political competitive advantage


Stephen Bainbridge links to a paper by corporate law professor Jill Fisch looking at the political strategies of corporations as a means to control market competition. The article promotes the idea that political activity is an oft-ignored (at least by corporate law scholars) corporate strategy.

Organizational scholars are probably less surprised by this proposition because, well, it's something we've been paying attention to for years. Neil Fligstein's research on market control is highly relevant (see also Mark Mizruchi's research on corporate political donations). In fact, many of the lines from Fisch's paper seem like they come straight out of Fligstein 1996 or 2001, but yet he's not cited anywhere.

The most intriguing point to me that Fisch makes is:

[F]irm competition takes place in both in the marketplace and the political arena, and thedynamics of one environment affect the other (pg. 65).

What seems new here is the recognition that firms not only compete with each other in the market but they also compete for political capital in non-market activities. Typically, organizational scholars see political activities as class-related or stemming from industry concerns. Here, Fisch makes apparent through the Fed Ex case that firms also compete for political influence with other firms in their industries, and this may translate into competitive advantage in the consumer market. Seems like a pretty interesting idea to test.

Update: Teppo reminds me that Amy Hillman has written a lot on corporate political strategy. Hillman's 2005 AMR paper (with Jean-Pilippe Bonardi and Gerald Klein) speaks directly to Fisch's question of why some firms choose to engage in political activity and others do not. Of course, Hillman is just representative of the many excellent strategy scholars who also work in this area.

Written by brayden king

April 27, 2006 at 6:30 pm

Posted in brayden, research, strategy

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