Egalitarianism and Lobbying: The Effect of Home-Country Culture on Cross-Border Nonmarket Strategy

Abstract

Prior literature has identified several firm and industry characteristics that are important determinants of firms’ political strategies. Yet much of the variation in firms’ political strategies remains unexplained. We address this theoretical gap in the literature by looking at the growing prevalence of foreign firms formulating and implementing political strategies in the U.S. In particular, we examine the role of home-country culture, particularly home-country beliefs around egalitarianism, as a central driver of the political strategies of foreign firms in the U.S. We argue that home-country beliefs around egalitarianism—the socially equitable and transparent use of market and political power—are a strong predictor of foreign firms’ political strategies in a host-country market. Empirically, we look at spending on formalized lobbying with mandated disclosure in the United States by non-U.S. firms and find strong support for our theory. We also find that home-country legal institutions and norms pertaining to egalitarianism have a moderating effect. This study contributes to the cross-cultural studies and the intersection of nonmarket and global strategy literatures.