How and Why Do Corporations Combine Lobbying with Social Responsibility?

Patrick Bernhagen, University of Stuttgart and University of Aberdeen

Natalka Patsiurko, Concordia University

This version: 18 September August 2014

This is a very first draft. Please do not cite or circulate without the authors’ explicit permission.

Abstract

Corporations are increasingly engaging both in various activities related to corporate social responsibility

(CSR) as well as in corporate political action (CPA), such as lobbying or donating money to politicians.

While these two modes of non‐market activity are fundamentally political in nature, business actors as

well as researchers are frequently uncertain about how they (should) relate to each other: How do

corporations combine more overtly self‐interested corporate political activity (CPA) and with

expectations of corporate social responsibility and corporate citizenship? To investigate this question we

analyze a new dataset of almost 1,000 corporations from Germany, the UK and the US that contains

information on their political and social activities. We develop and test empirical models of CPA and CSR

to evaluate expectations that these two modes of behavior can be explained by the same behavioral

logic. Our findings show that CPA and CSR can be explained by the same theoretical arguments and

empirical models. Moreover, the two types of non‐market activity go hand in hand: Engaging in CPA

significantly increases the likelihood of a corporation to employ CSR related strategies.

Paper presented at the ECPR General Conference, University of Glasgow 3 - 6 September 2014. The

research for this paper has been supported by the Economic and Social Research Council (grant ID

ES/I036974/1).

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How and Why Do Corporations Combine Lobbying with Social Responsibility?

It is difficult to remember a time when questions about the role that corporations play in politics have

been a more passionately debated subject than it is today. It has also arguably never been more

important than today for political scientists and democratic theorists to understand the contributions

that corporations make to creating political problems as well as solutions. Five years after the global

financial and economic crisis began, and after decades of high profile corporate scandals in multiple

countries, governments, organized groups and ordinary citizens are questioning the corporation’s

proper place in society. In advanced industrial democracies, business participation is the largest

component of interest group activity, whether measured by the number of participants or the resources

committed to lobbying (Baumgartner and Leech 2001; Grant 1993; Greenwood 2007). But to date

political scientists have devoted insufficient attention to the role that corporations play in politics (Wilks

2013). One particular area of neglect concerns the way in which this role varies across political venues

and types of activity. Analogous to citizens, some corporations may choose to combine and accumulate

different modes of political and social engagement, while others abstain from these activities

altogether. But while citizen participation tends to be territorially limited, many business corporations

have the resources and incentives to take up multiple activities in various national and international

arenas.

Thus, we may be witnessing a diversification of corporate non-market activity. There are several reasons

for this: While traditionally, capitalist democracies relied on the authority of the state to regulate

corporate actors, in recent decades transnational policymakers, a host of non-governmental groups and

alternative governance modes beyond the state have emerged. Globalization and the evolution of multi-

level systems of governance thus pose new challenges and opportunities for corporations and those

actors seeking to influence their behavior. In order to increase the levels of accountability and

transparency necessary for democratic politics, policymakers and the public need information about the

kind of organizations that have interests in a policy and the access they have to elected and appointed

officials. For their part, policymakers and civil society groups interested in increasing accountability in

public life face the challenge of evaluating the efficacy of various programs for regulating and

monitoring corporations’ political participation as well the effectiveness of social and environmental

responsibility schemes. These efforts require empirical analyses of corporate social responsibility (CSR)

and corporate political activity (CPA). Carrying out such analysis involves tackling two different frontiers:

First, as global markets continue to integrate and political decision-making expands to inter- and

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supranational levels, corporations face incentives to develop their non-market strategies accordingly to

engage these new frontiers of political and social engagement. Secondly, the literature to date has not

adequately addressed the variety of forms corporate political participation can take. In addition to

lobbying and donating to political parties, corporations, in increasing numbers, are participating in self-

regulatory schemes to demonstrate their commitment to CSR. And while we know that some

corporations are active in several types of non-market strategy at once, we do not know whether these

are employed independently or whether they are linked strategically. As some commentators point out,

corporations might use CSR strategically to avert stricter regulation and legal accountability (Vogel

2010). If this is the case, then any achievements of global governance goals resulting from CSR-related

activities may be undone by the setbacks that result from anti-regulatory lobbying facilitated by the very

same schemes. This question is yet to be addressed by systematic research.

The present paper seeks to take a first step toward this goal by analyzing the non-market behavior of

953 transnational corporations across different types of activities – lobbying and corporate social

responsibility – and venues – EU and UN. To this end, we have compiled a new dataset containing

information on corporation size, country of headquarter, and industry, as well as on corporations’

lobbying and corporate social responsibility (CSR) activities at these two different political venues. In the

remainder of the paper, we proceed as follows. The next section briefly reviews the literatures on CPA

and CSR and develops an argument about the relationship between these two forms of non-market

activity. After that, we describe the data we collected to evaluate out argument before presenting

results if preliminary empirical analysis. We conclude by discussing our findings in the light of the extant

literature on corporate non-market activity.

Explaining non-market strategies and their relationship

Corporations engage in non-market activities in a variety of ways, often with the aim of influencing

public policy and preventing adverse regulation (Grier et al. 1994, Stigler 1971). As they engage

politically, corporations are aware that their public reputations and the trust of key external actors in

the political arena and civil society are important political assets. Managing these assets is a key part of

corporate non-market strategies. While research on corporate political activity has mainly focused on

corporate lobbying of policy makers and financial contributions to electoral campaigns, there is growing

recognition that corporations are expanding their repertoire of political activity as part of an integrated

non-market strategy (Baron 2010; Rehbein et al. 2011; Schuler et al. 2002). In this context, the

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legitimacy that a corporation can gain by participating in public-private voluntary initiatives can reduce

the threat of adverse consumer, public or political activity (Meznar and Nigh 1995). Consequently,

scholars have begun to examine the political dimensions of what is generally referred to as corporate

social responsibility (CSR) (Lyon and Maxwell 2008; Matten and Crane 2005; Scherer and Palazzo 2011),

including the political and institutional factors that shape corporate decisions to participate in CSR-

related activity and voluntary codes (Brammer and Pavelin 2006, Doh and Guay, 2006). Of central

concern is the considerable variation in participation across different countries, economic sectors and

types of corporations (Kollman and Prakash 2001, Bennie et al. 2007, Perez-Batres et al. 2011).

We contribute to this literature by analyzing the choice of non-market activity employed by

corporations. Here, the options range from the more instrumental and specific (e.g. lobbying) to the less

specific and symbolic, e.g. CSR (Edelman 1964; Nye 2004). The questions are: Is there a subset of

corporations and sectors active in multiple arenas? Do the same factors explain both the more

instrumental corporate activities such as lobbying and their less instrumental activities such as corporate

social responsibility? And how do corporations’ activities in one political arena affect their strategies in

others?

To address these questions, we draw on conventional models of corporate political activity (Grier,

Munger and Roberts 1994; Hansen, Mitchell and Drope 2005) as well as on management studies on CSR

(den Hond et al. 2014; Anastasiadis 2013; Rehbein and Schuler 2013). CSR encompasses the policies,

processes, and practices corporations employ to meet societal and political expectations. Typically, this

involves adding social features or characteristics to products, or modifying production processes to

signal corporate efforts at advancing social objectives (McWilliams and Siegel 2001). The established

view holds that CSR implies compliance with expectations that go beyond legal requirements (Carroll,

1979).

CPA denotes deliberate corporate activities intended to influence public decision-making (cf. Getz 1997),

including lobbying, financial contributions, and constituency building (Hillman and Hitt 1999). These

activities may be used defensively, as means of warding off pending policy developments that may be

harmful to the corporation’s profit expectations (Getz, 1997). Or, they may be used proactively in a

quest to shape electoral, legislative or regulatory processes in such a way as to better meet the longer

goals of the corporation (cf. Bay singer 1984).

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Both CSR and CPA are oriented towards shaping the social and political environment in which a

corporation operates (Bonardi et al., 2006). Many of these activities are carried out in collaboration with

non-market partners, such as NGOs or governmental actors. They can therefore both be expected to

produce intangible assets, such as a positive reputation with external actors (den Hond et al. 2014). As a

consequence, these two major types of non-market activity should adhere to a single behavioral logic.

This would imply that many of the factors that have been identified in the literature to account for CAP

should also help explain CSR strategies – and vice versa. To investigate this possibility, we start with a

simple, profit-seeking model of the corporation (cf. Grier et al. 1994). According to this, we expect

several factors to structure corporations’ incentives for participating in the various political activities:

corporation characteristics (size, ownership), sector characteristics such as the degree of competition),

and home country characteristics including the politico-economic system and the normative and cultural

environment).

A corporation’s size reflects its resources and market power as well as what it has at stake in economic

and political conflict (Grier et al. 1994). As larger corporations have more to gain from political activity

than smaller ones, at least in absolute terms, they will often ignore the free-rider incentives of others

(Olson 1965). Larger corporations often also have increased reputational incentives for participating in

political activity as they have to protect publically-visible brand names. Indeed, individual corporation

size has consistently been an important determinant not only of political activity but also of CSR-related

activities and voluntary disclosure (Hillman et al. 2004: 839, Meek et al. 1995). In particular,

corporations are more likely to participate in global CSR initiatives. Research on the non-market

behavior of the Forbes Global 2000 corporations, for example, shows that larger corporations are

significantly more likely to sign the UN Global Compact (Bennie et al. 2007).

Differences in corporate governance systems might also affect the decisions that corporations make

about participating in non-market activities. As Kolk and van Tulder (2005) argue for CSR, the ‘outsider’

system of corporate governance dominant in the United States combines diffuse shareholding with a

prominent role of the CEO. Together with its high propensity for liability and class-action suits, this

system, they reason, might encourage socially responsible investment (Kolk and van Tulder 2005: 8). The

European and Japanese systems of corporate governance, by contrast, are ‘insider systems’ whose two-

tier board structure and less prominent CEO status might combine to use codes of conduct more as an

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‘internal control (rule-setting) instrument’ (ibid.). However, no empirical evidence exists to date to

support this expectation.

H1: Corporate participation in lobbying and participation in CSR activities are responses to the same

stimuli.

Furthermore, we argue that corporations’ CSR behavior complement their political activity. Credibility

and legitimacy are key assets underpinning any CPA strategy, such as lobbying. Displaying a credible

commitment to CSR contributes to the production and maintenance of these assets. As ‘relational

activities’ (den Hond et al. 2014), CSR can produce information and contacts that may subsequently be

deployed by the corporation in its political strategies (Yaziji 2004). Moreover, while many political

scientists view political lobbying by private interests as a normal feature of the political process in

pluralist systems, there are considerable concerns among democratic theorists as well as the public. For

example, Dahl (1989: 324-8) argues that political equality and democratic accountability are undermined

if corporate actors wield disproportionate influence over political outcomes. In recent years, concern

has been voiced that corporate political privileges have been further strengthened as a result of

increasing global financial and economic integration. In the United States, fears about corporate

influence in politics have increased after the Supreme Court’s rule 2010 rule on campaign spending

(Torres-Spelliscy, 2010). Indeed, campaign contributions from political action committees (PACs) are

often portrayed in the media as the functional equivalent of bribes (Milyo et al. 2000). Other studies

have shown that citizens are highly critical of business influence in politics (Pusey 2010). Reviewing this

literature, den Hond et al. conclude that CPA can ‘tarnish the reputation of a firm’. Here, CSR can work

as an effective counter measure to cherish corporate reputation.

This implies that corporations for whom lobbying is an important element in their non-market action

repertoire have increased incentives to engage in CSR related activities compared with corporations for

whom lobbying is less central. Thus, we expect that,

H2: Increased propensity to lobby is associated with an increased likelihood of engage in CSR, ceteris

paribus.

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The next section outlines how we intend to address these issue with the help of improved empirical

data.

Data, measurement and estimation strategy

In contrast to individual participation by citizens, where there is an extensive range of cross-national

datasets from election studies and opinion surveys. Comparative data on corporate non-market activity

are rare. To arenas address our research questions; we have compiled information on the political

activities for a sample of 953 corporations from Germany, the UK and the US – three countries

representing important politico-economic system types. Corporations’ demographic and financial data

are taken from Standard & Poor’s Capital IQ database, which contains almost 60,000 public and more

than 1.7m private companies from all over the world. From this source we have sampled the 300 largest

corporations from each of the three countries. For this purpose, we have created a size ranking based

on revenues, profits, assets and employee numbers.1 Compared to European firms, the top three

hundred US firms are disproportionately dominated by publically traded corporations. Therefore, we

have added 50 private corporations to the US sub sample to the 300 UK corporations, three based on

the Channel Islands were added.2

The Capital IQ data contain corporation-level information on size, sales, sectoral activity, and type of

ownership. Private corporations are those private equity and family owned corporations that are not

indexed in any stock market. We expect these three variables to be associated with non-market

activities, and to be so in the same way for CPA and CSR.

To this base of corporate characteristics, we have added information on the political activities of these

953 corporations from public lists and private directories. Lobbying data for the EU has been collected

through corporation-level searches of the 2013 European Public Affairs Directory (Harris 2013). A

corporation is coded as engaging in EU level CPA if it entertains a public affairs representative with an

office in Brussels (Brussels office). Setting up a European Affairs post is costly while being potentially

useful for targeting all three major policy-making bodies of the EU: the Commission, the Council of

1 Following established practice in the literature, size is measured by revenues in million US Dollars made during

the financial year 2011. Profit is gross profit revenues in million US Dollars realized during 2011. Assets are total current assets of the company in million US Dollars in 2011, while the number of employees is the total number of employees of a company for that year. 2 Although, as Crown dependencies, the Channel Islands are largely self-governing entities, they are not sovereign

states and instead are dependent on the Queen of the United Kingdom for their legislative acts to become law.

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Ministers and the EP. Equipping this representative with his or her own office in Brussels is more costly

still, but a Brussels base is useful for firms seeking to play a role in European public affairs. Thus, the

measure records whether a corporation is willing to invest in its long-term lobbying infrastructure in the

EU. CSR is measured by signing on to the human rights, environmental and good governance principles

that constitute the UN Global Compact (UNGC). The EU Commission actively encourages corporations to

put in place ‘a process to integrate social, environmental, ethical, human rights and consumer concerns

into their business operations and core strategy (European Commission 2011: 6) COM(2011) 681 final. In

particular, the Commission invites ‘[a]all large European enterprises to make a commitment by 2014 to

take account of at least one of the following sets of principles and guidelines when developing their

approach to CSR: the UN Global Compact, the OECD Guidelines for Multinational Enterprises, or the ISO

26000 Guidance Standard on Social Responsibility. Hence, corporations seeking to lobby the European

institutions face clear incentives to engage with this formalized torture of CSR. UNGC membership is

therefore a particularly valid measure of CSR in the context of EU lobbying. The dataset thus provides us

with binary measures of corporate non-market activity for in the EU and the UN (coded 1 if the

corporation engages in the activity, 0 otherwise).

Table 1 shows the levels of corporate activity for firms headquartered in each of the three countries in

our dataset. As can be seen from Table 1, about 8 percent of all corporations in our data entertain a

lobbying office in Brussels. Over 14 percent of corporations have signed up to the UNGC. German

corporations are most active in both modes of engagement. Perhaps surprisingly, large corporations

from the US are almost as likely to engage in EU level lobbying. However, US corporations are less likely

than their German and UK counterparts when it comes to UNGC membership.

Table 1. Percentages of corporations participating in non-market activities, by country

Germany UK US All

Brussels Office 10.3 4.6 9.7 8.3

UNGC 19.7 14.5 9.7 14.4

N 300 303 350 953

Decisions to participate take place within particular institutional and normative contexts (cf. Huckfeldt

and Sprague 1993), and the observed differences are likely to reflect these different contexts at the

national level. . Many of these can be best thought of as institutions as defined by North (1990: 97), i.e.

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‘the rules of the game’ that structure and constrain actors’ behavior. These rules can be formal (legally-

binding rules and regulations) or informal (soft-law codes of conduct, norms of behavior, and

conventions). Nation states are the foundations of the most important institutions in the international

system, and even globally active corporations operate on the basis of nationally distinct politico-

economic systems. Thus, general differences in national styles of capitalism as captured, e.g., by the

distinction between liberal market economies and co-coordinated market economies (Hall and Soskice

2001; Janney et al. 2009).3

To the extent that political institutions offer different ‘political opportunity structures’ (Kitschelt 1986),

the propensity to participate politically will differ across political arenas (Marks and McAdam 1996; Naoi

and Krauss 2009). While a number of parallels between the US and EU political systems make

comparative analysis across these different systems meaningful (Menon 2006), procedural differences

are likely to elicit different lobbying patterns.

Corporations also have incentives to behave according to what is considered appropriate in their social

contexts (March and Olson 1989) and hence to observe the social norms and cultural values of

corporations’ home countries. Existing analyses suggest that global corporations react to the pressure of

countervailing powers, such as NGOs and labor unions, and adapt to the normative context of their

home countries: corporations located in countries with strong environmental movements are more

likely to participate in the UN Global Compact (Bennie et al. 2007).

Furthermore, the non-market behavior of global corporations is partly shaped by national regulatory

regimes. Countries have different rules on lobbying and financial contributions as well as different

requirements for corporate reporting in areas of social or environmental responsibility. Increasingly,

such requirements are legally mandated, placing similar demands on corporations as voluntary schemes

in these areas do (Prakash and Potoski 2006: 142–4; Neumayer and Perkins 2004; Kollman and Prakash

2001).

Corporations’ involvement in politics and CSR is also likely to be shaped by the nature of their sectoral

activity. Corporations in extractive sectors are exposed to a higher risk of conflict with external actors,

3 Like with corporate governance, the role of nationally distinct types of capitalism has not yet been researched

empirically in great depth.

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especially in the areas of environment and human rights. Natural resources such as oil, gas and minerals

are often fixed and located in politically as well as geographically difficult environments. For global

corporations active in these locations, reputation-building, political communication and engagement to

safeguard their investment become important political activities. Hence, these ‘resource-cursed’

corporations seek opportunities to enhance their reputation and take counter measures to increase

their public legitimacy (Bennie et al. 2007) and lobby policymakers. At the industry level, corporations’

political engagement is likely to be shaped by their involvement in transnational business networks

(Coen and Grant 2001; Perkins and Neumayer 2010) and by the extent to which they can rely on trade or

industry associations to pursue their political interests (Streeck et al. 2006). In our analysis, we control

for industrial sector according to the divisions of the Standard Industrial Classification (SIC). The

distribution of corporations in our data across these divisions is shown in Table 2. Summary statistics of

all other variables are reported in Table A-1 in the appendix.

Table 2. Representation of industrial sectors in the data

Sector (SIC division) N Percent

Agriculture, Forestry and Fishing 4 0.4

Mining, Oil and Gas 36 3.8

Construction 20 2.1

Manufacturing 311 32.6

Transport, Communication and Public Utilities 150 15.7

Wholesale Trade 34 3.6

Retail Trade 92 9.7

Finance, Insurance and Real Estate 199 20.9

Services 102 10.7

Conglomerates and multi-sector holdings 5 0.5

Total 953 100

Results

As these are new data, we approach the empirical evaluation of our hypotheses from a descriptive and

bivariate angle first. As can be seen from Table 3, the percentage of corporations, just over 14 percent in

the sample, rises steeply to almost half of all firms in the data when the focus is on firms with active

11

political presence in Brussels. Thus, CSR and CPA tend to go hand in hand. The association is highly

statistically significant.

Table 3. Percentages of corporations participating in the UNGC, by Brussels office

Brussels Office

UNGC No Yes All

Non-participant 88.8 50.6 85.6

Participant 11.2 49.4 14.4

Total 874 79 953

Pearson’s Chi-square = 85.69, p<0.000

The bivariate correlation coefficient between these two measures of non-market activity is φ = 0.30 (see

Table 4). This is closely matched by the strength of the relationship between lobbying and CSR observed

among US corporations. The association is weaker for British firms and stronger for German firms.

Table 4. Bivariate correlations between non-market activities, by country

Germany UK US All

Phi 0.44* 0.13* 0.28* 0.30*

N 300 303 350 953

Note: * p<0.05,

To gauge the extent to which the same variables serve to predict lobbying and CSR activities, we

estimate generalized linear models with fixed effects and random intercepts using a logit link function.

There are random intercepts at two levels – countries and industrial sectors. As these levels are not

nested, we estimate crossed effects. Through random intercepts at country and industry level, most of

the factors discussed under “context” in the previous section are controlled for, although we do not

their individual effects. As can be seen from Table 5, the fixed effects estimates of the coefficients for

ownership type, revenues and profit are very similar across the two modes of non-market activity

(Models I and III). Ownership type does not affect the likelihood of either lobbying or signing up the

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UNGC. Size as measured by revenues is a significant predictor of both CPA and CSR. So is profit, although

the effect is small even when taking into account that the square root of this variable has been used for

better fit.

In Model V of Table 5, we take this empirical strategy a step further by treating CPA and CSR

interchangeably as instances of a non-market strategy, coding corporations’ non-market strategy as 1 if

they engage in CPA or CSR (or both), and 0 if they engage in neither. Once again, the coefficient

estimates are very similar to those obtained when predicting either CPA or CSR separately. Lastly, we

create an ordinal measure of corporate non-market strategy, coded 0 if a firm employs neither CPA nor

CSR, 1 if they engage in either CPA or CSR, and 2 if they do both. The results are reported in Model VI in

Table 5 and confirm the pattern of the estimates for the individual and combined non-market measures

reported in Models I, III and V. To test whether estimation of a single equation over these three

combinations of non-market strategies (none, one, or both) is appropriate, we perform a Brant test of

the parallel regression assumption. The xxx confirm this assumption, thus lending further support to the

assumption that the two measures tap closely related instances of non-market activity. Overall, the

estimates reported in Table 5 suggest that the same factors account for CSR that also serve to explain

variation among corporations in respect of lobbying, thereby supporting Hypothesis 1.

Table 5. Multilevel mixed-effects logistic regression for CPA and CSR behavior

Dependent variable

CPA (Brussels Office) CSR (UNGC) CPA or CSR Any or both

Model I Model II Model III Model IV Model V Model VI

Private 1.66 1.88 0.69 0.67

(0.58) (0.67) (0.20) (0.20)

Ln Revenues 1.99*** 1.77** 1.79*** 1.70***

(0.28) (0.33) (0.20) (0.19)

Profit (sq. root) 1.01** 1.01* 1.01** 1.01*

(0.00) (0.00) (0.00) (0.00)

UNGC 3.62***

(1.17)

Brussels Office 3.10***

13

(0.99)

Constant 0.00*** 0.00*** 0.00*** 0.00***

(0.00) (0.00) (0.00) (0.00)

Country-level �̂�𝑢2 1.52 1.19 2.93 2.58

(0.61) (0.25) (2.70) (2.12)

Sector-level �̂�𝑢2 2.19 1.67 1.22 1.20

(1.90) (1.05) (0.21) (0.20)

Log likelihood -208.22 -200.48 -321.61 -315.58

Wald 90.80*** 90.86*** 100.78*** 105.12***

Note: N=953; * p<0.05, ** p<0.01, *** p<0.001. Except for bottom two rows, cell entries are odds

ratios.

14

In Model II of Table 5, UNGC participation has been included as a predictor the CPA measure Brussels

office. The large and highly significant coefficients for this variable confirm the finding from the bivariate

analysis that the two modes of participation are highly correlated even when other variables are

controlled for. Similar, in Model IV we have included Brussels office among the predictors of UNGC

participation – this variable is also strongly and significantly associated with the outcome variable. This

suggests that firms that are strong on CSR are also more likely to develop lobbying infrastructure and

vice versa. It also means that the estimates reported in Models II and IV might be marred by

endogeneity of the non-market activity measure on the right hand side of the equation. Therefore, in

order to assess Hypothesis 2, we estimate an instrumental variable probit model in which the

endogenous Brussels office is instrumented by an exogenous size measure, total assets. This measure is

unrelated to UNGC but significantly associated with Brussels office. Thus, we are able to estimate the

effect of having a Brussels office on the likelihood of joining the UNGC after ensuring that this predictor

is no longer correlated with the error term of the empirical model. These estimates confirm the

significant association between the two non-market action variables. After controlling for a number of

firm level predictors as well as country dummies and clustering of standard errors on industry,

corporations that lobby in Brussels are twice as likely to join the UNGC as those that are not engaged in

this form of CPA.

15

Table 6. Instrumental variable probit regression for CSR behavior

Probit coefficients (2nd stage)

Brussels Office 2.07***

(0.45)

Private -0.36

(0.26)

Profit (square root) 0.00*

(0.00)

United Kingdom -0.11

(0.15)

United States -0.78***

(0.22)

Constant -1.19***

(0.18)

Arc-hyperbolic tangent of ρ -0.35

(0.21)

ln σ -1.38***

(0.08)

LL -358.17

Wald 1375.87

P 0.000

Note: N=953; * p<0.05, ** p<0.01, *** p<0.001; standard errors in parentheses corrected for clustering

on industrial sector; instrument: Total Assets

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Conclusions

We have argued in this paper that the two major types of corporate non-market strategy – CPA and CSR

can be explained by the same behavioral logic. Moreover, we proposed that CSR should be seen as

instrumental to the effective pursuit of CPA. Analyzing a new dataset of almost 1,000 corporations from

Germany, the UK and the US, we have tested these claims empirically. Our findings show that the two

modes of behavior can be predicted by a common empirical model. Moreover, engaging in CPA

significantly increases the likelihood of a corporation to employ CSR related strategies. The findings

provide reasons for viewing CSR activities as part of corporations’ political action repertoire, where they

serve as a buffer that smoothens relationships with public decision makers and alleviates any fallout

from negative publicity related to lobbying.

17

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Appendix

Table A-1. Summary statistics of all variables except sector

Variable N Mean Std. Dev. Min Max

Brussels Office 953 .0828961 .2758699 0 1

UNGC 953 .1437566 .3510269 0 1

Private 953 .2539349 .4354894 0 1

Revenues 953 16405.05 35041.02 .913 469162.00

Profit 953 5550337.00 11496.37 -223.6 127256.00

Assets 953 61788.67 219845.4 202.9 255557.00

Table A-2. First stage estimates

First stage

Private 0.03

(0.02)

Profit (square root) 0.00***

(0.00)

United Kingdom -0.06

(0.04)

United States -0.13**

(0.04)

Total Assets -0.00**

(0.00)

Constant -0.03

(0.04)