Home‐institutional Imprinting and Lobbying Expenditure of Foreign Firms: Moderating Effects of Experience and Technological Intensity
| DOI | http://doi.org/10.1111/1467-8551.12252 |
| Date | 01 October 2017 |
| Author | Vikrant Shirodkar,Palitha Konara,Steven McGuire |
| Published date | 01 October 2017 |
British Journal of Management, Vol. 28, 589–608 (2017)
DOI: 10.1111/1467-8551.12252
Home-institutional Imprinting and
Lobbying Expenditure of Foreign Firms:
Moderating Eects of Experience and
Technological Intensity
Vikrant Shirodkar , Palitha Konara1and Steven McGuire
School of Business, Management and Economics, University of Sussex,Brighton, UK, and 1Plymouth Business
School, Plymouth University, Plymouth, UK
Corresponding author email: v.shirodkar@sussex.ac.uk
The issue of whether a firm’s ‘home’ environment influences its non-market activities in
a ‘host’ country is being increasingly discussed in the international business literature.
In this paper, we use institutional and organizational imprinting theories to argue that
multinational enterprises (MNEs) founded in countries with stronger regulatory institu-
tions are likelyto spend more on lobbying in a host country compared to MNEs founded in
countries with weaker regulatory institutions. Wealso argue that this eect is moderated
by the MNE’s overall experience, its experience within the host country and its techno-
logical intensity. We test our hypotheses using a sample of 378 foreign MNEs (among
the largest 500) operating in the USA, spanning the eight year period 2006−2013, and
representing 29 home countries. Our results support our hypothesis on the relationship
between home-institutional imprinting and overseas lobbying expenditure, as described
above. Our results also support our arguments that MNEs’ overallexperience and tech-
nological intensity reduce the imprinting eect of home institutions on lobbying expendi-
ture; however, our moderating eect of host-country experience on this relationship is not
supported.
Introduction
Scholars have acknowledged that the strategic
actions of firms are often determined by the
institutional conditions faced by them at the time
of their founding (Kriauciunas and Kale, 2006;
Stinchcombe, 1965). Multinational enterprises
(MNEs) locate their value-chain activities in
multiple institutional contexts and therefore face
a multitude of non-market stakeholders in various
countries, such as changing governments with
conflicting agendas, changing social needs and
changing attitudes of local business communities
(Kobrin, 1979; Simon, 1984). MNEs are knownto
manage such institutional idiosyncrasies over time
exogenously, for instance via sequential stages
of entry (Delios and Henisz, 2003a, 2003b) and
by engaging in non-market activities to influence
host governments for preferential access and
exclusivity (Boddewyn and Brewer, 1994; Doh,
Lawton and Rajwani, 2012). An important issue
that remains under-explored in this context is,
while MNEs learn to adapt to the demands of the
non-market environment in various host coun-
tries, to what extent does the ‘imprinting’ eect of
their non-market capabilities developed at home
influence their non-market behaviour in host
countries.
Lobbying, defined as the transfer of infor-
mation between firms and policymakers, has
been regarded as an important form of non-
market strategy (De Figueiredo and Richter, 2014;
Hillman, Keim and Schuler, 2004; Rodriguezet al.,
2006). Although lobbying has been traditionally
studied under the umbrella of corporate political
activities (CPAs), i.e. to serve a firm’s self-interests
© 2017 British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4
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590 V. Shirodkar, P. Konara and S. McGuire
by demanding favourable policies from the govern-
ment (Hillman, Keim and Schuler, 2004; Lawton,
McGuire and Rajwani, 2013; Schuler, Rehbein
and Cramer, 2002), scholars have argued that lob-
bying is also a part of firms’ social responsibility
(e.g. Hamilton and Hoch, 1997; Keer and Hill,
1997; Wood, 1985). Wood (1985), for instance,
argues that lobbying enables firms to promote
the interests of various stakeholders, such as
customers in demanding quality goods, employees
in having continued jobs and incomes, and share-
holders in expecting reasonable profits. Lobbying
thus provides a legitimate mechanism for MNEs
to address their social as well as political needs in
their home and host environments.
Prior research on MNEs’ overseas lobbying has
largely focused on the institutional characteristics
of ‘host countries’, e.g. the (un)availability of
legitimate mechanisms to lobby (via information
exchange) and the extent to which MNEs learn to
develop alternative, locally accepted mechanisms
to voice their opinions to the host government
(Henisz, 2003; Hillman and Wan, 2005; Holburn
and Zelner, 2010; Lawton, Rajwani and Doh,
2013; Xin and Pearce, 1996; Zhou, Poppo and
Yang, 2008). An important assumption made in
these studies is that MNEs would use lobbying
as a mechanism in a host country if legitimate
business−government interfaces were available
for such activity. We first suggest that blending
this work with ‘organizational imprinting’ per-
spectives (Stinchcombe, 1965) could be a way
forward in understanding how an MNE’s home
environment aects its overseas lobbying. Having
its roots in biology, imprinting is the durable
influence of certain experiences and knowledge
developed at the time of founding on an orga-
nization’s approach to new situations. Studies
suggest that, depending on the nature of MNEs’
home institutions, managers develop specific
capabilities and routines to interact with external
stakeholders. In this context, stronger home insti-
tutions encourage lobbying, whereas institutional
‘voids’ encourage the use of bribery and other
mechanisms by firms (Campos and Giovannoni,
2007). We suggest that, due to the imprinting
eects of home institutions, MNEs founded in
such contexts will develop ‘mental models’ of in-
teracting with the government (Boddewyn, 2015;
Denzau and North, 1994; Holburn and Zelner,
2010; Kriauciunas and Kale, 2006) and that these
are likely to extend to MNEs’ overseas operations.
Therefore, our first research question is: to what
extent does home-institutional imprinting aect
foreign firms’ lobbying expenditure in a host
country?
Second, we suggest that MNEs’ experience,
both overall and host-country-specific, and their
technological intensity moderate the relation-
ship between home-institutional imprinting and
overseas lobbying behaviour. Imprinting theory
suggests that firms are more vulnerable to external
pressures during ‘developmental stages’, i.e. newer
firms have greater imprinting eects than older
firms (Freeman, Carroll and Hannan, 1983). As
MNEs generally growolder, they develop ‘generic’
political knowledge, reducing the imprinting
eects of institutional conditions at the time
of founding (Blumentritt and Rehbein, 2008;
Bonardi and Vanden Bergh, 2015; Delios and
Henisz, 2003a; Henisz, 2003; Holburn and Zelner,
2010). Likewise, as MNEs gain experience in a
specific host country, they are likely to gain deeper
and more institution-specific political knowledge
of the host country (Boddewyn, 2015; Buckley and
Boddewyn, 2015). We argue that, in general, ex-
perience reduces home-institutional imprinting
eects in overseas lobbying. We also acknowledge
the possibility that the imprinting eects of home
institutions vary among dierent types of firms.
In this context, we suggest that the technological
intensity of the MNE is an important variable,
as previously acknowledged (e.g. Hsu and Lim,
2013). This is because technologically intensive
MNEs tend to be embedded in multiple institu-
tional contexts, and this reduces the imprinting
eect of home institutions. Overall, this leads us
to our second research question: to what extent
do experience and technological intensity mod-
erate the relationship between home-institutional
imprinting and lobbying expenditure of foreign
firms in a host country?
In this paper, we focus on the ‘regulatory’
(i.e. formal) characteristics of home institutions,
although institutions are composed of regulatory,
cognitive and normative pillars (Scott, 1995).
This is because, first, various studies suggest
that regulatory factors are more likely to have
an impact on corporate political behaviour in
comparison to normative and cognitive factors
(Campos and Giovannoni, 2007; Harstad and
Svensson, 2011; Mondejar and Zhao, 2013). Also,
regulative factors are coercive and cannot be
taken for granted by firms, and are therefore likely
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