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

Building corporate ties to the government has long been viewed as an important tenet of a firms 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 o...

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Bibliographic Details
Published inCorporate Management Review Vol. 44; no. 1; pp. 1 - 34
Main Authors Lee, Cheng-Yu, Wu, Hsueh-Liang, Dong, Menghang
Format Journal Article
LanguageEnglish
Published Taiwan National Chiao Tung University, College of Management 01.01.2024
Subjects
Campaign contributions
Competition
Competitive advantage
Energy consumption
Lobbying
Market strategy
Politics
R&D
Research & development
Subsidies
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ISSN1028-7310
DOI10.53106/102873102024064401001

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Summary:Building corporate ties to the government has long been viewed as an important tenet of a firms 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.
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ISSN:1028-7310
DOI:10.53106/102873102024064401001