Does partisanship matter for income inequality? The empirical evidence is notably mixed. I argue that these inconsistent findings are partly the result of scholars not (properly) modeling the relationship between unionization and the partisan composition of government. If we accept that union members favor greater government intervention to reduce economic inequalities than non-union members, politicians desire to hold elected office and be popular but also to implement particular public policies, and left party politicians share union members’ policy preferences to a greater extent than center and right party politicians, then partisan differences should be greatest at moderate levels of unionization, a condition that allows all politicians to pursue their policy preferences while maintaining electoral viability. The empirical analysis examines 16 wealthy democracies between 1970 and 2010. The results of error-correction models confirm the theoretical expectation and hold regardless of whether there is a majoritarian or proportional representation electoral system.

This essay highlights productive ways in which scholars have reanimated the concept of structural power to explain puzzles in international and comparative politics. Past comparative scholarship stressed the dependence of the state on holders of capital, but it struggled to reconcile this supposed dependence with the frequent losses of business in political battles. International relation (IR) scholars were attentive to the power of large states, but mainstream IR neglected the ways in which the structure of global capitalism makes large companies international political players in their own right. To promote a unified conversation between international and comparative political economy, structural power is best conceptualized as a set of mutual dependencies between business and the state. A new generation of structural power research is more attentive to how the structure of capitalism creates opportunities for some companies (but not others) vis-à-vis the state, and the ways in which that structure creates leverage for some states (but not others) to play off companies against each other. Future research is likely to put agents – both states and large firms – in the foreground as political actors, rather than showing how the structure of capitalism advantages all business actors in the same way against non-business actors.

An increasing number of public institutional investors are adopting sustainable and ethical investment policies. While financial tests of materiality and norm structures are often assumed to guide their implementation, this assumption is challenged by the increasing complexity in global financial markets. This article provides an analytical framework to explain these implementation problems by drawing attention to the ambiguity inherent in investment policies. Ambiguity means there is no ideal outcome. Agents must use their discretion to interpret investment policies, which is at odds with conventional theories of discretion that assume a unique policy goal. This article argues that ambiguity impacts institutional investors in two contrasting ways. Ambiguity acts as a built-in mechanism for adapting investment policies to increasing complexity in global financial markets. But the resources required to maintain legitimacy under ambiguity detract from the investor's capacity to actually implement its policy. This framework is used to analyze the evolution of the Norwegian sovereign wealth fund (SWF)'s ethical investment policy. The article finds that agents use their discretion to interpret the Fund's investment policy in ways that align with its long-term mandate.

Private firms are increasingly being regarded as moral agents of their stakeholders and the broader public. Stakeholders can use different types of evaluation organizations to monitor this division of moral labor, but must also monitor the credibility of this second layer of moral agents. This paper uses agency, signaling, and legitimacy theory to develop a novel conceptual framework showing how both firms and evaluation organizations send signals of their credibility as moral agents to earn grants of legitimacy from their moral stakeholders. The paper also describes how three specific characteristics of ratings and certifications – transparency, expertise, and independence – may signal different forms of credibility, appeal to particular stakeholder groups, and elicit different forms of legitimacy. A content analysis of the websites of 245 eco-labels, sustainability ratings and other forms of environmental evaluations reveals the multi-dimensional nature of these three characteristics, and finds that transparency is the most commonly-sent signal of credibility, followed by independence and then expertise. These results highlight the complexity of existing signals of credibility, and suggest several strategies – including voluntary credibility standards and a virtual information marketplace – that both private and public actors can pursue to improve the quality and accessibility of these signals of credibility.

In the US, the failure of climate legislation and the implementation of EPA rules are the subject of intense scholarly and public debate. However, the debate has not investigated – and at times has further obfuscated – the preferences and expected tactics of industry stakeholders. Scholars of management and regulation argue that firms’ profit motives can be aligned with socially beneficial outcomes, but they assume that firms prefer market-based regulation over the status quo. Correspondingly, corporate stakeholders have been portrayed as protagonists in campaigns for climate legislation. In a case study of the cap and trade fight during 2009 and 2010, I find that industry stakeholders primarily mobilized to maintain the status quo, but simultaneously joined the cap and trade coalition in order to favorably shape potentially inevitable climate legislation. The case underlines the importance of deeper investigation of business preferences and provides evidence for theories that prioritize power resources and the structural power of business.

Structural power is a critical variable that merits more extensive and more explicit attention in Latin American political economy and in comparative politics more broadly. Assessing structural power in conjunction with its counterpart, instrumental power, can provide strong leverage for explaining variation in policy outcomes that affect business interests. However, structural power must be carefully defined and operationalized in order to capture its core attributes and nuances. This task requires wedding the concept's “structural” underpinnings with policymakers’ perceptions and anticipated reactions. Moreover, the relationship between structural power and instrumental power must be carefully theorized. While these concepts encompass distinct channels through which business exerts influence, the two types of power may be mutually reinforcing. I argue that business interests shape policy outcomes when either their structural power or their instrumental power is strong, yet business influence will be more extensive and more consistent when structural power and instrumental power are both strong. However, electoral incentives, and more importantly, popular mobilization, can counteract business power. I illustrate these theoretical points with a case study of Chile's 2014 tax reform proposal, a major policy initiative with important distributive consequences that received international press attention.

This paper examines the degree to which political connections affect business rankings through a statistical analysis of Turkey's industry rankings between 2003 and 2011. The analysis demonstrates that business performance is associated with connectedness through industry and firm level data. We show that political connectedness varies according to the firm's channel of access to obtain favouritism either through direct personal ties or institutional networks. Ideological motivations emerge to be significant in mobilizing, shaping and tying firm behaviour to broader political agendas. In the conclusion we discuss the impact of deepening connectedness on long-term business fortunes and political institutions.

The existing literature in public policy has commented mostly on mature and established businesses, leaving the relationships between entrepreneurial businesses and public policies less explored. Relying on qualitative research methods and quantitative surveys, we examine how managers in an intensively regulated entrepreneurial setting assessed the desirability of public policies. We show that managers in the regulated energy efficiency and renewable (EERE) business sector in the 1990s tended to view public policies favorably only if they lacked control over the business environment. The less control they perceived they had over the business environment, the more favorably they tended to view public policies. Our findings suggest that managers in a regulated entrepreneurial setting tend to view public policies as substitutes for their efforts to control their business environment, not as complements, as studies of mature and established companies in regulated settings commonly find. However, we also find some evidence to suggest these perceptions may evolve, as a business experiences greater success attracting customers.

Despite the observed frequency of firm lobbying, scholars attempting to explain this behavior have had little luck. Pushing away from theories that center on firm characteristics, this paper argues that firm lobbying can be best explained with a sociological model of competitive action. In particular, firms that perceive other firms to have influence on policy are more likely to lobby policy-makers. Since firms are both competitors in a free market and socially embedded actors, their belief in other firms’ influence on policy pushes them to engage in similar behavior in order to increase profit and survive. I test this argument with a combination of quantitative analysis of survey responses from 7247 firms in 40 countries from the World Bank Enterprise Survey and seven qualitative interviews with key firms in the Turkish Republic of Northern Cyprus. The results provide evidence for the hypothesis. This finding implies that scholars should not only take into account firm characteristics, but also explore the possible effects of how a firm's decision to lobby or not is influenced by its environment.

This paper explores the determinants of pro-minority shareholder corporate governance reforms. Using a Cox conditional model in gap time, this paper provides new empirical evidence on the linkages between the adoption of pro-minority shareholder corporate governance reforms at the firm level and government ideological affiliation in 16 OECD countries over the period 1970–2009. I find strong evidence linking rightward shifts in government ideological orientation with the adoption of minority shareholder protection legislation. This result supports our argument that changes in the composition of the coalition of heterogeneous interests and/or a change in the expectations of the parties’ constituency will affect government strategy on the adoption of pro-minority shareholder corporate governance reforms. I also find that the macroeconomic context at the international level may influence the adoption of these reforms. Our findings suggest that international economic integration has resulted not in the convergence of corporate governance regimes to the Anglo-Saxon model, but rather the emergence of hybrid corporate governance systems.

I examine the challenges of conceptualization and measurement of structural power when the differential power of industries or individual firms are in question. While ascertaining structural power's operation at this level can be very challenging, I point to some issues of conceptualization and measurement that can enhance our analytic leverage at the initial stages of the research process. Specifically I propose a more refined language of “structural prominence” to differentiate between the expected causes of structural power from its hypothesized effects. Using a variety of data I show that researchers have some simple tools at their disposal but must pay careful attention to basic logical inferential limitations when examining structural power arguments. Through an examination of firms’ reactions to policy proposals in US securities regulation I find positive evidence for structural power operating in initial policy proposals. When I examine levels of preference attainment in the policymaking process itself, structural power appears to be playing a weaker and more conditional role. I also find that the preference attainment of firms is greatest when structural and instrumental forces operate in conjunction, a finding supportive of recent research in this area.

Over the last 20 years, developing countries have witnessed the increased role of non-governmental actors such as health industry associations and umbrella organizations in the diffusion and governance of health innovation. Utilizing extensive interviews with actors in the Indian and South African health industries, this paper argues that, in a context of emerging pluralism – i.e., a dynamic context of bargaining between competing (public and private) interests and values – these associations constitute public actors that play dual roles in the politics of innovation and development. Specifically, not only do they engage downstream by diffusing knowledge to their respective health innovation systems in order to achieve common objectives, they also engage upstream with their governments to co-develop policies and regulations. This dual role of health industry associations and umbrella organizations makes them less neutral politically but more effective institutionally, and their innovative and political role should be seriously taken into account in the healthcare sector.

How much authority can sovereign states exercise over international banking in times of financial globalization? While most literature on international finance is rather pessimistic, this article argues that in case of US law enforcement, this pessimistic view is increasingly erroneous. The reason is that US authorities can take advantage of international banks’ structural dependence on access to the dollar-based financial system to force banks into punitive agreements or to plead guilty in case of criminal offenses. Using the conflict between the USA and Swiss banks over tax evasion by US persons, this article demonstrates that banks in the liberal economic system can no longer survive without access to the US-controlled, dollar-based financial system, thus giving the USA structural power over banks. In addition, it is shown that US structural power can be used strategically during negotiation processes to apply pressure on banks. Finally, while the use of this structural power was originally restricted to smaller banks, whose collapse would not endanger the world economy, US authorities have recently learnt to manage market expectations in a way that allows them to also target banks that were previously considered “too big to jail.”

The “cooling-off period” has remained a fixture of domestic consumer-protection legislation. Yet, as I argue in this paper, the longevity of these provisions is neither the result of their effectiveness at solving the problems they were intended to solve nor the forces of path dependence. Rather, I suggest that the cooling-off period has endured because of a process of gradual ideational adaptation. Over the course of the 20th century, legal and economic intellectuals advising government agencies have abandoned traditional consumer-protection rationales that led to the creation of cooling-off periods in favor of a paternalistic policy orientation that integrates behavioral science insights. Though the organizational problems the cooling-off period were expected to resolve have been more effectively addressed through the concurrent institution of other protective measures, such as the disclosure document and compulsory advisory provisions, the cooling-off period has found new uses and advocates, which have made it far from obsolete.

This article, situated at the interface of competition policy and labor economics literatures, examines the relationship between new competitor entry and its impact on changes in the employment levels and wage levels of incumbent telecommunications firms. The context for examining the issue is the local exchange carriers’ territories within the US. In markets with above-average competitive entry by new firms there has been a significant response by incumbent firms in increasing employment levels by 11% relative to industry average values, and wage levels have risen by 11.8% relative to average levels. In modern technologically-dynamic sectors, characterized by network effects, the impact of deregulation, competition policy changes and market entry on changes in employment and wage levels in the incumbent firms have been positive. The idea as to whether across-the-board competition leads to job losses or impacts wages negatively in incumbent firms requires re-assessment and the data suggest that promoting entry can be a powerful policy option to generate useful economic outcomes.

I conduct an event study of an exogenous pollution shock-smog in the winter of 2013 to examine how the market values of firms in polluting industries and environmental protecting industries, respectively, responded in “the world's worst polluter”: China. I first show that politically connected polluters, defined by having at least one board member who was a former local bureaucrat, are more likely to be state owned and in debt. During the 21 days of the smog, polluters experienced a cumulative abnormal return of −5.38%, while protectors had a cumulative abnormal return of 3.50%. However, politically connected polluters were less susceptible to the shock: they experienced a 1% greater positive abnormal return than unconnected polluters. Connected protectors also benefited from a greater 1% abnormal return than unconnected protectors. The findings imply that environmental disasters have distributional effects, and support a theory that links rent-seeking behavior to pollution.

Contemporary discussions in the comparative political economy of innovation revolve specifically around the question of globalization's impact on the observable diversity of innovation patterns, institutionally grounded comparative advantages of firms and countries as well as their evolution over time. The paper develops the concept of “contingent institutional adaptation” to trace institutional evolution at the firm level. It advances the idea that contingent adaptation can cause institutional hybridization, an evolutionary path defined by change and continuity, thereby offering a more nuanced concept of institutional evolution over time. In a historic single-case study the paper investigates the German Siemens AG and its efforts to remain on the cutting-edge of major information and communication technologies in two time periods (1847–1914; 1989–2013), both marked by institutional adaptations resulting in hybridization. Ultimately, institutional hybridization led to Siemens’ retreat from all information and communication technology sectors.

South Korea and Singapore display distinctive patterns of social provision. The Singaporean welfare state has served as the primary provider of social infrastructure and services, whereas the South Korean welfare state has developed its primary role in supporting income maintenance. These differences are not well accounted for in the existing literature, which focuses on similarities between the two regimes. This paper shows that deep institutional legacies in the two countries’ respective financial structures powerfully shaped their unique social policy instruments. In South Korea, where financial openness was low and firms relied on relationship-based financing, the corresponding long-term perspectives on production and employment encouraged the private provision of welfare-related infrastructure and services. In Singapore, where firms have relied heavily on arm's length financing, the corresponding flexible investment and employment perspectives encouraged the utilization of private income maintenance arrangements. Each country's government prioritized the mode of social provision that the firms were less willing to engage in. These findings suggest that financial liberalization may be an important determinant of welfare regimes in developing countries.

What accounts for the growing cost of government in the US? [Berry, William D., and David Lowery. 1984. “The Growing Cost of Government: A Test of Two Explanations.” Social Science Quarterly 65 (3): 735–749] tested two explanations for why the costs of goods and services in the public sector have increased faster than these costs in the private sector in the US: “Baumol's Disease” [Baumol, William J. 1967. “Macroeconomics of Unbalanced Growth: The Anatomy of Urban Crisis.” The American Economic Review 57 (3): 415–426], which focuses on the need for government to match wage increases in the more productive private sector, and [Buchanan, James M., and Gordon Tullock. 1977. “The Expanding Public Sector: Wagner Squared.” Public Choice 31 (1): 147–150] Bureau Voting explanation, which focuses on the voting power of government employees. Berry and Lowery (1984) tested these two explanations using data for the 1947–1979 period and found strong support for the former but little support for the latter. Decades later, a much longer time-series is now available for empirical analysis. Additionally, the character of both public- and private-sector production and the voting power of public employees have changed in ways that may influence the empirical veracity of the two explanations. For these reasons, we extend the original analysis through 2010 to assess whether Baumol's Disease and Bureau Voting continue to have relevance for understanding government cost growth. We find that Baumol's Disease continues to be the better explanation despite changes in both sectors, although public sector wages are now more closely tied to general private rather than manufacturing wages, suggesting that growing production costs may be serving as an increasingly relevant downward pressure on the scope of real government activity.

How did the most severe global financial crisis since the 1930s affect the organization of the world political economy? Was Anglo-American structural power in finance eroded? I employ network methodologies that have been recently extended for use with weighted and directed networks to shed light on these questions. I draw from complexity science and political economy to link these empirics to prior theories of structural power, which I refine in several ways. This approach provides unique explanations for developments in global banking since the crisis, including expected outcomes that did not occur: the continuation – and even expansion – of Anglo-American prominence, the decline of continental European prominence, and the lack of emergence of the BRICS economies into the core of the global banking system.