Professor Thomas C. Lawton

This study examines how multinational enterprises (MNEs) organize internally to enhance subnational institutional fit in new frontier developing economies. We consider how corporate political activity (CPA) can facilitate local embeddedness by engaging informal institutions and nonmarket stakeholders at local community level. We apply an exploratory, qualitative, multi-case study approach to six MNEs in Uganda’s electricity generation sector. The findings suggest that in markets like Uganda, MNEs depend on being bridged with subnational informal institutions such as tribal, social, and religious norms and grassroots political networks. Such bridging in turn positions these MNEs to contribute to developmental processes by integrating recognizable informal institutions into grassroots projects. Drawing on institutional theory and an organizational capabilities perspective, we identify the diverse bridging capabilities that enable MNEs to successfully embed locally, thereby simultaneously pursuing business objectives and achieving societal relevance.

The COVID‐19 virus ignited social and economic turmoil around the world. Not since the Spanish Flu of 1918 had we seen a pandemic of such scale and severity. The resultant global transformation of industries, supply chains, work, communication, and institutional frameworks suggests we are entering a period of non‐ergodic change, in which the future cannot be extrapolated from the past (North, 1999). This means that we do not know the probability distribution or the outcomes from the virus. So, we must find a way to coexist and build our resilience. Moreover, although pandemics cause short‐term fear and disruption, they can also initiate long‐term change for economies and societies. Thus, we suggest that although COVID‐19 challenges the foundations of modern business and management, it reinforces the core assumptions of nonmarket strategy research. In particular – and especially during times of crisis and uncertainty – competitive advantage is predicated on proactive political and social awareness and engagement, aligned with strategic business objectives.

Since the early 2000s, Sino-foreign equity joint ventures (JVs) have declined sharply as a predominant strategy for multinational enterprises (MNEs) to enter and operate in China. We study one of the contributory factors, foreign buyout, and its performance implications. By applying incomplete contract theory and an agency perspective, we provide micro evidence that superior post buyout performance is observed in converted wholly-owned subsidiaries (WOSs) with efficiency-seeking operations and subsequent CEO succession. The findings extend our understanding that ownership per se does not guarantee performance improvement. Instead, it is the alignment between ownership and the owner's inputs, and between ownership and the owner's managerial control, that give rise to performance improvement.

Purpose – Multinational corporations are increasingly augmenting their international strategies with insights on, and approaches to, external stakeholders and nonmarket dynamics. The rise of populism and increased geopolitical uncertainty have accelerated these efforts, particularly for business leaders anticipating and engaging external agents, events, and issues that challenge the strategic objectives of their enterprises. Approach – In this introduction to the special issue, we begin by explaining why the increased preponderance of populism and geopolitical uncertainty are simultaneously posing an existential threat to the post-Cold War global economy predicated on free trade and (relatively) open borders, and consequently, challenging the structures and strategies of international business. Findings – We provide an overview of the four papers in our special issue, and consider how each advances insights on how multinationals effectively navigate the nonmarket uncertainties of the contemporary global economy. We then advance four important areas for international business research around multinational nonmarket strategies: (i) resilience and legitimacy; (ii), diversification; (iii), market and nonmarket strategy integration; and (iv), institutional arbitrage. Research implications – We anticipate that nonmarket strategy scholars can build on these themes to assess how nonmarket strategies can better enable multinationals to survive and thrive in an age of heightened global risk and uncertainty.

Through a 21-year longitudinal study of the relationship between Italian supercar manufacturer Automobili Lamborghini and its parent, German carmaker Audi AG, we examine how a unit's degree of organizational autonomy is renegotiated over long periods of time. Using detailed empirical data, we develop a process model of the dynamics of organizational autonomy in a unit-parent relationship. This process model shows an ongoing dialectical tension between parent managers' autonomy-reduction efforts and unit managers' autonomy-extension efforts, and it reveals oscillations in the unit managers' discretion over resource-orchestration decisions. Driving this dialectic are parent managers' appraisal respect for the unit, their search for firm-wide strategic integration, and unit managers' organizational identity and concern for distinctiveness. Our process model captures concurrent feedback loops that endogenously produce these oscillations between lower and higher autonomy. We then conceptualize a harmonic domain in the unit-parent relationship, in which these oscillations persist without deviating toward amalgamation or separation. Finally, we develop a theory of change in autonomy by identifying a theoretical link between resource orchestration and specific dimensions of organizational identity. Our study highlights the dialectical, dynamic, and ongoing nature of organizational autonomy.

Trade associations work to influence regulation, government policy, and public opinion on behalf of the collective needs and objectives of their members. They also serve as agents for disseminating and exchanging information within industries, and often act as informal regulators by setting voluntary standards of behavior for industry members. Yet, despite the obvious importance of trade associations for firms, industries, and societies, management and organization researchers have devoted surprisingly little attention to understanding them. In this essay, we argue that researchers must develop a deeper understanding of their purpose, sources of influence, and impact on companies, industries, and society. We go on to discuss three examples of areas of management research—institutional theory, collective identity, and nonmarket strategy—where we believe trade associations are of particular relevance and where existing theoretical perspectives remain limited without an explicit consideration of these important organizations.

We explain that the reasons for this Dialog stem from the enduring gaps in our understanding of what trade associations are, how they work, and what impact they have on members, industries, markets, and societies. The Dialog includes an opening paper by Thomas Lawton, Tazeeb Rajwani and Amy Minto and is followed by contributions from Michael Barnett, Steven Kahl, Lyn Spillman, and Howard Aldrich. Building on previous and ongoing research, each author reflected on the key questions driving this Dialogue: Do trade associations matter and if so, how? We argue that not only do they matter but more attention needs to be given to their roles and responsibilities.

Purpose This paper aims to illustrate how legacy airlines can reorientate to achieve sharp recoveries in performance following prolonged periods of stagnation, decline and eroding competitiveness. Design/methodology/approach The authors use a qualitative analysis of five longitudinal case studies of legacy airlines that embarked on strategic change between 1997 and 2006. Data collection spanned ten years and included archival data, public documents, news clippings, accounts in specialist books and internal company documentation. Findings The paper identifies two distinct approaches for reorientation in the legacy airline industry. Companies that have fallen behind and are in risk of failure focus on regaining customer trust and loyalty, and restructuring route networks, business processes and costs in an “improvement and innovation” reorienting approach. Underperforming airlines, for whom growth has declined in traditional markets and who note that opportunities exist elsewhere, focus on product and service development and geographical growth in an “extension and expansion” reorienting approach. Practical implications The paper develops a framework for successful reorientation in the legacy airline industry. This framework encourages executives to focus on and leverage profit maximization, quality, leadership, alliance networks, regional consolidation and staff development during periods of strategy formulation and reorientation. Originality/value This research addresses the dearth of understanding and attention afforded to the concept of reorientation in the literature on strategic turnaround. The research also serves to emphasize the presence and importance of reorientation as a strategy of change within the legacy airline industry. Furthermore, in demonstrating how this strategy can be implemented in a sharp‐bending or performance improvement context, this study illustrates how reorientation is intertwined with the broader turnaround process.

Nonmarket strategy is now well established as a legitimate field of research. In this paper, we review the dominant paradigms in contemporary nonmarket research and report on the key insights and findings from those perspectives. We use this review to suggest that the integration of institutional and strategic perspectives provides a logical path for the continued development of nonmarket strategy research going forward. Looking ahead, our premise is that institutional perspectives will have an increased relevance to nonmarket scholarship, particularly with the increasing importance of emergent economies to international business. As companies are required to invest more in nonmarket practices, and adapt those practices to unique country contexts, we anticipate that research will increasingly draw from multiple conceptual paradigms and perspectives.

While extant research acknowledges the importance of information for corporate political activity (CPA), there is limited understanding of how information is actually used to deploy political strategies. This gap reflects a broader problem in the literature whereby Big Data (BD) research is overly focused on the impact of information on market performance but overlooks the impact on nonmarket performance. In this paper, we draw on the resource-based view to conceptualize the interrelationship between BD (i.e. information) and CPA. We argue that CPA motivates BD investments, which, in turn, shape the organization of CPA and spur the development of data-driven political capabilities. Our conceptual model, which unpacks the intricate linkages between CPA success factors, BD and political capabilities, generates important theoretical, practical and further research implications.

This paper reviews the extant and emerging perspectives on, and approaches to, political risk management, particularly in the context of foreign direct investment. The authors identify and classify the various theoretical lenses in the domain of political risk management, and suggest a future research agenda. The paper contributes by conceptually categorizing and mapping the extant research onto three approaches to the management of political risk. Through conducting a narrative literature review, the authors suggest three theoretical perspectives on political risk management: institutions; resources and capabilities; and resource dependence. They argue that the institutions approach to political risk management is reactive, responding to external stimuli, whereas the resources- and capabilities-based approach is proactive, preparing and acting in anticipation. The resource dependence domain offers an intermediate approach – the active management of political risk. The authors also suggest that the effectiveness of the domains’ approaches may vary across different national contexts.

Research summary: We analyze how a host market’s institutional context can influence an MNE’s senior management’s choice and deployment of corporate political activity (CPA). First, we argue that a non-engaged approach to CPA is likely to be chosen when senior management perceives high host-country political risk, arising not only from host-country political institutions, but also from the distance between home and host-government relations. Second, we propose that the deployment of this approach can require active adaptation through four political strategies: low-visibility, ensuring a minimal degree of general attention from other actors; rapid-compliance, entailing high speed actions to obey the rules; reconfiguration, involving re-arranging the MNE’s structure and processes for competitiveness; and anticipation, implying the prediction of public policy and analysis of interest groups to anticipate responses. Managerial summary: Senior managers of multinational enterprises (MNEs) often examine when and how to engage, or not to engage, with host governments. We argue that senior managers are likely to choose to evade engagement with a host government when they perceive high host-country political risk, not only through public political risk ratings, but also via their home and host-government relations. We show that this choice can require senior managers to lead active adaptation through four strategies: low-visibility, enabling the MNE to operate under the radar of host governments; rapid-compliance, entailing high speed actions to obey the rules; reconfiguration, involving re-arranging the MNE’s structure and processes for competitiveness; and anticipation, implying the prediction of public policy and analysis of interest groups to anticipate responses.

This paper reviews the diverse literature on corporate political activity (CPA) and develops a framework that details and integrates existing research in this field. A systematic analysis of extant CPA literatures is conducted to order them into domains that have implications for organizational performance. The paper is structured into three such domain emphases, which require further research investigation: resources and capabilities focus; institutional focus; and political environment focus. The contribution of each to an understanding of CPA in pursuit or defence of corporate competitive advantage is discussed. The authors also suggest that the internationalization of business, including the more recent emergence of developing country economies and companies, presents scholars with the challenge of understanding CPA in more varied institutional settings. CPA practices continue to expand as commerce goes increasingly global and, consequently, involves a wider array of political actors and institutions. The paper contributes by increasing the clarity of CPA classification, reflecting on the implications of a multi‐polar world for CPA research and advancing future agendas for scholars in this research community.

As interest increases in the political engagement between multinational enterprises (MNEs) and emerging economy host governments, less is known about wider MNE stakeholder engagement and the development of nonmarket capabilities in institutionally fragile environments. This study investigates how MNEs engage stakeholders through corporate political activity (CPA) during the pro-market reform of Uganda’s electricity generation sector. Data is collected through semi-structured interviews, archival materials and fieldwork notes, and is analyzed using an NVivo-supported grounded analytic method. We find both proactive and reactive leveraging of CPA to manage diverse stakeholders. We argue that the host government remains the most important political stakeholder in the early phases of reform, but changes in institutional and political environments necessitate strategic adaptations as the reform process progresses. These adaptations include the need for local engagement and the accommodation of multi-level stakeholder pressures. Our findings contribute to an understanding of corporate political capabilities in Africa’s emerging markets, and illustrate how these capabilities can be strategically leveraged to effectively manage diverse stakeholders.

We examine how multinational enterprises (MNEs) employ political strategies in response to location-based, institutional transformations in new frontier African markets. Specifically, we explore the heterogeneous corporate political activities of advanced and emerging market MNEs in Uganda’s electricity industry, as they respond to and influence locational advantage using diverse political capabilities. We argue that, in institutionally fragile, new frontier markets, Dunning’s OLI paradigm is more theoretically robust and managerially relevant when combined with a political perspective. Effective MNE political strategies in these markets rely on nonmarket capabilities in political stakeholder engagement, community embeddedness, regional understanding, and responsiveness to stages of institutionalization.

We review the extant literature on market entry modes to explain the multi-levels of the political environment that can have a moderating effect on transnational corporations’ (TNC) market entry processes. Based on a systematic review of the Uppsala model, transaction cost analysis, real options, eclectic paradigm, industrial network, and institutional approaches, we show that the market entry modes literature has largely excluded some aspects of the political environment from market entry mode decisions. Consequently, we continue to struggle with the question of how TNCs can factor the political environment into their foreign market entry processes. We suggest a more detailed analysis of the political environment may enable future research to address this challenge using corporate political activity literature and institutional theory. In particular, a distinction between macro and micro levels of analysis can explain how the moderating effect of the political environment on market entry mode decisions can be untangled.

The creation and preservation of competitive advantage remains the central concern of strategic managers (Lawton et al., 2013). Throughout this book, the contributors argue that in the modern world economy, the competitive advantage of a company is determined as much by its non-market strategy as it is by its market engagement. Following on Chapter 7’s discussion of corporate social responsibility (CSR), in this chapter we focus on the second pillar of non-market strategy, usually referred to in the literature as “corporate political activity” (CPA). This ranges from lobbying government through the use of political campaign contributions, to sharing information with political or regulatory actors, to attending political action committee meetings on policy formulation. Therefore, the key objectives of this chapter are to reflect on the various perspectives in the field, shed light on the dominant theoretical constructs in CPA, and set out a future research agenda. Our discussion underpins numerous subsequent chapters of this book.

In this study, we examine what is important to strategic management researchers in different countries and investigate whether or not there is a demarcation between North American-based scholars and those established elsewhere in the native English-speaking world. We advance data in support of the argument that there is a difference of approach to strategic management research between scholars and leading journals based in North America (USA and Anglophone Canada), compared with the rest of the world. We further argue that this has implications for strategic management teaching and practice. Our analysis of strategy research in the leading journals of the strategic and general management field found that – at a methodological level – North American-based scholars and journals have a quantitative, statistically-driven partiality, whereas scholars and journals based elsewhere in the English-speaking world favor qualitative, case-based research. At an epistemological level, North American research displays a managerialist inclination, concerned with improving the management of organizations. In contrast, research conducted in Australia, Ireland, New Zealand and the UK in particular exhibits a sociological partiality, interested in scrutinizing organizational meaning and social interactions. The implications may be evidenced in a more critical perspective on general management development and practice in these countries, and a performance optimizing approach in North America.

Takes a strategic management approach to a company's engagement with political, regulatory and social arenas and interests Develops a conceptual framework and managerial process for designing and delivering successful nonmarket strategies Compares and synthesizes nonmarket strategy best practices in a variety of company and country contexts. Advances an argument and logic for aligning nonmarket and market strategies to deliver competitive advantage Argues that regulatory and responsibility departments in companies should be functionally integrated and managerially elevated to ensure that the nonmarket environment is engaged at a strategic level in business organizations

We explore the organizational characteristics of trade associations (TAs) and suggest theoretical approaches for undertaking research into or involving TAs in management and organization studies. Through emphasizing the role of TAs within and between industries and at the interface of business and society, we consider how TAs generate meaning and influence.

It is too easy to blame market turbulence or unexpected events for a company's poor performance; yet, this is frequently the response of managers to circumstances and activities beyond their immediate control. As a consequence, managers and owners often fail to develop strategies for coping with challenge or crisis the next time it occurs. The result is that many organizations are doomed to repeat the same or similar mistakes over and over again in a form of corporate déjà vu. To gain insights regarding how companies can better manage in hostile environments, we consider the solutions that have evolved in nature over billions of years. We trace nature's codes for adapting to hostile environments and explore the underlying characteristics of four genetic code types that can help business organizations to offset the negative implications of hostility through ensuring strategic fit. We then link the four genetic codes most frequently found in nature with organizational capabilities. When correctly identified and leveraged, these capabilities can enable a company to focus attention and resources on how to manage successfully in hostile environments.

The late Kenneth Waltz, father of the neorealist approach to international relations, first suggested that a bipolar world is more stable,1 arguing that a world dominated by two great powers is less prone to large-scale conflict.2 The end of the Cold War heralded the dissolution of this system and the emergence of a unipolar world dominated by the United States. Susan Strange’s notion of structural power3 seemed to support this thesis, since, during the 1990s, the US had the authority to shape and determine the structure of the global political economy. This power manifests as the ability to control the four key pillars of the world economy: security, production, finance, and knowledge.

As David Baron noted in his Foreword to this book, non-market strategies serve one or more of five purposes: rent seeking (e.g. the continuation of government subsidies); unlocking opportunities (such as pushing for industry deregulation); defense (against rivals, non-governmental organization (NGO) criticism, community activism, or government directives); attracting customers (those who place a premium on environmental protection, social justice, or the protection of rights); and strengthening reputation, building trust, and enhancing legitimacy.

We explain that the reasons for this Dialog stem from the enduring gaps in our understanding of what trade associations are, how they work, and what impact they have on members, industries, markets, and societies. The Dialog includes an opening paper by Thomas Lawton, Tazeeb Rajwani and Amy Minto and is followed by contributions from Michael Barnett, Steven Kahl, Lyn Spillman, and Howard Aldrich. Building on previous and ongoing research, each author reflected on the key questions driving this Dialogue: Do trade associations matter and if so, how? We argue that not only do they matter but more attention needs to be given to their roles and responsibilities.

Purpose The purpose of this paper is to explore how, in unpredictable policy environments, specific managerial choices play a vital role in designing lobbying capabilities through the choice of levels of investment in human capital, network relationships and structural modification. Design/methodology/approach Using an inductive case study approach, data were collected through 42 in‐depth, semi‐structured interviews and documented archival data. Cross‐case pattern sequencing was used to construct an interpretive model of lobbying capability design. Data were framed by the dynamic resource‐based theory of the firm. Findings Heterogeneous lobbying capabilities are adapted differently in private and state‐owned airlines as a result of diverse ownership structures and time compositions that interplay with organizational processes. The result is a divergence between private‐ and state‐owned airlines in how they engage with governmental actors and policies. Research limitations/implications The paper contributes to ongoing discourse in and between the dynamic capabilities and corporate political activity literatures, particularly on how state/non‐state‐owned airlines design their political lobbying capabilities. The research is limited in so far as it only studies the European airline industry. Originality/value The paper illustrates how a specific and far‐reaching unanticipated external policy stimulus (the 9/11 terrorist attacks) impacted on management choices for lobbying design in the European airline industry.

It is commonplace for today’s transnational enterprises to undertake political risk analysis when choosing foreign markets and creating entry strategies. Despite this, non-market elements of corporate strategy are less well researched than the traditional market-based perspectives. Providing comprehensive and leading edge overviews of current scholarship, this Companion surveys the current state of the field and provides a basis for improving our understanding of the non-market environment, encouraging new insights to improve strategies for enhancing a firm’s performance and legitimacy. With a foreword by David Baron, the international team of contributors includes Jean-Philippe Bonardi, Bennet Zelner, and Jonathan Doh, who combine to create a book that is essential reading for students and researchers in business, management, and politics, including those interested in business regulation, environmental policy, political risk and corporate social responsibility.

Governments and ownership structures can both facilitate and constrain organizational value creation. Firm-level political strategy is a frequent response to protect or promote organizational interests. When effectively configured and implemented, these political strategies can become capabilities. This inductive study examines the antecedents of political capabilities in European airlines within the context of cross-border market deregulation. Our central contribution is an understanding of how management teams from non-state and state airlines organize and develop divergent corporate political capabilities in this context. While managers’ actions in response to specific public policy processes can create political capabilities, the outcome is moderated by the nature of corporate ownership and the relative influence of public and private stakeholders on capability formation. Our theoretical contribution is to extend the study of organizational capabilities into the non-market context through analyzing how European flag carrier airlines organized their political capabilities in anticipation of a changing transnational policy context.