Campaign Contributions and New Technology Adoption in the US Broadband Industry

Abstract

We study the relationship between corporate political activity and technology adoption when incumbents may deter entry. We propose that a greater amount of campaign donations to politicians is associated with less likelihood of new technology adoption. We also suggest that the local political environment at a more micro level moderates this negative relationship. Using the unique context surrounding the broadband market in North Carolina, we find support for our hypotheses. Our findings shed light on how technology adoption may be substituted with corporate political activities when the objective is to deter entry, and not to address increasing market demand or existing rivalry. We also illustrate that within a given institutional environment (state) lies heterogeneous markets at a more micro level (counties and municipalities) that serve as an important source of variance in technology adoption.

Keywords: technology adoption, contributions, broadband