This study examines the effects of two major environmental jolts, the Airline Deregulation Act of 1978 and the 9/11/2001 terrorist attacks, on strategic change and performance in the U.S. air carrier industry. The sample includes the Major U.S. air carriers during two periods of time: deregulation (1974-1986) and 9/11/2001 (1997-2008). Data were collected from archival sources and analyzed using cross-sectional time series regressions with fixed effects. The results show that following both environmental jolts, the initial response of the airlines was emphasis on cost control. However, over the long run, there was a deceleration of the emphasis on cost control. Further, following deregulation, the long run response involved the acceleration of differentiation change. We also found a significant relationship between strategic change and firm performance. The results contribute towards a reconciliation of the conflicting predictions of the repetitive momentum hypothesis and the deceleration hypothesis.

The articles in this special issue of Business and Politics weigh in on the domestic political dynamics that continue to shape the international political economy, with a focus on the United States case. In this issue, Richard Carney discusses the role of New Deal–era farmers in shaping modern global financial standards, Daniel Kono analyzes the relationship between social policy and support for freer trade, and Kathleen Rehbein and Douglas Schuler examine the characteristics of business firms that are most likely to gain legislative and executive branch access in the area of trade policy. The two final articles provide insights into critical issues in ongoing policy debates. Irja Vormedal discusses the role of business strategies and “tipping points” in determining the support and failure of federal environmental regulation from 1990 through 2010, while Emily Yixuan Cao, Yong Cao, Rashmi Prasad, and Zhengping Shen argue that domestic politics continues (and will continue) to influence the character of U.S.-China exchange rate negotiations. This introduction to the special issue summarizes the contributions of these five articles and also situates them in relation to other contemporary political science debates.

A previous study suggests that U.S. Senators trade common stock with a substantial informational advantage compared to ordinary investors and even corporate insiders. We apply precisely the same methods to test for abnormal returns from the common stock investments of Members of the U.S. House of Representatives. We measure abnormal returns for more than 16,000 common stock transactions made by approximately 300 House delegates from 1985 to 2001. Consistent with the study of Senatorial trading activity, we find stocks purchased by Representatives also earn significant positive abnormal returns (albeit considerably smaller returns). A portfolio that mimics the purchases of House Members beats the market by 55 basis points per month (approximately 6% annually).

Guanxi and guanxi capitalism are much-debated terms in the context of China's evolving political economy. This article explores the changing nature of China's guanxi capitalism. It analyzes first various aspects of guanxi capitalism, a unique conceptual blend infused with seemingly incongruous cultural and historical meanings drawn from both Chinese and Western roots. It then introduces three case studies of private firms, illustrating empirically how Chinese entrepreneurs' relationship with the political system is evolving. The article ends by assessing the ways in which political factors, guanxi practices and capitalist accumulation are interacting and changing. I hold that guanxi capitalism is playing a crucial role in realigning the interests of state and capital in China. It yields idiosyncratic benefits to certain Chinese private firms, while also bridging the logics of freewheeling capital accumulation and authoritarian control in a state-dominated economy. In this view, guanxi capitalism encompasses both contradictory and complementary institutional logics. Since the persistence of Leninist control generates “deliberate ambiguity” in how China's private sector is governed, the penetration of guanxi networks into government-business relations creates institutional space that enables both Leninist control and relentless capital accumulation to proceed, in turn lending China's emergent capitalism a unique quality.

Investments by Asian Sovereign Wealth Funds (SWFs) continue to be of concern in the global economy. A common perception is that they are managed by state-affiliated entities with geostrategic motives that could somehow prove detrimental to host countries. This paper demonstrates, however, that even the definition, let alone the establishment and investment targets, of Asian SWFs are embroiled in ambiguity within home country politics. Plainly put, ambiguity refers to the absence of clear-cut policy processes, means, and goals. How do we explain the ambiguity surrounding SWFs? Ambiguity is not a cover for deliberate, cohesive, and strategic actions, because SWFs are not under the control of any one set of actors. Rather, perhaps to the discomfort even of home country sovereigns, ambiguity is a messy domestic product of contending political forces that do not allow a marked trend toward any one single policy equilibrium on sovereign investments, whether domestic or foreign. While this reality is perhaps understandable in a democratic polity, it is also equally true of authoritarian ones in the region. In both types of cases, ambiguity is constructed inadvertently by the interactions of state, interstate, and intrastate actors, each with their own interests and expectations about the role of SWFs. Analyzing the cases in Singapore, China, Japan, and other Asian countries, from this unifying perspective suggests that while ambiguity may fuel external anxiety concerning home country intentions, it actually reflects far more domestically salient controversies about SWF activities than is typically appreciated.

This paper investigates whether Foreign Direct Investment (FDI) decisions are influenced by state ownership. The literature has established that host country institutions affect FDI allocation, but there is no systematic evidence how state ownership affects such relationships. However, we expect that state ownership systematically affects the relation between host country institutions and FDI. Theoretical arguments indicate that state-owned enterprises (SOEs) should invest relatively more than privately owned enterprises (POEs) in countries with poor rule of law, poor property rights protection and a high degree of corruption. However, SOEs are expected to invest relatively less than POEs in dictatorships and countries with poor human rights protection. We test these hypotheses, using a new dataset on Norwegian firms' FDI from 1998 to 2006. The empirical analysis suggests that SOEs invest relatively more than POEs in countries with high level of corruption and weak rule of law. Indeed, SOEs' FDI appears not to be reduced by such institutional risk factors. However, there is no solid evidence indicating that SOEs invest more in democracies and countries with better human rights protection.

This paper provides a comparative perspective of public procurement policies for small and medium-sized enterprises (SME) in the United States and Europe. Public procurement is increasingly recognized as a strategic function of public administration because of the huge amount of resources it consumes, as well as the important policy objectives it seeks to promote, including SME-related objectives. Progress towards meeting SME procurement participation goals, however, remains elusive on both sides of the Atlantic. Policy makers and administrators have little comparative research upon which to draw regarding the effectiveness of various policy approaches, a shortcoming this paper seeks to address. An institutional perspective is adopted which helps explain similarities and differences in U.S. and European SME policies.

America's securities markets constitute a central distinguishing feature of its brand of capitalism. What are their political origins? In contrast to arguments which point to business owners as determining the institutional foundations of America's political economy, this paper argues that farmers played a leading role. Indeed, the rules and regulations governing U.S. securities markets were created in opposition to the wishes of business owners, and without farmers' political influence, the U.S. may have developed a financial system similar to that found in continental Europe. Moreover, to the extent that U.S. securities regulations serve as a template for international financial standards, the paper shows that the humble American farmer inadvertently contributed to the financialization of the modern global economy.

An extensive game lodge industry operates across Southern Africa. Many of these lodges market themselves as ‘eco-tourism destinations’ where wildlife protection, community development and the maintenance of bio-diversity are supposed to be central values of the business model. This article deals with the tensions that arise for the management of such enterprises between a multiplicity of local and global interests around land use pertaining to conflicting motivations of profitability and capital-intensive development, protection of bio-diversity and enabling community empowerment. The article illustrates the interplay between these competing interests, preferences and claims surrounding the use to which the land these lodges occupy is used. It examines a set of cases in South Africa with special reference to the Sabi Sand Private Game Reserve.

Business is often assumed to resist increased social and environmental regulation, preferring voluntary or soft-law approaches to global governance. This article analyzes the dynamics between CSR, soft law, and hard law by exploring corporate attitudes in the Nordic area towards CSR and regulation'an area reputed to be a forerunner in both CSR and social and environmental regulation. The analysis, based on a survey of the Nordic companies with the strongest CSR performance, reveals skepticism towards relying on CSR and voluntary approaches, combined with a very strong preference for increased international regulation of social and environmental issues. Drawing on insights from recent analyses in the governance literature, the article discusses the conditions under which business favors increased social and environmental regulation, concluding that corporate self-interest and increased international regulation can indeed coincide.

This paper establishes a model for analyzing the dynamics of the host state-international oil company (IOC) bargaining relationship. Theoretically, the model advances our ability to investigate bargaining dynamics between host states, oil companies and other stakeholders in the oil industry. It is a sophisticated mechanism which identifies the complex array of relationships and bargains within which the host state-IOC bargaining relationship is nested. The model builds on and leverages the key contributions of earlier bargaining models. It enables us to integrate relevant ideas from existing scholarship on host state-MNC bargaining while also taking into account other actors and bargains at domestic and international levels that affect bargaining between an IOC and a host state. Practically, the model will help actors choose strategies more systematically, leading to higher relative bargaining power that may translate to preferable bargaining outcomes.

Research shows that trade openness and high social spending go hand in hand, at least in wealthy democracies. It is not clear, however, exactly why this is so. Many scholars and policymakers argue that generous social spending facilitates trade liberalization, but there is no direct empirical support for this claim. This paper is the first to show directly that social spending promotes freer trade. Specifically, I show that U.S. state-level unemployment insurance makes Congress members significantly more likely to vote for freer trade. Since state unemployment insurance is exogenous to individual congressional votes, my analysis shows clearly that the former affects the latter. My results imply that social spending insures not only citizens but also open trade policies against hard economic times. They also highlight the importance of subnational policy choices to national policy outcomes.

Executive pay regulation is widely discussed as a measure to reduce financial mismanagement in corporations. We show that the professional team sports industry, the only industry with substantial experience in the regulation of compensation arrangements, provides valuable insights for the regulation of executive pay. Based on the experience from professional sports leagues, we develop implications for the corporate sector regarding the establishment and enforcement of executive pay regulation as well as the level, structure, and rigidity of such regulatory measures.

This paper proposes a theory of political action based upon ownership structure and tests this theory utilizing data on independent expenditures during the campaign finance regulatory regime consisting of the period after the Bipartisan Campaign Reform Act of 2002 and before the U.S. Supreme Court's Citizens United decision in 2010. The results suggest a strong relationship between the presence of an entrepreneur or founding family and firm participation in electoral politics via contributions to independent political organizations. Both privately held and publicly traded firms with a principal owner present are more likely to contribute to independent political organizations in the first place, and once they do contribute, give a far greater amount relative to firms without a principal owner. The implications for the post-Citizens United era and possible motivations behind independent expenditures and their impact on other stakeholders including investors, employees, competitors, and the public are discussed. This paper contributes to our understanding of which corporate interests are most likely to spend money on electoral politics independent of the political party or candidate and seeks to broaden discourse about why these actors might participate in elections in the first place as well as the impact of their participation.

We examine the characteristics of business firms that gain access to legislative and executive branch officials in the trade policymaking area. Our empirical analysis of over 1200 manufacturers reveals that legislators were most attracted to firms with foreign market expertise, firms which actively participated in politics with outside lobbyists and campaign contributions, and firms with significant employment in the state and/or district. Executive branch officials were responsive to firms with foreign market expertise, firms from industries that had previously received tariff protection, firms using in-house government affairs specialists and outside lobbyists to convey information, and firms making campaign contributions to members of the trade oversight legislative committees. Our results largely support the political market framework and provide insights about the attractiveness of certain demanders to suppliers of trade policies from the legislative and executive branches of the U.S. federal government.

Buoyed by the success of two large-scale bingos in 1993 Alberta's First Nations initiated plans to construct reserve casinos to mitigate economic hardships. That year Alberta commenced with neoliberal reforms to slash the provincial budget. This paper explores how Alberta's acquisition of regulatory authority over First Nation's gaming led to the creation of a bureaucracy responsible for oversight of reserve gaming, the costs of which were borne by reserve casino revenues thereby resulting in no additional taxation of non-Native Albertans.

How does the internal organization of a foreign aid donor affect its aid allocation decisions? Despite the voluminous literature on the political economy of foreign aid, little systematic scholarship exists on this topic. This paper analyzes the allocations of the International Development Association (IDA), the World Bank's lending arm for the poorest countries, to all eligible countries between 1977 and 2005. While factors such as a country's need and its policy environment have consistently impacted IDA's allocation decisions, other factors have changed in important ways. For example, IDA disbursements do not follow US aid disbursements in the post–Cold War period the way they did during the Cold War. And most strikingly, IDA's allocations have become tightly linked to debt owed to IDA's sister organization, the International Bank for Reconstruction and Development (IBRD). While IDA used to shy away from countries with higher debt to the IBRD, the last two decades have seen IDA engage in apparently defensive lending for the IBRD, lending more to countries with outstanding balances to that institution. The results suggest greater focus on the internal structures of donors would yield insight into their allocation decisions.

This article develops a model for analyzing corporate strategy formation and regulatory change in environmental politics. The model emphasize how conditions that materialize through the dynamic interplay between corporate preferences and multilevel environmental governance can trigger the emergence of “tipping points,” at which a critical mass of leading industries begin to push for regulatory change. It is argued that tipping points often generate new political momentum and may lead to considerable progress in political and legislative bargaining. The model is applied to a case study of U.S. climate politics between 1990 and 2010. The case demonstrates that the tipping point model provides a plausible account of the intersection between business strategies and the failures and successes of federal climate action in this period.

While the state remains the main unit of analysis in International Relations, the emergence of transnational actors and their integration into global governance have contributed to an opening of perspectives and issues. NGOs and multinational enterprises as well as their interaction in public-private-partnerships have become popular research objects. However, these partnerships are often assessed in terms of effectiveness which leads to juxtapositioning binding and effective versus non-binding and ineffective initiatives. Considering such an either/or-logic to be of limited insight, the article argues that current research on public-private-partnerships suffers from four conceptual difficulties: (1) an underspecified concept of effectiveness, (2) a missing discussion on the yardsticks chosen for assessments, (3) a tendency to (over-)generalize individual findings and (4) underlying yet seldom reflected actor assumptions. To help engage with these difficulties, the paper conceptualizes partnerships as social contexts. Within such contexts, dynamics influence corporate identity and action and create new awareness as well as new conduct. Such a perspective allows to go beyond weighing the effectiveness of binding versus the likelihood of non-binding initiatives. The argument is illustrated by analyzing the emergence, development, and impact of the Voluntary Principles on Security and Human Rights with respect to BP and Chevron.

Exchange rates influence a country's trading capability, foreign reserves and competitiveness. Recently, the exchange rate between the Chinese RMB and the U.S. dollar has been a contentious issue in both the United States and China. In this paper, we conduct a historical review of how the United States deployed negotiation strategies with China on the exchange rate issue and consider the degree to which it follows theoretical expectations. We then analyze the changing nature of the factors which shape exchange rate negotiations between the two nations in projecting alternative scenarios for the future of conflict resolution between the U.S. and China on this issue. We predict that the U.S. is likely to continue alternating between competition and collaboration, a negotiation cycle influenced by U.S. domestic politics, and China is less likely to continue with accommodation and compromise. The sequencing and timing of each nation's negotiation strategy will lead to widely divergent consequences for the management of exchange rates and the world economy.