Private Politics, Corporate Social Responsibility, and Integrated Strategy

This paper provides a theory of private politics in which an activist seeks to change the production practices of a firm for the purpose of redistribution to those whose interests it supports. The source of the activist's influence is the possibility of support for its cause by the public. The paper also addresses the issue of corporate social responsibility by distinguishing among corporate redistribution as motivated by profit maximization, altruism, and threats by the activist. Private politics and corporate social responsibility not only have a direct effect on the costs of the firm, but also have a strategic effect by altering the competitive positions affirms in an industry. From an integrated-strategy perspective the paper investigates the strategic implications of private politics and corporate social responsibility for the strategies of rival firms when one or both are targets of an activist campaign. Implications for empirical analysis are derived from the theory.     

A dynamic theory of parliamentary democracy

This paper presents a dynamic model of elections, government formation, and legislation in a parliamentary democracy with proportional representation in which the policy chosen in one period becomes the status quo for the next period. The electorate votes strategically by taking into account the likely governments that parties would form based on their representation and the policies they would choose as a function of the status quo. The status quo thus affects both the election outcomes and the bargaining power of the parties during government formation. A formateur party therefore has incentives to strategically position the current policy to gain an advantage in both the next election and the subsequent bargaining over government formation and policy choice. These incentives can give rise to centrifugal forces that result in policies that are outside the Pareto set of the parties.     

The role of entrepreneurs in firm-level innovation: Joint effects of positive affect,creativity, and environmental dynamism

Innovation is often a crucial ingredient in new venture success but at present, we know relatively little about the role of individual entrepreneurs in encouraging its occurrence. The present research addressed this issue by investigating the joint effects, on firm-level innovation, of two variables pertaining to entrepreneurs (their creativity and positive affect) and a key environmental variable (environmental dynamism). Although it has been predicted that affect plays an important role in entrepreneurship [Baron, R. A., 2008. The role of affect in the entrepreneurial process. Academy of Management Review 33(2), 328–340.], relatively little empirical evidence on its effects has been obtained to date (e.g., [Foo, M.D. In press. Emotions and entrepreneurial opportunity evaluation. Entrepreneurship Theory and Practice.]). Further, although the link between creativity and innovation has been described in past literature [Amabile, T.M., 1988. A model or creativity and innovation in organizations. In B.M. Staw and L.L. Cummings (Ed.)., Research in organizational behavior 10, 123–167.], direct evidence for its existence is currently lacking. Findings of the present research indicate that positive affect among founding entrepreneurs is significantly related to their creativity and that creativity, in turn, is positively related to firm-level innovation. Both of these relationships are moderated by environmental dynamism, being stronger in highly dynamic than stable environments.     

Competing for the Public Through the News Media

Interest groups seek to influence economic activity through public and private politics. Public politics takes place in the arena of public institutions, whereas private politics takes place outside public institutions often in the arena of public sentiment. Private politics refers to action by interest groups directed at private parties, as in the case of an activist group launching a campaign against a firm. This paper presents a model of informational competition between an activist and an industry, where both interest groups seek to influence public sentiment and do so by advocating their positions through the news media. Citizen consumers make both a private consumption decision and a collective choice on the regulation of a product that has an externality associated with it. In the absence of the news organization, the collective choice is not to regulate. The activist and the industry obtain private, hard information on the seriousness of the externality and provide favorable information to the news media and may conceal unfavorable information. The news media can conduct investigative journalism to obtain its own information, and based on that information and the information it has received from its sources, provides a news report to the public. Because of its role in society, the media has an incentive to bias its report, and the direction of bias is toward regulation. Its bias serves to mitigate both market failure by decreasing demand and a government failure by shifting votes in favor of regulation. The activist then has incentive to conceal information unfavorable to its interests, whereas the industry fully reveals its information.     

Anti-competitive effects of resale-below-cost laws

We show that resale-below-cost laws enable producers to impose industrywide price-floors to retailers. This mechanism suppresses downstream competition but also dampens upstream competition, leading to higher prices. Price-floor may be more profitable for producers than resale price maintenance contracts and, while resale price maintenance may have ambiguous effect on welfare, price-floors always harm welfare. Retailers' buyer power appears as a key element for a price-floor to work out.     

Social sources of information in opportunity recognition: Effects of mentors,industry networks,and professional forums

Effects on opportunity recognition of three social sources of opportunity-related information (mentors, informal industry networks, participation in professional forums) were investigated. Results indicated that all three sources had direct, positive effects on opportunity recognition by entrepreneurs. In addition, the effects of two sources (mentors and professional forums) were mediated by schema strength, while effects of the third source (informal industry networks) were mediated by self-efficacy. Results are consistent with theories of opportunity recognition that emphasize the role of information and cognitive processes, and suggest that two social sources of information not systematically investigated in previous research–mentors and participation in professional forums–can assist entrepreneurs in identifying opportunities for new ventures.     

Bribes as entrepreneurial actions: Why underdog entrepreneurs feel compelled to use them

Entrepreneurs often need external resources to found their new ventures. These can be obtained from many sources, but government sponsored programs are an important and often desirable one because they do not require repayment of the funds provided. Resources from such programs should, in principle, be equally available to all entrepreneurs, but in fact, some entrepreneurs—ones often described as underdogs – have restricted access to them. This disadvantage stems, in part, from personal factors they cannot readily change (e.g., gender, age, race, ethnicity, current occupation, family background, experience). The negative effects of being an underdog are especially harmful to entrepreneurs in the context of poor economic conditions, when competition for available resources is intense. In order to overcome such adversity, underdog entrepreneurs offer bribes to persons who control these resources. We hypothesized that there would be a positive relationship between the perception by entrepreneurs that local economic conditions are poor and their use of bribes, and that this relationship would be stronger for “underdog” entrepreneurs than for other entrepreneurs. We also hypothesized that the use of bribes by entrepreneurs and their perception that these bribes will be effective would interact to influence entrepreneurs' decisions to close their new venture. Specifically, bribes would influence such decisions only when they were viewed as effective. Results offered support for these hypotheses, thus providing new insights into why underdog entrepreneurs use bribes to overcome the adversity they face.