Rhetorical Commitment: The Impact of Digital Orientation on Corporate Political Spending

Abstract

This study explores how firms in emerging markets balance the benefits of political investments with the risks of government overdependence, particularly in the context of digitalization. Drawing on resource dependence theory, we argue that firms’ digital orientation can serve as a buffering corporate political activity, increasing their autonomy and reducing political dependence. Using longitudinal data collected from Chinese listed firms from 2010 to 2020, we find that digital orientation enhances political legitimacy, reducing regulatory pressures, attracting government support, and unlocking new opportunities, ultimately lowering the need for transactional political spending. We also explore how firm, industry, and environmental contingencies influence business-government interactions. Specifically, the buffering effect of digital orientation weakens for firms with high outward foreign direct investment or those in heavily regulated industries. Conversely, greater public attention to digital issues strengthens the relationship between digital orientation and political spending. This research deepens understanding of digital strategies in emerging markets and the evolving dynamics of firm-government interdependence.

Keywords: Digital orientation, Political spending, Resource dependence theory, Nonmarket strategies