Shaping the rules of the game: How political capabilities affect financial performance

Research output: Contribution to journalResearch articleContributedpeer-review

Contributors

Abstract

This study contributes to the growing body of research that examines how political capabilities affect firms' financial performance. Although research has found mixed results for the state and local levels of the governance hierarchy, our study is the first that examines this important relationship at the supranational level. First, by building on the resource dependency theory and the capabilities-based view, we argue for a positive effect of the relationship. Second, considering that firms become politically active when their industry environment is uncertain, we argue environmental dynamism and munificence moderate this effect. Our findings support the hypothesis that political capabilities are positively related to firm profitability. This effect is magnified when firms operate in industries with high market dynamism. However, we find no effect whereby higher levels of munificence negatively moderate this link.

Details

Original languageEnglish
JournalEuropean Management Review
Volume2023
Early online date19 Dec 2023
Publication statusE-pub ahead of print - 19 Dec 2023
Peer-reviewedYes

External IDs

ORCID /0000-0002-8891-3861/work/149439428
Scopus 85179943009
Mendeley 4de20dda-4b79-3552-94e3-4a4a2238525d

Keywords

DFG Classification of Subject Areas according to Review Boards

Keywords

  • environmental munificence, financial performance, market dynamism, moderation, political capabilities

Library keywords