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Although various studies have investigated the corporate political activity (CPA), however, there is no definite report which shows its effect on the public policy outcome or the organization’s performance. Hence, the political effects of the corporate social responsibility (CSR) have garnered a lot of recent interest since the CSR included activities which have an intended or an unintended effect on the CPA–corporate financial performance (CFP) link. We use data made available by the 1995 Lobbying Disclosure Act, while the CSR indices were gathered from the Fortune Magazine’s most admired companies from 2007 to 2016. We analyzed the relationship between the organization’s CPA and CFP, with the help of the dynamic panel data system generalized method of moment (GMM) estimation. Their results showed that the CPA did not improve the firm’s performance. Moreover, CPA and CSR are substitute in affecting financial performance, because they are essentially exclusive investments that require resources but do not have synergies.

Corporate social responsibility (CSR) and corporate political activity (CPA) are two important components of firms’ nonmarket strategies, oriented toward shaping the firm’s political and social conditions. Although this is acknowledged in the literature, there are contradictory arguments and evidence, concerning, first, whether and under which conditions firms align their CPA and CSR activities, and second, what the impacts might be if they do align these activities. In light of this, this chapter draws from earlier reviews of nonmarket strategies, to explore the factors at multiple levels, macro and micro, that may drive a firm’s alignment of CPA and CSR. In doing so, we draw from management research to identify the macro- and micro-level factors that shape CPA and CSR alignment as CSR and CPA alignment research mostly focuses on outcomes rather than identifying the drivers of alignment. We develop a general model that integrates the macro- and micro-level discussions to make suggestions about where future research needs to go to increase understanding of when corporations will combine their CPA and CSR efforts and the merits of these efforts.

We examine how a firm’s market-oriented capabilities (in areas such as R&D or marketing) and consumer focus (business-to-business or business-to-consumer) foster its effectiveness in pursuing corporate political activities. We then explore the sustainability of any advantage that firms may gain from their political activities. We develop a conceptual framework to propose that a firm’s political capabilities to implement different political tactics, such as information provision and constituency building, are a product of how related these tactics are to different market-oriented capabilities and to the skills needed to serve different types of customers. Finally, we propose that the integration of market strategies and political strategies provides new insight into the sustainability of the advantages that a firm might gain through political activities.

Campaign contributions are typically seen as a strategic investment for firms; recent empirical evidence, however, has shown few connections between firms’ contributions and regulatory or performance improvements, prompting researchers to explore agency-based explanations for corporate politics. By studying intrafirm campaign contributions of CEOs and political action committees (PACs), we investigate two hypotheses related to public politics and demonstrate that strategic and agency-based motivations may hold simultaneously. Exploiting transaction-level data, with over 6.8 million observations, we show that (i) when PACs give to specific candidates, executives give to the same candidates, especially those who are strategically important to the firm; and (ii) when executives give to candidates who are not strategically important, PACs give to the same candidates potentially due to agency problems within the firm.

We argue that the influence of public stakeholders (the state) and private stakeholders (nonstate social or economic stakeholders) on corporate philanthropy is interdependent, in that satisfying the state may increase the degree of scrutiny and pressure exerted by private stakeholders on the firm, particularly in institutional environments that place few checks and balances on the power of the state – thus creating suspicion that political patronage shelters firms’ social and moral wrongdoing. To test this theory, we examine the circumstances under which politically patronized firms engage more (or less) in corporate philanthropy. Utilizing a dataset that encompasses both publically traded and unlisted private firms in China, we find that corporate philanthropy is negatively associated with political patronage among unlisted firms but positively associated with political patronage among listed firms. These results are consistent with the predictions made based on our theoretical arguments. This chapter aims to foster further discussion regarding the interdependence of the influences exerted by different stakeholders on firms.

Purpose – This chapter explores the rationale for foreign companies to have a political strategy and how these companies are politically active in a small, open and regionally integrated economy. The reasons why companies are engaged in corporate political activities are tied to the rationales for corporate political actions but are also interrelated with the question of how effective is the selected corporate political approach in the institutional environment of a host country. The approach of political corporate activities is based on the relational and transactional approaches.

Design/methodology/approach – This chapter is largely exploratory and focuses on a non-American political context. The evidence is coming from the foreign firms operating in the chemical sector of a small, open and regionally integrated economy, the Netherlands, which is part of the larger economic entity the European Union (EU). In-depth interviews were conducted with general managers of foreign-owned firms because they could provide most insight into the political strategies of their subsidiary. The data collected through the interviews were analysed using content analysis, by using four entities of analysis: analysis on words, sentences, fragments or themes.

Findings – Empirical evidence shows a strong transactional predisposition among the political activities of foreign firms as a result of the red tape bureaucratic Dutch system. On a standalone basis, the small foreign firms did not consider that they have the power to influence political decision making in any way. The majority of firms are member of an industry association. These associations interact with political decision makers in the Netherlands on behalf of these firms.

Originality/value of chapter – This chapter takes a foreign firm-specific level of analysis on corporate political strategies approach in a host institutional environment, which is generally more researched at multinational enterprises level. The Netherlands, with a small, open and regionally integrated economy, represents a totally different setting than the pluralist country, in particular the American one, and therefore, the existing American based literature on political strategies will be less representative for this corporatist country. The design choice and the effect of the approach of political strategies implemented by the foreign firms are affected by the specific host institutional environment.

This chapter addresses the research question of whether multinational enterprise (MNE) lobbying can contribute to sustainable development.

It presents the results of two case studies, from different perspectives, whose results strengthen and complement each other. Both studies use interviews as their main source of data within triangulation, and both adopt iterative processes for their analyses: one uses data coding, the other takes a narrative approach.

The findings suggest that whilst companies see both costs and opportunities in environmental regulations, this is not perceived by their policy-making counterparts. Furthermore, company-internal communication suggests that lobbying and corporate social responsibility (CSR) are not joined up, which leads to mixed (external) messages sent from the company to policy-makers and the public.

The chapter focuses on one industry (automobiles) in one host country setting (EU).

Policy-makers, as well as companies that want to contribute to sustainability, could usefully adopt the concept of internalising external costs as a minimum proxy for sustainability. Companies that wish to promote sustainable development, or even wish to act in a consistent manner, might usefully examine their assumptions about the political process. This is particularly the case with MNEs as they operate in numerous jurisdictions.

The chapter integrates the MNE literature and the literature on international business (IB)–government interactions. The findings underline the importance of addressing both environmental issues and the relationships between policy-makers and MNEs, an area that can be further developed by extending the scope of the study to other industries in further research.

Multinational corporations (MNCs) are experiencing a number of major challenges in the international business arena. Can business diplomacy help them to deal with these challenges effectively? In this introductory chapter we conceptualize and identify the relationship between MNCs’ international business diplomatic activities and firm performance.

We conducted a literature review and interviews with five large MNCs that are operating in distinctive industries. Business diplomatic activities have been classified into three particular areas to support the analysis, namely: (1) MNC–Non-Governmental Organization (NGO) relations, (2) MNC–Host Government relations, and (3) MNC–Local Community relations.

The main findings suggest that international business diplomacy has a direct positive effect on firm performance with regard to so-called soft or nonfinancial indicators. These indicators include knowledge sharing, reputation, company image, and marketing possibilities. The effect can in turn lead to a better financial performance and market stance in the long run.

The results of this study are important for the future awareness and execution of business diplomacy in large MNCs.

The purpose of this chapter is to introduce and provide an overview of the topic of corporate social responsibility (CSR). The approach is to present an introduction to the importance of the topic and a review of the concept’s evolution and development which includes an exploration of the topic’s meaning and competing and complementary frameworks which are related. Among these related concepts are the following: business ethics, stakeholder management, sustainability, corporate citizenship, creating shared value, conscious capitalism, and purpose-driven business. These concepts are frequently used interchangeably with CSR, and they have more in common than differences. At their core, each embraces value, balance, and accountability. The chapter also explores a number of key research avenues that are quite contemporary. Among these, the following topics are addressed: political CSR; the CSP–CFP relationship and business case for CSR; upstream/downstream CSR; CSR in emerging economies, corporate social activism, and corporate social irresponsibility. In the final analysis, it is argued that the topic of CSR continues to be on an upward and sustainable trajectory in both conceptual development and practice.