Developing an empirical study of MNE subsidiaries' corporate political activities: Relationships with subsidiary characteristics, environment and performance

The activities of multinational enterprises (MNEs) are central to international business (IB) research and IB literature is replete with conceptual and empirical works on understanding how MNEs influence and react to their commercial environments. However relatively little attention has been given to understanding how MNEs integrate their political activities with their market strategies, through corporate political activity (CPA). Based on the theoretical foundations of (i) the behavioural theory of the firm, (ii) transaction cost theory, and (iii) institutional theory, this paper proposes a model that demonstrates the effect of MNE subsidiary characteristics and the subsidiarys environment on CPA within its host-country. Thus this paper provides a systematic attempt at integration of CPA with MNE strategy and examination of its effectiveness. Contributions include (i) an empirically testable model that (1) captures the relative impact of subsidiary and environmental factors on I-CPA and that (2) measures the effect of CPA on subsidiary performance.