Shareholder activism challenges management control over the corporate status quo. Drawing on reactance theory and recent empirical work on corporate political activity and on firms’ response to shareholder activism, and testing using data complied by the Interfaith Center for Corporate Responsibility, the Federal Election Commission and others for S&P 500 firms from 1999-2006, we find evidence that CPA buffers firms from corporate social responsibility-related or socially-oriented shareholder proposals. Greater CPA, particularly greater relational CPA, influences responses of the U.S. Securities and (...) Exchange Commission as well as responses of the targeted firm, to help neutralize socially-oriented shareholder activism. (shrink)

Firms have been relying on corporate political activity 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 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 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. (shrink)

Although an important feature of firms’ corporate social responsibility, the strategic pressures behind firms’ corporate philanthropy are not well researched or understood. This research note argues that firms’ CP and firms’ corporate political activity may share common strategic antecedents; forces in firms’ political environment may shape both CP and CPA. Using S&P 500 data in a longitudinal analysis, the authors find evidence suggesting that industry-level political uncertainty increases firm propensity for engaging in both CP and CPA, above and beyond the (...) propensity to engage in either as a stand-alone strategy. The authors use this preliminary evidence to explore political marketplace contingencies for the relationship between CP and CPA. CSR literature indicates that CP can benefit firms by creating and enhancing their relational wealth and institutional legitimacy. Such benefits may also serve firm interactions with government policy makers—a dynamic largely ignored until recently. The authors’ findings may indicate that, due to its institutional signaling ability and impact on firms’ reputations, CP may allow firms to differentiate themselves or stand out from others when faced with political uncertainty, and that these outcomes should be considered when firms engage in CP. (shrink)