The More You Give, the More You Get? The Impact of Corporate Political Activity on the Value of Government Contracts
School of Economics and Business Administration
Management and Entrepreneurship
Business and Society Review
Firms have been relying on corporate political activity (CPA) to achieve access and to affect public policy change for decades. Most research on CPA and public policy outcomes has implicitly assumed that access afforded by CPA results in an either- or (dichotomous) policy outcome such as votes or election outcomes. Based on recent research on how CPA can be a strategic signal to government agencies, however, it is possible that CPA may in fact, have a linear association with public policy outcomes as opposed to merely a dichotomous one, and we explore this relationship in the unique public policy context of government contract awards. We specifically analyze how higher levels of CPA impact the financial value of government contracts awarded to firms. Utilizing the S&P 1500 sample for 16 years (1997–2012) we find that CPA has a one to one association with the value of contract awards, indicating that CPA and public policy outcomes can be linked in ways that motivate firms to continuously invest in CPA, to maximize their political rents. We discuss the theoretical and practical implications of this finding in light of extant research on CPA and its direct impact on public policy outcomes.
Business | Business Administration, Management, and Operations | Economics | Entrepreneurial and Small Business Operations
Hadani, M., Munshi, N. and Clark, K. (2017), The More You Give, the More You Get? The Impact of Corporate Political Activity on the Value of Government Contracts. Business and Society Review, 122: 421–448. doi:10.1111/basr.12122
Hadani, Michael; Munshi, Natasha; and Clark, Kim. The More You Give, the More You Get? The Impact of Corporate Political Activity on the Value of Government Contracts (2017). Business and Society Review. 122 (3), 421-448. 10.1111/basr.12122 [article]. https://digitalcommons.stmarys-ca.edu/school-economics-business-faculty-works/12