Sticking to the Rules or Shaping Them - Corporations Between Market- and Non-market-orientation

Jan Siedentopp (Federal Ministry of Economics, Germany)
Albrecht Söllner (Europa-Universität Viadrina, Germany)

Abstract: Firms basically have two behavioural options concerning their institutional environment: They can stick to the existing rules, in other words accept the institutional environment as given, and try to compete successfully within the “rules of the game” (North 1990, 3) - Market-orientation would be the name of the game in this case. Or they can try to shape the institutional environment in their own favour in order to achieve a competitive advantage through favourable “rules of the game”. Corporate political activity or non-market-orientation would be the label for this type of behaviour. In this paper we aim at shedding some light onto this matter. We combine a new institutionalism with research results from path dependence theory and the resource based view. By doing so, we are able to better understand the drivers or rather the motivation of economic actors and their efforts towards shaping the institutional environment. Our empirical research confirms that a lock-in into a public-affairs orientation (non-market strategy) seems to be a good explanation of the firms’ activities to shape their institutional environment. The influence of corporations focussing on CPA might well result in an institutional environment that does not aim to solve the problem of (repeated) market failure but rather shapes the environment in the firms’ interests. Furthermore it seems that a non-market strategy focus of firms might actually reduce their market performance even further.

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