The Political Capital of Foreign Subsidiaries

Abstract

This article explores the concept of political capital in the setting of multinational corporation foreign subsidiaries. Drawing on resource dependence theory, the literature on corporate political activities, and the bargaining power framework, hypotheses are developed examining the antecedents to subsidiary political capital. The article tests hypotheses based on primary data from 91 foreign subsidiaries using path analysis. The empirical results suggest that both ownership of bargaining power resources and the management of those resources through government affairs activities are important in explaining the variation of political capital across foreign subsidiaries.