Choosing Channels of Influence in Hybrid Regimes: Direct and Indirect Lobbying Across the Russian Federation
Abstract: How do the political institutions shape the way that firms pursue the laws and regulatory changes that they desire? We contrast firms that choose to influence policy directly, through un-mediated contacts with executive and legislative branch personnel, and those that do so collectively, through lobby group acting as intermediaries. Assuming that the firms’ choice between direct and indirect strategies will depend upon the relative costs and benefits in expected value terms and considering different mechanisms of how the institutions condition these costs and benefits, we infer that direct lobbying through government officials should be encouraged in autocratic settings while collective strategy becomes more attractive in democratic environment. We test this implication by using a multi-level hierarchical design and data from a 2010 survey of 1013 Russian firms across 61 regions and a regional level dataset. The data contains answers to the direct question about the channels that firms use to influence laws and regulations. For the variation in political environment we exploit the substantial variation in regional governance across Russia measured by the results of regional and federal parliament elections and press freedom index. Our data shows that in more democratic settings firms are more likely to use business associations when trying to influence their institutional environment. In less democratic settings Russian firms more frequently report approaching government personnel directly.
