The
Management Department & The Research Center
-
MOS WORKSHOP -
SRIVIDYA JANDHYALA
will present her paper
Tuesday, June
5th
2018
Room N231
– 9:15 a.m in
Cergy
3:15 p.m in
Singapore
Theme: “Firms
Political Strategies Abroad: Opening the Black Box of Commercial Diplomacy”
Abstract: A considerable literature in
strategy and management assesses firms’ political and non-market strategies,
including questions such as how lobbying and political connections influence
firm performance. Yet the bulk of this literature has focused on domestic
political strategies, ignoring the potential role of political influence
abroad. In this paper we examine firms’ political strategies abroad, with a
particular focus on the role of commercial diplomacy in investment disputes. We
make two primary contributions. First, the few existing studies of
international political ties typically treat diplomacy itself as a “black box”,
using proxy measures of diplomacy and inferring the effects of diplomacy by
observing firm outcomes. We instead use a unique dataset of leaked diplomatic
cables to provide a systematic empirical assessment of the specific actions
American diplomats undertake to assist firms managing their relationships with
host governments. Second, we use structured, focused comparisons across three
case studies to probe two potential mechanisms driving diplomats’ decisions to
intervene in disputes: a firm’s political power and connections, and its
ability to frame its case in clear normative terms. We find that normative
framing is particularly important: when firms can successfully frame their
treatment at the hands of the host government as illegitimate, diplomats are
significantly more likely to intervene—even for small, politically unimportant
firms. These findings have important implications for firms seeking to
capitalize on available diplomatic channels in managing their relations with
host states, and suggest nonmarket strategy can be important even when firms
have limited resources for lobbying or building political connections.
