependent elements: anti‐establishment ideology, de‐institutionalization, and short‐term policy bias. These elements jointly shape the policymaking dynamics and institutional risks for firms under populism. Our analysis shows how firms can calibrate two nonmarket strategies – political ties and corporate social responsibility – to mitigate populism‐related risks. We specify how particular configurations of political ties and CSR activities, aimed at the populist leadership, bureaucrats, political opposition, and societal stakeholders, minimize risk under populism. Further, we theorize how the effectiveness of specific attributes of political ties and CSR – namely their relative covertness (more vs. less concealed) and their relative focus (narrowly vs. widely targeted) – varies as a function of firm type (insiders vs. outsiders) and the probability of populist regime collapse. Finally, we address how motivated reasoning may bias firms' assessments of regime fragility and resulting strategy choices.

Röell, Christiaan; Arndt, Felix; Kumar, Vikas

doi: 10.1111/joms.12817pmid: N/A

This article examines the institutional strategies of multinational enterprises (MNEs) operating in an emerging market, drawing attention to how longstanding foreign subsidiaries proactively negotiate their involvement with socio‐political actors. We build on institutional logics to explain how MNE subsidiaries develop sustained political, cultural, and cognitive embeddedness. Using an inductive, interpretive study of four century‐old Dutch MNE subsidiaries with a colonial legacy in Indonesia, we examine these three dimensions of the institutional environment, finding that local employees embedded in both the MNE and the host country sets of logics ‒ rather than expatriate managers ‒ most effectively facilitated sustained institutional embeddedness. Our findings also suggest that embedding practices in host institutional contexts and developing structures that align with host institutional expectations provided a platform for the unfolding of institutional strategies by local employees. However, MNE subsidiaries face contrasting logics between home and host country institutions, placing significant strains on MNEs’ ability to enact change.