How Does Foreignness Affect Corporate Political Activity Engagement

Multinational corporations are observed to intentionally influence local public policy environment and their political activities have received attention from host country governments and the public. Research on the incentives behind foreign firms local corporate activities, especially in contrast with the domestic firms, is limited. In this paper, I investigate how being a foreign affiliate may influence firms political activity engagement. I argue CPA is one way to mitigate liability of foreignness and the institutional tension foreign affiliates face. Furthermore, multinational corporations are at the boundary-spanning social positions connecting multiple institutional fields, which may enable them to conduct institutional innovation. I suggest that the effects from the two aspects will encourage foreign affiliates to be more politically active than domestic firms are. Along the arguments, two moderators, firm local experience and local regulatory institutional development, are then suggested. The hypo...