Wednesday, May 30, 2018

Management Department MOS - Srividya Jandhyala - “Firms Political Strategies Abroad: Opening the Black Box of Commercial Diplomacy”

The Management Department & The Research Center

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.