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1. Introduction
Corporate political behavior (which includes corporate political activity (CPA) and corporate political strategy (CPS)) attempts to increase the overall efficiency of a firm and is considered a non-market strategy. Market strategies aim to create value by improving economic performance (Baron, 1995). If the government is key to a firm’s competitive future, political behavior and the related strategies should be a business priority (Yoffie, 1987). Corporations’ attempts to shape government policy in ways that are favorable to the firm are commonly employed across many countries (Hillman et al., 2004). For example, Sweden, Japan, and Germany formally participate in the public policy process, and in the USA, Canada, and Mexico, companies informally compete with a variety of other interest groups to affect public policy (Hillman and Hitt, 1999). Corporate political behavior is an effort to employ the power of government to advance private ends (Mitnick, 1993). “Influence rents” are extra profits earned by a firm because the rules of the game (e.g. laws, regulations, and informal rules) have been designed or changed to suit the firm (Ahuja and Yayavaram, 2011).
Non-economic pressures may sometimes influence managerial strategies, and senior managers are the most likely targets for private and public political pressure, sometimes even adopting costly strategies in response. Other stakeholder groups are less visible and are perceived less influential within corporate strategy formulation (Wright and Ferris, 1997). The ability to manage institutional idiosyncrasies as a firm-level capability, similar to research or advertising, can drive internationalization (Henisz, 2003). Multinational enterprise’s (MNE) home country environment is also important in the study of corporate diversification strategies (Wan and Hoskisson, 2003). Much of the existing literature is country specific (Getz, 1993), providing few insights with which to make generalizations on different country contexts. However, the existing literature can still be generalized into three political strategy dimensions: approaches to political strategies, participation levels, and types of strategies (Hillman and Hitt, 1999). Recent literature on CPS has mainly focused on investigating different institutional environments, especially relating to emerging and transitional markets (Doh et al., 2012; Shirodkar and Mohr, 2015; Zhang et al., 2016), developing uncertainty reduction strategies (Engau and Hoffmann, 2011a, b; De Villa et al., 2015), societal impact on business behavior (Den Hond et al., 2014;...