Integrated market and nonmarket strategies: Empirical evidence from the S&P 500 firms’ climate strategies

Firms with well-formulated competitive market strategies could still fail due to their lack of effective nonmarket strategy. Climate change poses significant threats to firms and presents firms’ need to develop nonmarket strategy integrated with market strategy. Relying on the unique dataset of US S&P 500 firms’ responses to climate change, this study seeks to ask why some firms attempt to engage in climate policy making, while others do not do so. The results found that firms with organizational resources and capabilities underlying their carbon market strategy are more likely to support mandatory climate policy. It sheds light on the significance of integrated market and nonmarket strategies, particularly when business opportunities are controlled more by governments than by markets.

Anti-globalization implications for NME performance

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings Increase in populism is fueling anti-globalization sentiments and negatively impacting on the investment, expansion and location plans of many multinational enterprises. By focusing on social legitimacy, resilience and institutional arbitrage, such organizations can develop appropriate nonmarket strategies to help alleviate risk and better adapt to the changing business environment. Originality/value The briefing saves busy executives and researchers’ hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

Corporate social responsibility and firm performance: a theory of dual responsibility

PurposeThe authors aim to develop and test a theory of dual responsibility to explain the relationship between corporate social responsibility (CSR) and firm performance. The authors empirically examine whether firms that meet their economic and social responsibilities simultaneously perform better than firms that fail to do so. In doing so, the authors theoretically extend and empirically test Barney's (2018) call to incorporate the stakeholder perspective with resource-based view (RBV). The authors also examine the moderating effects of firm status on this relationship.Design/methodology/approachThe authors use a longitudinal panel sample of 137 S&P 500 firms and data for the years between 2004 and 2013 collected from multiple data sources. The authors use stochastic frontiers analysis to measure firm capabilities in the areas of R&D, operations and marketing. These capability measures are then used along with CSR measures and a measure of firm status to test the hypotheses of this study. The authors also conducted several robustness checks and various supplementary analyses using different econometrics techniques and different operationalizations of the key variables of interests.FindingsThe results show that firm CSR is positively related to firm performance and that the effect of CSR on performance is stronger for firms with higher levels of R&D capability and operational capability. The authors also find support for the three-way interaction between CSR, economic responsibility and firm status, suggesting that firms high in both social and economic responsibilities and status will enjoy the highest levels of performance.Research limitations/implicationsThe findings of this study are based on large, publicly listed firms in North America. Therefore, their generalizability to other contexts and other types of firms require additional research. The reliance on KLD measures is also a limitation, especially because they have not reported CSR ratings after 2013.Practical implicationsFor practicing managers, the main implication of this study is that an optimal balance between market and nonmarket strategies is key for superior performance.Social implicationsThe continued debate regarding the firm's purpose can be understood by focusing equally on the two main responsibilities of firms: nonsocial responsibility and social responsibility toward all stakeholders.Originality/valueThe study answers the call to incorporate stakeholder theory into the RBV of the firm by highlighting the critical role of firm capabilities in the relationship between CSR and performance. The study also highlights the role that firm status plays in the relationship between market and nonmarket strategies and firm performance.

Open for business in a closed world? Managing MNE nonmarket strategy in times of populism and geopolitical uncertainty

Purpose This paper aims to consider how multinational enterprises are increasingly augmenting their international strategies with insights on, and approaches to, external stakeholders and nonmarket dynamics. The rise of populism and increased geopolitical uncertainty have accelerated these efforts, particularly for business leaders anticipating and engaging external agents, events, and issues that challenge the strategic objectives of their enterprises. Design/methodology/approach This paper aims to explain why the increased preponderance of populism and geopolitical uncertainty are simultaneously posing an existential threat to the post-Cold War global economy predicated on free trade and (relatively) open borders, and consequently, challenging the structures and strategies of international business. Findings We provide an overview of the four papers in our special issue, and consider how each advances insights on how multinational enterprises effectively navigate the nonmarket uncertainties of the contemporary global economy. We then advance four important areas for international business research around multinational nonmarket strategies: (i) resilience and legitimacy; (ii), diversification; (iii), market and nonmarket strategy integration; and (iv), institutional arbitrage. Research limitations/implications We anticipate that nonmarket strategy scholars can build on these themes to assess how nonmarket strategies can better enable multinational enterprises to survive and thrive in an age of heightened global risk and uncertainty. Originality/value This paper and the related special issue provide new theoretical insights by bringing attention to the relatively under-researched realm of multinational enterprise nonmarket strategy, particularly in populist contexts and during periods of geopolitical uncertainty. We identify four promising domains – resilience and legitimacy, diversification, the integration of market and nonmarket strategy, and institutional arbitrage – for international business scholars investigating nonmarket strategy to consider. We hope that our paper, as well as other papers in this special issue, provide further momentum to this growing area of research.

Corporate Responses to COVID-19: A Nonmarket Strategy Approach

The COVID-19 pandemic has been an unprecedented threat to the survival of U.S. firms. Prior studies show that firms use market strategies such as layoffs and pay cuts to cope with organizational crises. Little is known about how firms engage in corporate social responsibility (CSR) and corporate political activities (CPA) during crises. This study focuses on how America’s largest publicly traded firms use these two nonmarket strategies to cope with the COVID-19 pandemic. Results suggest that public firms actively engaged in both CSR and CPA after the outbreak. The preliminary estimation shows that firms listed in Russell 1000 have donated or pledged over $3.9 billion to corporate philanthropy and invested over 2.1 billion in observed political donations and lobbying in Congress in the early pandemic. The marked variation in corporate nonmarket strategies could be partially attributed to corporate elites’ political ideology, political accountability, and perceived COVID-19 risk.

Digital markets, competition regimes and models of capitalism: A comparative institutional analysis of European and US responses to Google

The comparative capitalism literature examined how institutions vary on a national or societal level and how these differences affect multinational companies’ strategies. Yet, little attention has been devoted to cross-national or regional differences in the governance of competition, especially in the context of digitalization of markets. The article seeks to fill this gap by looking at the case of Google. It traces the process of the stark US–EU disagreement over Google’s abuse of dominant position in digital markets, which resulted in one of the largest fines in the EU history. It is argued that the variation in the response to the company’s market and nonmarket strategies are traced back to differences between Ordoliberal and Chicago School ideas, which are embedded in the ‘competition regimes’ of European and US capitalist models. The article concludes by discussing the implications of these findings for varieties of capitalism frameworks.