Firm-level political capabilities and subsequent financial performance

Research output: Contribution to journalArticle

10 Scopus citations

Abstract

While there is a robust literature on corporate political activity, scholars have not adequately framed these activities as being part of a strategy to garner political capabilities. In this paper, we incorporate political capabilities and argue that those firms that more intensely commit resources to political activities have associated subsequent performance benefits. In a sample of 87 Fortune 500 firms from 2005 to 2011, we find that both political action committee and lobbying intensity were associated with higher return on invested capital and return on assets after controlling for other factors. Additionally, we find support that the cumulative effect of political action committee and lobbying intensity on performance is also significant. Finally, we moderate the main effects with industry concentration and find that returns are greater in more consolidated industries.

Original languageEnglish (US)
Pages (from-to)303-313
Number of pages11
JournalJournal of Public Affairs
Volume16
Issue number3
DOIs
StatePublished - Aug 1 2016

All Science Journal Classification (ASJC) codes

  • Public Administration
  • Political Science and International Relations

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