The balancing act of corporate political activity under institutional pressure

Abstract

Business firms engage in the public policy process to manage the influences of state and public policy. Many stakeholders in society voice concerns about the excessive influence of firms, which creates complex conditions for using corporate political activity. This study addresses the question of how institutional pressures influence corporate use of political strategy. I propose that institutional pressures will moderate the effects of strategic factors on corporate political activity, as corporations try to make the strategic balance between strategic needs and institutional pressures. The findings of this study show that corporations engaged in corporate political activity were less active when there were direct pressures on corporate political activity, such as proxy voting proposals by activist shareholders and media coverage of their political activity.