SYMPOSIUM PROPOSAL
ACADEMY OF MANAGEMENT PERSPECTIVES
Overview of the Symposium
1. Title:
New Directions in Nonmarket Strategy: An Integrative Approach to Value Creation
2. Editors
Professor Jonathan Doh, Villanova University and Professor Thomas Lawton,
EMLYON Business School
3. Articles:
(i) Integrating Market and Nonmarket Strategy: Institutional Perspectives in a
Multi-Polar World
Prof. Jonathan P. Doh
Villanova University
Lancaster Avenue
Villanova, PA 19085
USA
T: +1 (610) 519-7798
E: jonathan.doh@villanova.edu 1
Prof. Thomas C. Lawton
EMLYON Business School
23 Avenue Guy de Collongue
69134 Ecully Cedex
France
T: +33 (4) 7833 7800
E: Lawton@em-lyon.com
Dr Tazeeb Rajwani
Cranfield School of Management
Cranfield University
Bedford MK43 0AL
United Kingdom
T: +44 (1234) 751122
E: Tazeeb.rajwani@cranfield.ac.uk
(ii) Neoinstitutionalism and Nonmarket Strategy
Prof. Witold Henisz
The Wharton School
The University of Pennsylvania
Philadelphia, PA19104
2
USA
T: +1 (215) 898-0788
E: henisz@wharton.upenn.edu
Prof. Bennet A. Zelner
Robert H. Smith School of Business
University of Maryland
College Park, MD 20742-1815
USA
T: (919) 660 1093
E: bzelner@duke.edu
(iii) Political Markets and Regulatory Uncertainty: Insights and Implications
for Integrated Strategy
Prof. Jean-Philippe Bonardi
Université de Lausanne
Quartier UNIL-Dorigny, Bâtiment Internef
1015 Lausanne
Switzerland
3
T: +41 (021) 692 3440
E: Jean-Philippe.Bonardi@unil.ch
Prof. Allison F. Kingsley
University of Vermont
School of Business Administration
55 Colchester Avenue, 205 Kalkin Hall
Burlington, VT 05405
USA
T: +1 (802) 656.3464
E: allison.kingsley@uvm.edu
Prof. Richard G. Vanden Bergh
University of Vermont
School of Business Administration
55 Colchester Avenue, 207 Kalkin Hall
Burlington, VT 05405
USA
T: +1 (802) 656.8720
E: vandenbergh@bsad.uvm.edu
4
(iv) The Contingent Value of Corporate Political Ties
Prof. Kamel Mellahi
Warwick Business School
University of Warwick
Coventry CV4 7AL
UK
T: +44 (24) 7615 1393
E: Kamel.Mellahi@wbs.ac.uk
Prof. Pei Sun
School of Management
Fudan University
Shanghai
China
E: sunpei@fudan.edu.cn
T: +86 2501 1114
Prof. Mike Wright
Imperial College Business School
South Kensington campus
London SW7 2AZ
5
United Kingdom
E: mike.wright@imperial.ac.uk
T: +44 (20) 7589 5111
The Basic Idea
The domain of nonmarket strategy (NMS)1 suffers from an identity problem. Several
traditions and approaches inform the study of NMS, including research on corporate
political activity (CPA) (Hillmann and Hitt, 1999; Hillman et al., 2004; Keim and
Zeithaml, 1996; Schuler, 1996; Schuler et al., 2002), exploration of firm-environment
interactions under varying institutional conditions (Henisz, 2000; Henisz and Delios,
2004; Helisz and Zelner, 2003a), and, more recently, heightened interest in and attention
to the social and environmental obligations – and strategies – of business firms as they
interact with their external stakeholders (Boddewyn and Doh, 2011; Husted and Allen,
2010; Yaziji, 2010; Yaziji and Doh, 2009). In this symposium, we seek to synthesize and
integrate some of this disparate literature to inform contemporary strategic challenges
that emanate from political and social actors and environments. The articles that
comprise this symposium review some of the relevant strands in the literature to date,
emphasizing especially the importance of social and economic institutions in constraining
and facilitating nonmarket activity. This emphasize on institutions affords an opportunity
1 We understand nonmarket strategy to mean strategic
management activities and
actions directed toward political, regulatory, social and cultural environments, influences
and actors. 6
to tie together some of the strands of the existing NMS literature while extending that
literature in novel and innovative directions.
The contributions in this symposium
highlight and reinforce the relevance of governmental and nongovernmental actors at
multiple levels of analysis. While approaching this challenge differently, each article in
this symposium contributes to the notion that strategies for the nonmarket environment
are – and should be - inextricably and inexorably linked to “traditional” strategic
rationales and approaches, and that many of the theories and perspectives that have been
used to inform market-oriented strategies can be adopted and incorporated into
understanding strategies for the social and political arena. More broadly, however, the
articles collectively propose a wider and more inclusive approach to – and domain of –
strategic management than has typically been defined and applied.
The guiding principle of this symposium is that corporate political and social
activity needs to be embedded in the strategy process if it is to add real value for business.
Furthermore, strategy for industry and market competition and strategy for political and
social contexts must be equally attuned with corporate vision, values and objectives.
Alignment involves adjusting different aspects of a company’s operational and
organizational presence to produce a harmonious relationship or orientation. Some firms
that appear to be especially effective at such alignment include Stonyfield Farms, Marks
and Spencer, Banyan Tree Resorts, Swiss Re, and others. While each approaches this
challenge uniquely and have tailored the concept of alignment differently, they have
achieved a balance and ensured positive interactions between their commercial and
political/social strategies.
When we refer to alignment, we have in mind two complementary ideas. First, we
7
explicitly argue for closer integration and coordination between market and nonmarket
strategies. Second, and in parallel, we refer to alignment between those activities and
actions within the firm that support and underpin strategy, and the acknowledgement,
assessment, and incorporation of the external social and political environment into those
strategic processes and actions. We consider these two related forms of alignment as
constituting a form of strategic fit between commercial and political/ social strategy, and
between internal and external factors and variables.
In the first paper, Jonathan Doh, Thomas Lawton and Tazeeb Rajwani provide an
overview of the concepts and issues, focusing on the themes of “alignment” and
“integration” in both senses as described above, using examples and insights from recent
research across strategy, political science, sociology and philosophy. They illustrate how
institutions have demonstrable effects on the competitive advantage of firms and the
competitive dynamics of industries and can contribute to increases or decreases in
profitability (MacAvoy, 1992; Kim, 2008). As a discipline, strategic management has
offered a variety of theoretical routes to address the role of institutions, particularly those
governed by the nation state (Mahoney and Pandian, 1992; Cockburn et al., 2000; SegalHorn, 2004). In addition, strategy scholars have leveraged the neo-institutional
perspectives of North (1986; 1993) and the institutional/transaction cost insights of
Williamson (1985) to inform a variety of strategy-related phenomena (Bonardi et al.,
2006; Frynas and Mellahi, 2003; Henisz and Williamson, 1999; Henisz and Zelner, 2003).
In this paper, Doh et al. seek to synthesize and extend this work and to reflect on its
implications in a multi-polar world.
8
Henisz and Zelner subsequently examine the influence of the “New Institutionalism” in
economics, political science, and sociology on the developing field of non-market
strategy in the context of international business. They argue that the application of
neoinstitutional theory from economics and political science to the analysis of political
risk - which provides the impetus for international nonmarket strategy research in the first
place - advanced such research after years of stasis by providing conceptual and
empirical rigor.
In the third paper of the symposium, Bonardi, Vanden Bergh and Kingsley investigate
nonmarket strategy in the context of political markets and regulatory uncertainty.
Specifically, they assess the design of nonmarket strategies to manage regulatory
uncertainty and discuss ways for firms to integrate this with their market strategies.
Bonardi et al. advance a framework for predicting the magnitude of regulatory
uncertainty and develop strategic implications for firms to manage regulatory uncertainty
in the context of their market investments. They suggest the dimensions of a nonmarket
strategy that fit well with the characteristics of the political market to create an integrated
strategy. Finally, the authors provide examples from several market entry choices that
involve different nonmarket strategies and offer suggestions for future research in this
area.
In the final paper, Mellahi, Sun, and Wright argue that the value of corporate political
ties vary depending upon managerial, organizational, and environmental factors.
9
Specifically, they explore the downside of corporate political ties during periods of
institutional transition and upheaval. Using a matched pairs case approach, they argue
for a contingency perspective of political ties to develop an integrative framework
incorporating managerial, organizational, and environmental factors that condition the
value of corporate political ties. They propose operating mechanisms through which
network-based political capital may turn into liabilities for a focal firm leading to
undesired effects on performance. They suggest their paper deepens our understanding
of the network-based corporate political strategy and of its relationship with market
strategy.
The Audience
We seek to reach an audience of scholars interested in contemporary thinking about
nonmarket strategy as well as strategic management scholars interested in competitive
strategy and strategy process. In addition, scholars outside of strategy have paid even less
attention to nonmarket actors in terms of their ability to influence organizational
development and success, and so we would like to move beyond the “usual suspects” and
speak to scholars on OB, OT and other management areas. This would include scholars
interested in social movements, ethics and corporate social responsibility. Finally, we
would also like to demonstrate to scholar/teachers that the nonmarket paradigm has much
to offer in terms of management learning and development, including some fascinating
case studies and other illustrations and examples that may be relevant for broader
management learning.
10
Importance of Idea
Nonmarket strategy has gained considerable and renewed importance in recent years as a
consequence of the resurgent state following the financial collapse and the increasing
incidence of Western multinationals operating in emerging market where government
play a prominent role in economics and business development. More recently, emerging
multinationals – with complex and opaque state and private ownership structures are
entering and operating in developed countries, posing challenges for those firms’
interactions with host governments and for competitors who seek to respond to the rise of
developing country MNCs. Finally, the sustained interest in – and priority given to –
social actors as a result of changes in consumer preferences, investor priorities, and
media and popular interest, poses challenges for nonmarket strategists because it suggests
different modes and mechanisms for developing and advancing strategies and a new set
of influencers which firms must consider. As noted above, we believe these social and
political strategies must be integrated with nonmarket strategies targeted toward
government and that nonmarket strategies should be aligned with overall commercial
strategies.
Communication of Idea
We draw upon our considerable collective research in the nonmarket strategy domain to
construct a conceptual roadmap for managers striving to develop integrated strategies.
Our approach is not normative in nature but instead is premised on the practical
assumption that how managers approach and configure their social and political strategies
11
is optimally determined by their corporate vision and values, business objectives and
market positions.
In particular, we will synthesize and extend the argument and evidence that a consistent,
integrated approach to market and nonmarket strategy is essential to organizational
success, particularly in a multi-polar world where institutions vary in their scope and
impact on business activities. Moreover, we argue that companies based in advanced
economies risk being at a competitive disadvantage relative to competitors from
emerging markets in the quest for international market success. Corporations such as
Haier from China, Dr Reddy’s from India and Kaspersky from Russia have experience
from the outset in managing institutional voids and factoring institutions into their
strategic decisions and actions. As a consequence, their approach to nonmarket forces,
particularly institutions, is proactive, engaged and rooted in pragmatism. U.S.-based
companies and their peers in the developed world vary in their approach to integrated
strategy, often depending on the industry and existing international footprint. Often
nonmarket variables and institutional influence is approached reactively with a tactical
rather than a strategic response. We argue that in the new multi-polar world, an aligned
approach to strategic management is the optimal method for senior managers seeking
international growth and foreign market success.
Building on existing theory and advancing fresh insights, the papers in our Symposium
collectively argue and illustrate why an aligned approach to integrated strategy is needed,
how it can be formulated and add value, and the challenges to overcome in implementing
an integrated strategy in a multi-polar world.
12
References
Baron, D.P. (1995). The nonmarket strategy system. Sloan Management Review
(Fall):73-85.
Bonardi, J.P., Holburn, G.L.F. and Vanden Bergh, R.G. (2006). Nonmarket strategy
performance: evidence from U.S. electric utilities. Academy of Management Journal,
38:288-303.
Cockburn, I. M., Henderson, R.M. and Stern, S. (2000). Untangling the origins of
competitive advantage. Strategic Management Journal, 21: 1123-1145.
Coen, D. (1998). The European business interest and the nation state: large-firm lobbying
in the European Union and member state. Journal of Public Policy, 18: 75-100.
De Figueiredo, J.M., and Tiller, E.H. (2001). The structure and conduct of corporate
lobbying: an empirical analysis of corporate lobbying at the federal communications
commission. Journal of Economics and Management Strategy, 10: 91-122.
De Figueiredo J.M. (2009). Integrated political strategy, Advances in Strategic
Management, 26: 459 - 486.
Doh, J. P. and J. A. Pearce (2005). The high impact of collaborative social initiatives.
13
Sloan Management Review, 46: 30-39.
Frynas, J. G, and Mellahi, K. (2003). Political risks as firm-specific (dis) advantages:
evidence on transnational oil firms in Nigeria. Thunderbird International Business
Review, 45: 541-565.
Frynas, J. G, Mellahi, K. and Pigman, G.A. (2006). First mover advantages in
international business and firm-specific political resources. Strategic Management
Journal, 27: 321-145.
Getz, K. A. (1997). Research in corporate political action: integration and assessment.
Business and Society, 36: 32-72.
Henisz W.J. and Williamson O.E. (1999). Comparative economic organization – within
and between countries, Business and Politics, 1: 261-277.
Henisz, W.J. and Zelner, B.A. (2003). Legitimacy, interest group pressures and change in
emergent institutions: The case of foreign investors and host country governments.
Academy of Management Review, 30: 361-382.
Hillman, A.J., Hitt, M.A. (1999). Corporate political strategy formulation: a model of
approach, participation and strategy decisions. Academy of Management Review, 24:
825-842.
14
Holburn, G. and Vanden Bergh, R. G. (2008). Making friends in hostile environments:
political strategy in regulated industries. Academy of Management Review, 33: 521-540.
Husted, B.W. and Allen, D.B. (2011) Corporate social strategy: stakeholder engagement
and competitive advantage. Cambridge: Cambridge University Press.
Kim, J. (2008). Corporate lobbying revisited. Business and Politics, 10: 1-23.
Lawton, T.C. and Rajwani, T. (2011). Designing lobbying capabilities: managerial
choices in unpredictable environments. European Business Review, 23: 167-189.
MacAvoy, P. W. (1992). Industry Regulation and the Performance of the American
Economy. New York: W.W. Norton and Co.
Mahoney, J. T. and J. R. Pandian (1992). The resource-based view within the
conversation of strategic management. Strategic Management Journal, 13: 363-380.
North D. (1986). The new institutional economics. The Journal of Institutional and
Theoretical Economics, 142: 230-237.
North DC. (1993). Institutions and credible commitment. Journal of Institutional and
Theoretical Economics, 149: 11-23.
15
Segal-Horn, S. (2004). The modern roots of strategic management. European Business
Journal, 16: 133-142.
Williamson, O. E. (1985). The economic institutions of capitalism: firms, markets and
relational contracting. New York: Free Press.
16