Examining the interplay between non-market and market strategies: A study on political ties and R＆D investment

• Published in: Corporate Management Review Vol. 44; no. 1; pp. 1 - 34
• Main Authors: Cheng-Yu Lee(李振宇), Hsueh-Liang Wu(吳學良), Menghang Dong(董夢杭)
• Format: Journal Article
• Language: Chinese; English
• Published: 國立陽明交通大學管理學院 30.06.2024
• Subjects: environmental dynamism; R＆D investment; 研發投資; 政治連結; 環境動盪; Nonmarket strategy; corporate political ties; 非市場策略
• ISSN: 1028-7310; 1028-7310
• DOI: 10.53106/102873102024064401001

Building corporate ties to the government has long been viewed as an important tenet of a firm's nonmarket strategy; however, the literature thus far has not yet concluded the performance implications of doing so. The mixed findings pave the way for the contextual approach to the performance effect of corporate engagement in political ties. This study thus investigates the nuances of the complex balancing act between two types of strategy choices and environmental dynamism with a sample of 7,982 firm-year observations of publicly listed firms in Taiwan during 2002-2016. The results show that building corporate political ties per se cannot guarantee firm performance, but its synergistic effect with R＆D investment leads to better performance. Furthermore, this synergistic effect becomes stronger for firms subject to more dynamic environments. The findings of this study not only enrich strategy research but also caution against polarizing either market- or nonmarket-oriented strategy.