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A political theory of the firm : why ownership matters


I develop and test a new theory of corporate political strategy and behavior based upon ownership structure. I posit that firms with a principal owner structure will differ from firms with an independent management structure. To test this hypothesis, I analyze contributions to political parties, politicians, and political organizations. I find that principal owner firms are able to resolve collective action problems within the firm and innovate the most rapidly in response to campaign finance legislation. In addition, I find that ownership structure predicts which firms exhibit strong partisan preferences relative to their industry. Furthermore, ownership structure explains why some firms innovate in response to legal and political change, and are more likely to engage in philanthropic, partisan and ideological activities. These findings challenge much of the conventional wisdom regarding the political behavior of firms. Analytical methods applied in my research include causal modeling, pattern matching, econometrics, and case studies.

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