Economic influence activities

Davin Raiha

Journal of Economics & Management Strategy, 2018, vol. 27, issue 4, 830-843

Abstract: Firms frequently make operational and strategy decisions to gain political influence. They locate plants, expand workforces, or choose suppliers, with the aim of affecting the economy and the electoral success of politicians. This behavior constitutes a nontraditional form of influence, which I refer to as economic influence activities (EIA). In this paper, I show how such activities influence policymaking and why firms may prefer it to more traditional influence activities such as campaign contributions. What distinguishes EIA is that a firm's strategy choices affects the state of a local economy and, in turn, the evaluations that voters make of the performance of an officeholder. I show how firms can use this capability to extract subsidies and policy favors from incumbent officeholders.

Date: 2018
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