Corporate Politicking, Together: Ties, Lobbying and Giving in a Polarized and Connected World

Business and Politics, Forthcoming

32 Pages Posted: 15 Jun 2016 Last revised: 10 Mar 2017

Date Written: March 9, 2017

Abstract

Scholars and politicians in recent years have become concerned with rising levels of inequality among Americans, heightened in the aftermath of the 2010 Supreme Court decision in Citizens United v. F.E.C. The suspicion over an ever larger influence of corporate and elite interest over public policy has brought about significant public backlash, even becoming a key platform of reformist candidates such as Sen. Bernie Sanders. In large part, these fears have yet to be realized, as many corporations have chosen to remain on the sidelines in American elections and not fully take advantage of their newfound rights. At the same time, we have observed a stark rise in corporate lobbying expenditures in recent decades. What explains the puzzle of how corporations choose to engage in new or expanded forms of political activity, and even what drives the spread of corporate norms? This study investigates the conditions under which corporation may come to embrace political action. While firm level factors have been cited as a significant portion of what drives corporate engagement in politics, some have noted a network component, largely through board interlocks. Board interlocks, the ties between firms through shared directors, have been a staple in the corporate politics literature for several decades. However, scholars have recently noticed a significant decline of these networks, with a subsequent fracturing of the corporate network. I argue that rather than a decline in the corporate network, corporations have shifted to a new form of tie: trade associations. Trade associations, as an explicit goal, work to organize and further business. While some have suggested the role of these organizations as potential source of influence, none have studied the network of trade association membership as influencers of corporate political behavior. This study presents a new network data set, the corporate trade association network. This network of Fortune 500 firms connected by over 30 of the largest trade associations provides a new resource for scholars of corporate behavior. Using network autocorrelation models and simulations to study corporate lobbying and campaign expenditures, I find that although firms may have been reluctant to engage in corporate giving, even a single firm increasing their level of participation in political activity can have a dramatic ripple effect through their ties in the trade association network, leading to a significant overall increase in total spending by Fortune 500 firms. The trade association network provides significantly more explanatory power of corporate political behavior than the previous board interlock network. This can explain in large part the dramatic increase in corporate lobbying over the last decade, and offers a vision of the future where the hypothesized and sometimes feared effect of a massive infusion of corporate cash in American elections could be the reality. This shift in corporate spending, and indeed corporate norms, could potentially lead to policies conducive to ever greater levels of inequality in the United States and contribute to historic levels of polarization.

Keywords: networks, lobbying, campaign finance, Congress

Suggested Citation

Kowal, Michael, Corporate Politicking, Together: Ties, Lobbying and Giving in a Polarized and Connected World (March 9, 2017). Business and Politics, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2795348 or http://dx.doi.org/10.2139/ssrn.2795348

Michael Kowal (Contact Author)

Bowdoin College ( email )

Brunswick, ME 04011
United States

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