Rapid growth in the East Asian newly industrializing countries depended on institutional innovation. Authoritarian governments like Taiwan faced a dilemma: how to assure investors in a policymaking environment that made commitments difficult to sustain? In contrast to both the early developmental state literature and the new literature on authoritarian institutions, this article shows that “small” institutions have had an effect on both the credibility of commitments and the composition of the firms that the Taiwanese state sought to assure. In the 1950–1960s, insulated decision-making bodies with strong participation by foreigners and export-processing zones signaled government intent to both foreign and domestic firms. In the 1970–1980s, democratic decision-making structures were more decentralized and state interventions shifted in a more market-oriented direction. Even so, the Taiwanese government continued to use institutions such as the Hsinchu Science Park to extend assurances to domestic investors engaged in risky high-technology ventures.

In 1967, Gordon Tullock asked why firms do not spend more on campaign contributions, despite the large rents that could be generated from political activities. We suggest in this paper that part of the puzzle could come from the fact that one important type of political activity has been neglected by the literature which focuses on campaign contributions or political connections. We call this neglected activity “asset freezing”: situations in which firms delay lay-offs or invest in specific technologies to support local politicians’ re-election objectives. In doing so, firms bear a potentially significant cost as they do not use a portion of their economic assets in the most efficient or productive way. The purpose of this paper is to provide a first theoretical exploration of this phenomenon. Building on the literature on corporate political resources, we argue that a firm's economic assets can be evaluated based on their degree of “political freezability,” which depends on the flexibility of their use and on their value for policy-makers. We then develop a simple model in which financial contributions and freezing assets are alternative options for a firm willing to lawfully influence public policy-making, and derive some of our initial hypotheses more formally.

This paper considers the relationship between assessments of institutional quality in developing countries and the innovative activities of multinational corporations. Firm entry mode literature has established links between domestic institutions and ownership equity patterns among multinationals, but institutionalist analyses have not adequately addressed the types of activities pursued by multinational firms. I argue that in addition to various socioeconomic indicators, the quality of domestic political institutions in developing countries is an important determinant of local innovative activity. I argue that institutional quality in host countries reinforces consistent patterns of interaction between states and firms, leading to reduced risk of technological expropriation and other undesirable outcomes for firms. I test this argument by examining the impact of institutional assessments, carried out by firms themselves and by outside observers, on R&D effort among multinationals, using firm-level surveys conducted in developing countries between 2002 and 2005. The multilevel empirical analysis suggests that multinational firms are likely to both locate R&D activities and pursue them intensively in developing countries with well-regarded institutions, and that the impact of institutional variables is more significant than other likely predictors, such as education levels in host countries.

In 2008 and 2009, the House of Representatives directed billions of dollars to the auto industry by passing a bailout and the “cash for clunkers” program. Moving beyond corporate influence via campaign contributions, we demonstrate that the presence of auto workers in a district strongly predicts legislative support for both bills. In addition to this critical legislation, we also analyze over 250 bills on which the auto industry either lobbied or took a public position. We find no patterns relating a district's workers or corporate campaign contributions to these votes on broader legislation where other groups, such as environmental advocates or labor unions, are at the table. Instead, the auto industry garners consistent support only on quasi-private, particularistic legislation. Thus, we contend that on particularistic legislation the presence of workers (not just campaign contributions) drives legislative support; however, when legislators expand the scope of conflict, the influence of a single industry is attentuated by other interests.

In recent years, Saudi Arabia has strengthened its regulatory and financial institutions and adopted many reforms concerning its business environment. Yet, Saudi Arabia seems an unlikely country to succeed at implementing business environment reforms given the presence of an authoritarian state and rent-seeking behavior from elites that is the outcome of oil wealth. What explains the ability of Saudi Arabia to initiate reforms that many states have struggled to implement or uniformly reject? This paper argues that the country's monarchical system helps the government solve the credible commitment problem with private sector elites, thereby facilitating business environment reforms. The monarchical system does this by legitimizing and reinforcing the institution of economic familism. The salience of this institution provides a reliable guarantee to private sector elites that their rents and business interests will be protected during the reform process. The case of Saudi Arabia stands as an important example of how absolute monarchies can pursue certain economic reforms, and also how an informal institution can solve the credible commitment problem in an authoritarian context where formal institutions are either absent or weak.

We examine how economic change influences the supply of organized interests. Indeed, the economies of states have changed markedly since the turn of the century. State economies have grown, and the relative contributions of different economic sectors have changed. We use the Energy-Stability-Area model of interest system density to assess how these changes – along with changes in the productivity of different economic sectors in terms of generating organized interests – have influenced the size and composition of state interest communities from 1997 to 2007. We find that all three sources of economic change have uniquely contributed, and to a significant degree, to demographic change in state communities of organized interests.

The small-business sector faces a persistent dilemma: small firms often lack the human skills and financial resources to modernize and compete. How, then, can small firms overcome collective action problems to forge sector-wide modernization? This paper examines the political dynamics and the process of institutional change that underpin successful industrial upgrading through a comparative, longitudinal analysis of two policy experiments aiming at the modernization of small firm sectors in Portugal. Relying on comparative-historical analysis and process tracing, this study shows that successful industrial upgrading relies on intense and sustained political action, led by strong and stable interest leadership, in the pursuit of well-defined developmental benchmarks, and relying on the implementation of political, organizational and financial strategy according to a specific logic and sequence.

Multinational corporations (MNCs) increasingly internationalize research and development (R&D), but the distribution of foreign direct investment (FDI) in R&D differs from that of general FDI. I use data on US MNC affiliates’ investments abroad (2001–2008) to demonstrate that increasing value added predicts more future R&D FDI, as R&D FDI is an upgrade decision. I then use data on R&D investment incentives to show that, while governments spend resources on R&D incentives, these can be negative predictors of R&D FDI. The findings imply that government efforts are best directed at incremental encouragement of value-added activities, as efforts to jump to R&D FDI are misguided.

The Trade Related Intellectual Property Agreement (TRIPS) has had a profound effect on industrialization and innovation, as well as access to medicines in cases of public health crisis such as HIV/AIDS. However, compliance with TRIPS has varied in developing countries, despite heightened international pressure. For instance, Brazil has pursued a coherent approach to its HIV/AIDS health crisis, while India has failed to take care of its HIV patients despite late compliance with the TRIPS agreement and the presence of business firms that produce the generic medicines for HIV/AIDS. This article suggests that divergence in TRIPS compliance is the result of a linkage politics, in which global variables (global rules, global supply chains and global networks) reach into the domestic political economy to alter the interests and capabilities of domestic actors. Indian pharmaceutical firms have developed external and export interests that lower incentives for the Indian state to design a nationally relevant public health policy, while the Brazilian health movement with its societal and external linkages puts pressure on the Brazilian state to defend the interests of its HIV patients even at the cost of patents. We conclude by suggesting that linkage politics is better at helping us understand compliance with international agreements than existing explanations, with important consequences for the effectiveness of international institutions.

Business and public partnerships in socially responsible behavior have become a central pillar of global governance, but one that is unevenly developed in different countries. Despite the transnational character of business operations, national context is of theoretical as well as policy significance. To explain cross-country variation in corporate commitment to social responsibility we investigate the political conditions that encourage firms to participate in the United Nations Global Compact. Drawing on a theory of corporate social responsibility as motivated by self-interest and external pressure, we examine the influence of external actors and the locally specific mobilization of bias. Analyzing participation levels in 145 countries, we find that a democratic regime and Global Compact participation by countervailing groups are associated with higher levels of business participation in the program. Contrary to earlier studies relying on smaller numbers of countries, we find no evidence that a country's relationship with the UN or the domestic political strength of environmental interests account for cross-national variation in corporate engagement with the Global Compact.

What is the nature and extent of corporate leader involvement in American national politics? The results of a mail survey of nearly 100 such individuals show that leaders are quite active, devoting an average of nearly 1 hour per day to national political activity. We also show that corporate leaders engage in a wide range of advocacy activities. Monetary activities loom particularly large in the political lives of American corporate leaders, as large numbers are approached by members of Congress for contributions, and many who are approached answer the call. In addition, we find that corporate leaders, unlike advocacy professionals, do a great deal of their advocacy work in private; for the most part they eschew public activities such as testifying before congressional committees. Speaking to the question of which leaders are most politically active, our data evince a strong relationship between firm political activity and firm leader political activity. In sum, politically active firms have politically active leaders. We thus contribute to the ongoing academic discussion of corporate political activity by showing that the CEO's office is an additional locus of political power within business firms, and that CEO political activity is instrumental rather than consumptive in nature.

Scholars have long held that partisan politics cause aggregate-level fluctuations in markets. However, if investors hold different policy preferences, the effects of election campaigns on their behavior should be more nuanced. In particular, investors in economic sectors benefiting from neo-liberal economic policies might respond favorably to gains in support by right-leaning candidates, whereas those expected to profit from state-led economic development might react favorably to gains by left-leaning contenders. To test these propositions, I examine stock market performance by economic sector during Mexico's 2006 presidential race. Statistical analysis of pre-election polls and stock market returns during the campaign reveals that, although investors did not react to potential partisan policy change in the ways originally expected, they did respond to polling news differently by economic sector. The findings demonstrate the importance of disaggregating stock, bond, and currency markets according to economic criteria, and thus the limitations of aggregate level analysis for research on politics and markets.

The private sector clearly has an increasingly important and well-defined role to play in slowing the flow of technology and preventing the provision of enabling services to states pursuing Weapons of Mass Destruction (WMD) and destabilising military capabilities. Exporters of proliferation-sensitive technology are frequently targeted by Iran and other countries. These countries are highly dependent on technology from the international market place to sustain their WMD and military programmes. Compliance with export controls only goes someway to ensuring that proliferation is prevented; a form of “over-compliance” is required to ensure that goods are not transferred to programmes of concern. This paper uses a significant quantity of primary data to consider the costs of compliance and over-compliance, the drivers for such processes, and the relationship between the national authority and firms and how this could be improved.

For more than a decade, political science scholars have stressed the harmonizing effect of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPs). Recent implementation practices in developing countries, however, have challenged this view. In this article, I argue that different manifestations of innovation systems can lead to varying patterns of innovation. I substantiate this claim through a comparison between the pharmaceutical sectors of India and Brazil. Drawing on the NSI approach, my analysis reveals that different forms of state engagement have played a decisive role for the varying directions of post-TRIPs pharmaceutical innovation in the two countries. The article illustrates that developing countries can opt for different approaches to innovation even after TRIPs and that the socioeconomic effects of global IP regimes can only be assessed properly when taking into account the country-specific configurations of national innovation systems.

What explains the pattern of selective business interest in preferential trade agreements (PTAs) with active campaigning for and utilization of tariff preferences for some trade agreements, but not others? Under what conditions can business advocates of PTA policy mount an effective lobbying campaign to influence policy outcomes (i.e., shaping decisions on who to negotiate with and what to negotiate about)? These are important questions given that analyses of Asian PTAs frequently assign a negligible role to business interests either out of apathy or lobbying weakness. To understand the pattern of selective business lobbying for PTAs, I develop a theoretical model with three main independent variables: venue selection, preference intensity, and advocacy effectiveness, and apply it to the case of Japan to test its usefulness. My model shows that the conditions for effective business PTA campaigning are exacting: loss avoidance, high technical expertise, and influence-seeking strategies that maximize access opportunities given institutional constraints. And yet when these factors align, business interests do influence PTA outcomes. My research shows that the current trend to characterize the agency of PTA proliferation as either state-led or business-driven needs to be re-examined as it is more useful to think about state-society constellations in favor or against PTAs.

To what extent do transnational companies (TNCs) have the capacity to influence public policy? This article uses the results of a major new study of TNC ownership to shed light on this issue. It is found that TNC ownership and control is extremely concentrated and that there is an inner core of firms with strong co-ownership links that is overrepresented in the membership of major business organizations. It is concluded that these factors enhance the potential for TNCs in general, and core TNCs in particular, to influence public policy.

The paper illustrates a practical framework for understanding and predicting political economy risk for project managers operating in a variety of developing country settings, including non-democracies, ethnically diverse environments and societies undergoing political transition. In doing so, the paper also develops a number of novel cases illustrating the effectiveness of this framework in helping us understand both surprising success and failure in the realms of sustainable, private sector and human development. These cases include Tata Nano's difficulties in locating its automobile plant in West Bengal, how a small NGO, the Mehta Foundation, helped secure passage of green fuel mandates in Delhi over strong political opposition, and the sustained success of Mexico's pioneering conditional cash transfer program-Progressa/Oportunidades – in an environment of dramatic political regime change.

Management consultants provide strategic advice to public sector agencies and departments throughout the US, contributing to what some scholars call the “hollowing out of the state.” What ideational frameworks underlie these public -private relationships? Findings from a survey of management consultant show that they believe that they are contracted because they provide knowledge that is unavailable inside the public sector and that their ideas are more innovative. This study helps to explain management consultants’ perceptions of their services contracted by US public sector. By gauging the perspectives of management consultants, this research will potentially help academics and practitioners to better understand public agencies’ contracting of management consultants. This article provides preliminary steps towards better understanding and analyzing the use of management consultants by different levels of the US public sector.

Professors Gordon Clark and Ashby Monk's “Modernity, Imitation, and Performance: Sovereign Funds in the Gulf” represent a welcome departure from previous studies of Gulf Sovereign Wealth Funds by beginning to explore the origins and the changes in Gulf SWFs. However by way of critical commentary on their article, I sketch out a political economy approach to understanding Gulf SWFs and place these institutions within an historical and political setting.

Based on three in-depth case studies, the study analyzes how and why Chinese enterprises partner with governments in cooperative ventures which aim to simultaneously achieve poverty alleviation objectives and establish profitable business ventures in rural areas. The analysis draws out specific characteristics of three government-business partnerships in China, which vary in terms of governance structure, resource complementarity and incentives. The findings show that in this state capitalist system, outcomes of government-business partnerships depend on firms having unique resources and capabilities that serve particular policy objectives of the government. By the same token, in order to make partnerships attractive to firms, national and local governments must hold the keys to unique resources needed by enterprises looking to do business in low-income markets. The cases further illustrate that, in order to build and maintain successful government-business partnerships over time, the alignment of incentives plays an important role. In sum, complementary resources and well-aligned interests between firms and governments help to explain why some government-enterprise partnerships are more successful than others.