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Non-market Social and Political Strategies - New Integrative Approaches and

Interdisciplinary Borrowings

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DOI: 10.1111/1467-8551.12253

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British Journal of Management, Vol. 28, 559–574 (2017)
DOI: 10.1111/1467-8551.12253

Non-market Social and Political

Strategies – New Integrative Approaches
and Interdisciplinary Borrowings
Jedrzej George Frynas, John Child1,2 and Shlomo Y. Tarba1
Roehampton Business School, University of Roehampton, London, UK, 1 Birmingham Business School,
University of Birmingham, UK, and 2 Plymouth Business School, Plymouth University, UK
Corresponding author email: [email protected]

This paper introduces a special issue of the British Journal of Management on social and
political strategies in the non-market environment. On the one hand, it reviews the extant
research on the possible forms of interaction between Corporate Social Responsibility
(CSR) strategies and Corporate Political Activity (CPA): CSR-CPA complementarity,
CSR-CPA substitution and mutual exclusion between CPA and CSR. On the other hand,
the paper provides an overview of the recent contributions of non-business disciplines –
psychology, sociology, economics, politics and history – to nonmarket scholarship and,
above all, the potential future scholarly contributions of these disciplines.

This special issue addresses business strategies in ket transaction is arguably an outcome of the so-
the non-market environment. By their very defi- cial, political, cultural and economic forces that
nition, strategies in the non-market environment are shaping it (e.g. Abolafia, 1998; Astley, 1985;
stand in contrast to those in the market envi- Fligstein, 1996). Some business scholars convinc-
ronment. Following Baron’s (California Manage- ingly assert that, ultimately and for their bene-
ment Review (1995), 37, pp. 47−48) definition, ‘the fit, companies should analyse and manage their
non-market environment consists of the social, po- external − market and non-market − environ-
litical, and legal arrangements that structure the ments in an integrated fashion (e.g. Baron, 1995;
firm’s interactions outside of, and in conjunction Holburn and Vanden Bergh, 2014), just as scholars
with, markets’, whereas ‘the market environment of sustainable development and the social respon-
includes those interactions between the firm and sibilities of business suggest that companies and
other parties that are intermediated by markets or financial markets should integrate environmental,
private agreements’. In other words, non-market social and governance concerns into their day-to-
strategies are about managing the wider institu- day strategic decision-making for the benefit of
tional context within which companies operate, as the wider society (e.g. Busch, Bauer and Orlitzky,
opposed to the more narrowly economic context 2016; Elkington, 1994).
of market competition. While such integrated strategies may be the ul-
The academic dichotomy between market and timate goal, the study of non-market strategies is
non-market environments is not unproblematic. valuable and necessary. Business managers face
Our understanding of markets and of non-market a vast array of non-market risks and opportuni-
institutions is socially constructed, and any mar- ties in an increasingly complicated and multi-polar
world (the emergence of a relatively large number
of new power centres globally), as demonstrated
The authors are very grateful to Professor Kamel Mellahi
whose constructive comments have helped us to improve by various business executive surveys and consul-
this paper. tancy reports (e.g. PricewaterhouseCoopers, 2016;

© 2017 British Academy of Management. Published by John Wiley & Sons Ltd, 9600 Garsington Road, Oxford OX4
2DQ, UK and 350 Main Street, Malden, MA, 02148, USA.
560 J. G. Frynas, J. Child and S. Y. Tarba

World Economic Forum, 2016). In such a world, research have emerged in isolation: one that exam-
a multinational enterprise (MNE) may face an ines corporate social responsibility (CSR) (for a re-
increasingly integrated international economy, on view of the CSR literature, see Aguinis and Glavas,
the one hand, and a fragmented non-market en- 2012) and the other that examines corporate polit-
vironment on the other (Kobrin, 2015). For exam- ical activity (CPA) (for a review of the CPA liter-
ple, a large MNE may decide to engage in a merger ature, see Lawton, McGuire and Rajwani, 2013).
with another company to benefit from global mar- Scholars have long articulated the need for an in-
ket opportunities, but the merger deal may need tegration of these two lines of research (Baron,
to be approved by a dozen different regulatory 2001; McWilliams, van Fleet and Cory, 2002;
authorities around the world. Likewise, a multi- Rodriguez et al., 2006), but it was only relatively
national petroleum company may have a global recently that they have started to explore this in-
production system but successful production activ- tegration (see Frynas and Stephens, 2015; Mellahi
ities are dependent on different non-market actors et al., 2016). The lack of integration of the po-
in the different countries where the firm operates, litical and social/environmental domains of non-
such as different national government agencies, do- market strategy research manifests itself inter alia
mestic pressure groups and so on. in the failure to understand the substitution effects
Navigating this non-market environment often between company political and social strategies
requires skill sets that are very different from the or the failure to understand the social impact of
more conventional commercial ones, in terms of corporate political strategies on other stakeholder
both the required political skills and capabilities groups outside the organization.
(e.g. Frynas, Mellahi and Pigman, 2006; Oliver On the other hand, research on non-market
and Holzinger, 2008) and social skills and capa- strategies has suffered from the failure to in-
bilities (e.g. Hart, 1995; Russo and Fouts, 1997); tegrate insights and methodologies from disci-
consequently, the study of non-market environ- plines outside business studies such as politi-
ments may require different research approaches cal science, legal studies, sociology and history.
and methods. While some influential theoretical lenses used in
CSR and CPA scholarship originated from re-
lated disciplines outside business and manage-
Rationale for this special issue ment − including resource dependence theory,
institutional theory and social movement theory
Scholarly interest in non-market strategies has ex- − non-market scholarship largely imitated the
isted for several decades (for recent reviews see application of these theories to other branches
Boddewyn, 2016; Mellahi et al., 2016). We now of business and management research, rather
have considerable knowledge of the antecedents than developing them for its own purposes (cf.
(e.g. Hillman, Keim and Schuler, 2004), the organi- Suddaby, Hardy and Huy, 2011; Whetten, Fe-
zational performance outcomes (e.g. Rajwani and lin and King, 2009). Additionally, in those in-
Liedong, 2015) and the contextual diversity (e.g. stances in which borrowing did take place in
Örtenblad, 2016) of non-market strategies. Other non-market scholarship, its quality was sometimes
recent studies have explored inter alia investor re- poor, as notably evidenced by the superficial ap-
actions to non-market strategies (Arya and Zhang, plication of Habermasian theories to recent politi-
2009; Werner, 2017) and the socially constructed cal CSR scholarship (see the critique by Whelan,
nature of non-market strategies (Gond, Cabantous 2012). Given that, by definition, non-market re-
and Krikorian, 2017; Orlitzky, 2011) and have search touches on the political, legal and social as-
wondered to what extent collective political ac- pects of company strategies, one would expect and
tions and private political actions are substitutes welcome a much greater cross-fertilization with
or complements (Jia, 2014). non-business disciplines in order to address those
However, research on non-market strategies has aspects of non-market strategy that are currently
suffered from two crucial limitations. On the one insufficiently explained by existing approaches.
hand, the relevant scholarship has been highly Underlying the rationale of this special issue has
fragmented for a long time and has largely dis- been our desire to help, in a modest way, to fill these
integrated into separate political and social do- two research gaps. Consequently, we sought papers
mains. Two parallel strands of non-market strategy that either offer new pathways for the integration

© 2017 British Academy of Management.

Non-market Social and Political Strategies 561

of the political and social research domains in non- Rehbein and Schuler (2015) outlined the various
market research and/or offer new pathways for the possible ways in which CSR can strengthen CPA,
enrichment of our understanding of non-market and vice versa.
strategies with insights and theories from outside CPA can strengthen CSR activities through sev-
business studies. The four papers in this special is- eral mechanisms. Interactions with political actors
sue help to address these research gaps in very dif- can assist organizations in selecting CSR priorities
ferent ways. by identifying significant social and political issues.
CPA can provide critical information, support or
favourable regulation to enhance the economic vi-
Integration of social and political ability of CSR activities. CPA may also help to in-
perspectives crease the credibility and legitimacy of CSR activ-
ities (den Hond et al., 2014).
In recent years, CSR scholarship has started to Conversely, CSR can strengthen CPA by fa-
address the political aspects of CSR (for a re- cilitating access to the political system and its
view, see Frynas and Stephens, 2015), although efficacy. CSR can improve human capital re-
many studies approached political CSR from a sources (e.g. issue expertise), organizational capi-
narrow normative research agenda, advocating a tal resources (e.g. legitimacy) and geographic pres-
new conception of political CSR that ascribes new ence in a political constituency. CSR, as a CPA
roles to business in the delivery of public goods, strategy, may also lessen the necessity for finan-
which postulates normative theory to the exclu- cial donations to politicians or may reduce the
sion of descriptive theory and addresses changes cost of demonstrating compliance to regulation
in global governance to the exclusion of the tradi- (den Hond et al., 2014; Rehbein and Schuler,
tional domestic political process (e.g. Scherer and 2015).
Palazzo, 2007; Scherer et al., 2016). CPA scholar-
ship also explored some social aspects of political
activities − e.g. CPAs related to environmental CPA−CSR substitution
regulation, such as regulation related to climate In contrast, the paper by Liedong, Mellahi and Ra-
change (e.g. Kolk and Pinkse, 2007; Levy and jwani (2017) in this special issue finds no evidence
Egan, 2003) − or the role of social mobilization in for complementarity. The authors found that CSR
CPAs (e.g. McDonnell and Werner, 2016; Walker, helps to lower perceptions of risk exposure but is
2012), but, until recently, it has largely failed to ineffective when combined with managerial politi-
specifically explore the CSR−CPA relationship. In cal ties (MPTs), thereby ‘suggesting the existence
effect, only relatively few empirical studies have of a form of “cannibalization” whereby MPTs
started to explore the nature of the interactions erode the gains of CSR’. This gives some credence
between CSR strategies and CPAs (as discussed to the idea that CSR and CPA may mutually act
below), and their results to date appear highly as substitutes. Other empirical research provided
contradictory. some evidence that, for example, companies may
donate less to charitable causes because they have
good political connections (Zhang, Marquis and
CPA−CSR complementarity
Qiao, 2016). In this case, CPA substitutes for CSR.
There has been an explicit assumption among var- Another recent study found that those Chinese
ious scholars that CSR and CPA are complemen- companies that increase CSR in the aftermath of
tary and may need to be aligned (e.g. den Hond changes of city-level mayors can build political net-
et al., 2014; Liedong et al., 2015). Indeed, recent works and can be rewarded with government sub-
empirical research suggested that CSR weakens sidies (Lin et al., 2015). In this case, CSR substi-
the potentially negative impact of CPA (Liedong tutes for CPA.
et al., 2015; Sun, Mellahi and Wright, 2012), that In general terms, companies may have a pref-
CSR helps to gain and to maintain political ac- erence for CSR as a substitute for CPA be-
cess (Gao and Hafsi, 2017; Wang and Qian, 2011) cause the latter is vulnerable to the loss of polit-
and, alternatively, that CPA offsets negative CSR ical ties due to the departure of managers with
records (Alakent and Ozer, 2014). The important personal ties to political decision-makers (Sun,
conceptual papers by den Hond et al. (2014) and Mellahi and Wright, 2012), or because potential

© 2017 British Academy of Management.

562 J. G. Frynas, J. Child and S. Y. Tarba

political and regulatory shocks and evolutionary surveyed companies had a fundamentally neutral
changes may undermine the value of a company’s and apolitical stance, had perceptions of low power
existing political ties (Siegel, 2007; Sun, Mellahi vis-à-vis the conflict sides and failed to appreci-
and Thun, 2010). Most notably, the politicians ate the collective interest in providing solutions to
or political factions in power may be displaced, conflicts. At the same time, the companies believed
thus exposing those companies that had cultivated that the means and expertise at their disposal were
close relations with them (Darendeli and Hill, not necessarily appropriate in conflict situations.
2016). This research suggests that − at least in some ar-
By contrast, CSR tends to be more politically eas of societal engagement − integration between
neutral and its organizational value is more likely CSR and CPA may be extremely difficult.
to outlast changes in government or managerial At the same time, within some companies, CSR
departures. In addition, companies with a reputa- and CPA may be seen as separate mutually exclu-
tion for CSR activities may also be reluctant to sive activities because of existing internal organiza-
become involved in political activities (including tional structures and corporate values. These un-
even government-sponsored sustainability initia- derpin the development of non-market activities
tives) because of the perceived risk of later accu- by companies, stemming from inter alia the struc-
sations of ‘greenwashing’ and hypocrisy (Kim and turing of business groups (Dieleman and Bod-
Lyon, 2011). dewyn, 2012), ownership structures (Lawton, Ra-
jwani and Doh, 2013), the internal organization of
the external affairs function (Doh et al., 2014) and
CPA−CSR incompatibility
the nature of the internal relationships between
Some research also provided evidence that CSR public affairs managers and colleagues in other
and CPA may be mutually exclusive. For exam- subsidiaries (Barron, Pereda and Stacey, 2017).
ple, some research on philanthropy (which can be For example, the external affairs function at the
viewed as a sub-set of CSR) suggests that philan- German airline Lufthansa specifically benefitted
thropy may not necessarily be undertaken for ra- from the complementarities of integrating social
tional, instrumental reasons, because it is an out- and political activities, while the creation of a sim-
come of employee empathy (e.g. Grant, Dutton ilar European external affairs function at Tata
and Rosso, 2008) or because it consists of ad Consultancy Services (an affiliate of India’s Tata
hoc corporate disaster relief following some catas- Group) had few consequences for political activ-
trophic events (e.g. Crampton and Patten, 2008); ities because its remit was strictly limited to so-
hence philanthropy may not be a substitute for cial and environmental activities (Doh et al., 2014).
CPA or complementary with CPA under those cir- Thus, we still need to learn considerably more
cumstances. Boddewyn and Buckley (2017) in this about the effects of organizational structures and
special issue and other studies (Gao and Hafsi, corporate values on CSR−CPA integration.
2017; Wang and Qian, 2011) suggest that philan-
thropy may still lend itself as a substitute for CPA
The way forward
or complementary with CPA, but some societal is-
sues such as conflict mitigation and resolution may Based on the above discussion, we conclude that
just be fundamentally unsuited to becoming part integration, substitution and mutual exclusion are
of a company’s CPA agenda. all possible forms of interaction between corporate
As a notable example, Jamali and Mirshak social activities and CPAs. Our model in Figure 1
(2010) investigated the extent to which MNEs visualizes these possible forms of interaction.
can help in conflict mitigation and resolution and We should recognize, of course, that different
peace building efforts in conflict-prone host coun- types of CSR or CPA may elicit different interac-
tries. While the authors actually provided a norma- tions; for example, a company’s high expenditure
tive argument in favour of such roles for companies on environmental protection measures may make
in conflict-prone regions, their actual empirical ev- it redundant for it to lobby the government for
idence pointed to the incompatibility of goals and lower environmental regulatory standards (substi-
means between the social activities of MNEs and tution effect), whereas a company’s expenditure
the political activities necessary to help in conflict on charitable projects that are valued by politi-
mitigation and resolution and peace building. The cians may help to improve corporate political ties

© 2017 British Academy of Management.

Non-market Social and Political Strategies 563

CSR and CPA are complementary

CPA substutes for CSR

CSR CSR substutes for CPA CPA

CSR and CPA are mutually exclusive

Figure 1. The possible interactions between CSR and CPA

(complementarity effect). Similarly, it is possible In addition, companies are increasingly getting

that complementarity effects may be more likely in involved in emotive and publicly contested socio-
some institutional contexts, e.g. countries in which political issues that do not neatly fall into ei-
the government intervenes more frequently in the ther the traditional CSR or CPA categories; e.g.
economy, such as China, and less likely in a coun- Volkswagen’s support for the influx of refugees in
try with relatively few government interventions, Germany, Lush Cosmetics’ support for LGBT ed-
such as Switzerland (on China, see Wang and ucation in the USA, or Ctrip’s opposition to the
Qian, 2011; on Switzerland, see Helmig, Spraul government’s ‘one-child policy’ in China (Nalick
and Ingenhoff, 2016). et al., 2016). Therefore, the ‘non-market’ label may
Given that there can be much variance in ultimately be more helpful than CSR and CPA,
CSR−CPA interactions, future research should in- but our concern here is with integrating CSR and
vestigate how the nature of these interactions may CPA in scholarship and in practice in view of the
differ between different types of CSR and CPA, fact that the two types of activities still tend to
different institutional environments, different in- be viewed as distinct and are addressed in distinct
dustry contexts, different types of organizations, fields of study.
internal organizational arrangements or individ-
ual business leaders, or how these interactions
change over time. Non-business insights on non-market
At this stage, one can pose the fundamental strategies
question as to the extent to which we can neatly
divide all corporate non-market activities into Non-market strategies are about addressing those
CSR and CPA, given that the political and so- environmental forces that are the outcome of polit-
cial aspects of non-market interventions are so of- ical, social or historical processes. However, schol-
ten intertwined. Some key characteristics enable arship on non-market strategies has been slow at
us to distinguish CSR from CPA. Notably, CSR integrating insights and methodologies from po-
tends to be an open, often well publicized activ- litical science, sociology, history and other related
ity that can be imitated by others (Frynas, 2015; disciplines. In recent years, there has been a rising
McWilliams and Siegel, 2011), whereas CPA tends interest in non-market research among psycholo-
to be conducted behind closed doors (Boddewyn gists (e.g. Gully et al., 2013; Rupp and Mallory,
and Brewer, 1994), which is more a difference of 2015) and − to a lesser extent − sociologists (e.g.
process rather than of intent. But non-market ac- Lim and Tsutsui, 2012; Walker and Rea, 2014), but
tivities may be simultaneously aimed at both the there has been little interest from, say, historians or
political constituency and the wider society. If political scientists.
CSR is solely motivated by helping a company in- Mellahi et al. (2016, p. 167) noted that ‘borrow-
fluence a government (as in the example of the casi- ing new insights from non-business disciplines may
nos in the Boddewyn and Buckley paper in this potentially lead to some of the greatest advances
special issue) or if political engagement is moti- in our understanding of non-market strategy’. The
vated by social and ethical concerns (as in the case full promise of insights from non-business disci-
of the creation of social and environmental private plines for non-market scholarship still remains un-
regulation to fill in for its inadequate state coun- fulfilled. Therefore, it may be useful to scope out
terpart), should we treat such activity as CSR or how non-market scholarship could benefit from
CPA? such insights. Here, we provide a brief overview

© 2017 British Academy of Management.

564 J. G. Frynas, J. Child and S. Y. Tarba

Table 1. Additional theoretical perspectives in future non-market strategy research

Theoretical perspectives Key research questions

Psychological theories How do personal identities and values of the individual actors involved in non-market strategy
influence CSR and CPA and interactions between them? What effect do they have on the
acceptability and impact of those strategies?
Organizational power How is power located and exerted in different relational frameworks? What are the power-related
processes governing the implementation and evolution of non-market strategies?
Transaction cost economics How does non-contractual reciprocity affect non-market strategies? How do individual transactions
between companies and non-market actors reveal the nature of reciprocal exchanges, the capture
of non-market actors by business, or the integration between CSR and CPA?
Austrian economics How do asymmetric future expectations among individual managers affect non-market strategies or
the development of social and environmental innovations?
Social contract How do the nature and strength of the social contract between citizens and the state influence
differences between non-market conduct and subsequently organizational performance across
different national contexts?
Habermasian theories How do discourses and societal power structures reveal different normative assumptions and forms
of communication behind notions of organizational performance in different institutional
contexts?
Biological theories How can we draw parallels between organizational behaviour and biological processes to better
understand the implementation and evolution of non-market strategies?

of the recent contributions of non-business disci- individual level include, for example, cognitive
plines to non-market scholarship and, above all, categorization theory (cf. Lord and Maher 1991),
their potential future contributions. Table 1 sum- organizational justice theory (cf. Greenberg,
marizes some of the promising theoretical ap- 1987), psychological contract theory (cf. Robin-
proaches and the related future research questions. son, Kraatz and Rousseau, 1994) and image theory
(cf. Schepers and Beach, 1998) (for an overview
of such theories, see Frynas and Croucher, 2015;
Psychology and non-market research Rupp and Mallory, 2015). Studies have applied
According to a survey of organizational psychol- psychological theories to demonstrate inter alia
ogists conducted by the Society of Industrial and that CSR is positively related to employee social
Organizational Psychology a few years ago, CSR identification with their organization (e.g. Evans
was one of the top trends affecting the workplace et al., 2011; Jones, 2010) or that CSR signals
(reported in Glavas, 2016). In fact, various studies the values of an organization − and hence the
of employment relations borrowed psychological potential for value congruence − to potential job
theories to explore aspects of workplace relations applicants (e.g. Gully et al., 2013; Jones, Willness
that are closely related to CSR (see discussion be- and Madey, 2014).
low). At the same time, business and management Recent reviews (Glavas, 2016; Rupp and
scholars have been making calls for more non- Mallory, 2015) showed that psychological per-
market research at the individual level of analysis, spectives on CSR are quickly gaining ground
an endeavour in which psychological theories among scholars. Special issues of journals have
could play a leading role (e.g. Aguinis and Glavas, been solely devoted to the intersection of CSR and
2012; Hillenbrand, Money and Ghobadian, 2013; organizational psychology (e.g. Andersson, Jack-
Morgeson et al., 2013). son and Russell, 2013; Morgeson et al., 2013; Rupp
Psychological research and theories already et al., 2015). Perhaps unsurprisingly, psychology
have an established presence in those micro-level has arguably made the greatest contribution of
studies of employment relations that have natural recent years to non-market research. One recent
linkages to CSR concerns − such as work–life review in a psychology journal went as far as to
balance and employee voice research − and suggest that ‘With the rise of employee-focused
have started affecting CSR scholarship in gen- micro-CSR research, person-centric work psychol-
eral (Glavas, 2016; Rupp and Mallory, 2015). ogy, and humanitarian work psychology (HWP),
Examples of psychological theories that can be a sea change is occurring regarding the field’s
useful in explaining non-market factors at the perspective on CSR’ (Rupp and Mallory, 2015,

© 2017 British Academy of Management.

Non-market Social and Political Strategies 565

p. 212). This development informs the distinction Sociology and non-market research
between internally and externally directed CSR
Sociology has already left an important mark on
and their respective intentions. CSR directed
non-market research. Two of the main theories
toward employee well-being within the company
used in non-market research − institutional the-
may be primarily intended to raise productivity.
ory and resource dependence theory − have their
CSR directed towards projects in the external so-
roots in sociology, while social movement theory
ciety may be primarily intended to create political
and network theory have also left a mark (cf.
capital and, in this respect, be more closely allied
Mellahi et al., 2016). Some of the psychological
to CPA.
approaches in non-market research mentioned
A psychological perspective emphasizes that de-
above − such as organizational justice theories (cf.
cisions on CSR and CPA activities are made and
Greenberg, 1987) − have roots in both psychology
implemented either by individuals or by teams
and sociology.
of individuals. It draws attention to the signifi-
But sociology still has much to offer to the
cance of the ‘micro-foundations’ of such activities
study of non-market strategies, and sociologi-
in terms of the individual actors responsible for
cal contributions on non-market strategies have
them (Fellin, Foss and Ployhart, 2015). The micro-
started to appear in leading sociology journals
foundations view of corporate CSR and CPA high-
(Bartley, 2007; Lim and Tsutsui, 2012; Walker
lights the role and capabilities of those members of
and Rea, 2014). Novel applications of sociological
organizations who are the movers of these activi-
lenses − such as the institutional work lens within
ties, together with the interactions they have both
institutional theory (Gond, Cabantous and Kriko-
with each other and with external actors. It argues
rian, 2017) or systems theory from the sociology of
that these individual-level factors help to account
law (Sheehy, 2017) − illustrate the potential soci-
for the ability of companies to formulate and sus-
ological contributions to non-market research yet
tain successful non-market policies and routines.
to come. Curiously, we did not receive any submis-
In addition to the individuals’ capabilities and re-
sions to this special issue specifically from a novel
lationships, a psychological perspective highlights
sociological perspective, if we exclude the more tra-
the personal identities and espoused values of the
ditional institutional theory applications.
actors involved in CSR and CPA, which are also
Research into CPA in particular could benefit
expected to provide the motivation for their ini-
from the application of another longstanding
tiatives and to colour the meaning they attach to
perspective within sociology − namely, a focus on
them. The interpretations that corporate actors
organizational power and the conditions under
and those in governmental and institutional agen-
which it is exercised. While some scholarship
cies place on non-market strategies are likely to
on CSR has explicitly acknowledged the critical
have a significant bearing on the acceptability and
importance of power relations (e.g. Banerjee,
impact of those strategies.
2008; Bondy, 2008), in particular within global
Insights from psychology hold the key to un-
production chains (e.g. Levy, 2008; Tallontire,
derstanding many aspects of non-market strate-
2007), it would be appropriate for the analysis of
gies at the individual level. Given that emerg-
CPA to take greater account of power and of the
ing scholarship has overwhelmingly focused on
processes whereby power is generated and used.
CSR activities, there is an enormous potential
Following Pfeffer’s (1981, p. 7) aphorism that
for exploring the psychological processes behind
politics is ‘power in action’, a potentially fruit-
the political activities of companies. Psychological
ful approach to doing this is found in the
theories could help investigate, inter alia, the psy-
political action analysis of corporate socio-
chological drivers behind CPAs or CPA−CSR
political initiatives. This is premised on the view
integration, and the mediating and moderating
that power (or, more precisely, its exercise in the
effects of CPA that are related, for example, to so-
form of influence) does not necessarily follow
cial and organizational identity or the perceived
mechanically from the possession of valuable
person−organization fit. We certainly expect that
resources but is also generated through persua-
future non-market research will be increasingly
sive actions that create legitimacy for corporate
conducted at the individual level of analysis and
policies in the eyes of other actors. The political
will provide a much richer understanding of the
action perspective therefore regards the outcome
underlying psychological processes.

© 2017 British Academy of Management.

566 J. G. Frynas, J. Child and S. Y. Tarba

of non-market strategies as depending on the Transaction cost economics has also left a mark
process of how they are presented, interpreted on non-market research, in particular investigating
and negotiated within the relational framework the transaction cost drivers that affect companies’
(the network of social and political relations that governance choices with regard to CSR activities
companies have with external agencies) between (e.g. Husted, 2003; King, 2007). Last, but not least,
corporate and external actors (Child, Tse and game theory has contributed interesting insights to
Rodrigues, 2013). A fundamental assumption is non-market research (e.g. Baron, 2001; Fairchild,
that power operates through relationships such as 2008). Finally we should remember that institu-
these and ‘is inseparable from interaction’ (Clegg, tional theory also has roots in the study of the reg-
Courpasson and Phillips, 2006, p. 6). ulatory role played by institutions in economics
The political action approach within sociology (Davis and North, 1971; North, 1990) and this
draws attention to the power-related processes ‘new institutional economics’ lens has influenced
governing the implementation and evolution of non-market research (Bonardi, Holburn and Van-
CSR and CPA. Power is regarded as a capacity den Bergh, 2006; De Figueiredo, 2009; Dorobantu,
rather than as the exercise of that capacity (Lukes, Kaul and Zelner, 2017).
2005). In other words, a corporation’s possession Leading literature reviews of non-market schol-
of a power resource gives it the potential to imple- arship in recent years have emphasized the need
ment CSR and conduct effective CPA, but the out- for more scholarship on the micro-foundations of
come will depend on the dynamics of the relations non-market strategies (Aguinis and Glavas, 2012;
with the other parties that are involved. This ap- Mellahi et al., 2016), and economics can arguably
proach also allows for reaction and counter-action play an important role in the study of these micro-
by institutional and other recipients of corporate foundations. In fact, agency theory has been the
non-market strategies. In so doing, it acknowl- leading lens for the understanding of micro-level
edges the relevance of contrasting cultural and po- phenomena in non-market research to date.
litical contexts in informing that reaction. This in- Micro-level studies conducted through the agency
dicates that a potentially fruitful way forward for theory lens have inter alia investigated the link
research would be to address questions such as, between CEO compensation and levels of CSR
for example, how power is located and exerted performance (e.g. Berrone et al., 2010; Deckop,
in different relational frameworks, or whether, in Merriman and Gupta, 2006) and the link between
some contexts, CSR is a more effective non-market the individual characteristics of top management
strategy than CPA and vice versa. We believe team members and CSR-related decision-making
that the neglected study of power dynamics holds (e.g. Bear, Rahman and Post, 2010; Chin, Ham-
the key to understanding the boundaries of what brick and Treviño, 2013). However, agency theory
is feasible in terms of implementing non-market has a relatively narrow focus on agent−principal
strategies. relationships and hence provides only a partial ex-
planation of non-market strategies.
The article by Boddewyn and Buckley (2017)
Economics and non-market research
in this special issue inspired us to think that
Economics has already left an important mark the micro-foundations of non-market strategies
on non-market research in the sense that many could be studied by looking at individual non-
notable non-market strategy studies have applied market transactions. Instead of studying the indi-
economic analysis in conceptualizing and expli- vidual traits of decision-makers (using psycholog-
cating problems in non-market research, e.g. by ical theories or agency theory) or the relationships
investigating CSR with reference to the attributes between an organization and its individual stake-
of neo-classical equilibrium models or by con- holders (using stakeholder theory or resource de-
ceptualizing non-market choices of companies as pendence theory), future researchers could apply
games with specific payoffs (e.g. notable contribu- the tools provided by transaction cost economics
tions by Baron, 2001; King, 2007; Kitzmueller and to study individual transactions at the micro-level,
Shimshack, 2012). Agency theory has become one e.g. the individual transactions that occur between
of the most influential theoretical perspectives ap- companies and non-governmental organizations
plied in non-market research (cf. Mellahi et al., or the individual transactions conducted by cor-
2016). porate charitable foundations. Such analysis could

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Non-market Social and Political Strategies 567

provide a wealth of insights on issues such as the Lawton, McGuire and Rajwani, 2013). Political
nature of reciprocal exchanges, the capture of non- frameworks have influenced CPA and CSR re-
market actors by business, and the integration be- search, as evidenced inter alia by the use of political
tween social and political strategies. economy ideas in the scholarship on business and
Going beyond neo-classical economics, Aus- politics, the application of the social contract con-
trian economics provides one alternative avenue cept in business ethics and the reliance on Haber-
for enriching individual-level perspectives on masian political theory in political CSR research.
non-market strategy. In contrast to neo-classical Influenced by pluralist theory scholarship in in-
economics and much of the extant non-market ternational relations (cf. McGuire, 2015), political
literature, Austrian economics regards human ac- economy ideas and concepts have found their way
tion − not external constraints − as fundamental into business and politics research, helping to ex-
to decision-making (e.g. Lachmann, 1956; Mises, plain the increased structural power of companies
1963). While Austrian economists such as Mises in politics (e.g. Farrell and Newman, 2015; Fuchs
(1963) viewed consumer demand as an external and Ledererer, 2007). Influenced by the concept of
constraint, they suggested that the only acceptable the social contract in political theory (cf. Frynas
research propositions are those relating to indi- and Stephens, 2015), the social contract has been
vidual actions, and that all motivations of agents applied to issues of business ethics and CSR, par-
and institutions arise from individual behaviours ticularly in the form of Donaldson and Dun-
(applying the Austrian concept of ‘methodological fee’s integrative social contracts theory, as a way
individualism’). Austrian economics can provide of explaining and legitimizing the non-market
a superior explanation for individual decisions, (political and social) involvement of business with-
recognizing that inter alia value is subjective, out reliance on state regulation or indeed a legit-
manager-entrepreneurs can choose different imate state (e.g. Hartman, Shaw and Stevenson,
courses of action, and information is interpreted 2003; van Oosterhout, Heugens and Kaptein,
differently by different actors (the Austrian 2006). However, we must note that insights from
concept of ‘asymmetric expectations’). The few political economy have largely failed to inform the
studies that applied Austrian economics to CSR CPA literature, just as social contract approaches
(Adams and Whelan, 2009; Frynas, 2009; Max- have largely failed to inform the CSR literature, in
field, 2008) had no discernible influence on wider the leading mainstream business journals.
non-market scholarship, but non-market studies In this context, the ‘political CSR’ research
from an Austrian perspective could investigate stream has recently made a very important contri-
inter alia asymmetric future expectations among bution by encouraging a wider discussion of cor-
individual managers with regard to non-market porate political engagement in business schools
environments or the genesis of social and envi- and in mainstream business journals. Inspired
ronmental innovations in companies as a result of by and selectively borrowed from the political
entrepreneurial/intrapreneurial decision-making. writings of Jürgen Habermas (cf. Whelan, 2012),
Insights from Austrian economics have informed Scherer and Palazzo (2007, 2011) offered a nor-
the micro-level perspective of the resource-based mative political CSR conception, portraying a vi-
view in strategic management (Foss and Ishikawa, sion of a global society in which non-state actors
2007; Kraaijenbrink, Spender and Groen, 2010) legitimately provide public goods to satisfy hu-
and, conversely, there may be much value in man development needs. They adopted the Haber-
applying Austrian economics to inform the masian political concept of ‘deliberative democ-
micro-foundations of non-market behaviour. racy’ as a way of addressing the legitimacy gap
created by the involvement of non-state actors in
political decision-making. Scherer and Palazzo’s
Political science and non-market research
conception has attracted considerable follow-up
There is a long scholarly tradition pertaining to the work (e.g. Levy et al., 2016; Lock and Seele, 2016;
investigation of the interactions between business Scherer et al., 2016).
interest groups and politics (Gerschenkron, 1943; However, there was a notable absence of po-
Schattschneider, 1935) and, specifically, company- litical scientists in political CSR debates, Haber-
level CPAs (for an early review, see Shaffer, 1995; masian ideas were incompletely adapted and nor-
for a review of the recent CPA literature, see mative political CSR scholarship failed to offer

© 2017 British Academy of Management.

568 J. G. Frynas, J. Child and S. Y. Tarba

any predictive power (see the critique by Whelan, strategies, not least since the development of non-
2012). The lack of involvement of political scien- market resources by companies has been shown
tists manifested itself, for example, in the axiomatic to be linked to long-term cooperative interactions
misconception of this literature with regard to the and reciprocity by the actors involved (Frynas,
decline of state power as a key explanation of Mellahi and Pigman, 2006; Sun, Mellahi and
non-market strategies, despite evidence from po- Thun, 2010). In line with those historians who have
litical science that state power vis-à-vis companies pointed to the benefits of robust longitudinal his-
remains strong and is a prerequisite for success- torical case studies in business research (Carr and
ful economic globalization (e.g. Evans, 1997; Kim, Lorenz, 2014; Jones and Khanna, 2006), we think
2013; Micklethwait and Wooldridge, 2014; Weiss, that non-market strategy research could fruitfully
2000). utilize such studies to investigate how companies
We are left with the impression that political the- acquire, integrate and sustain political and social
ory has still failed to fulfil its full promise with re- resources and how non-market strategies evolve in
gard to informing non-market scholarship. Going the long term.
beyond their function in business ethics research, As Morck and Yeung (2007, pp. 358−359) sug-
social contract theories could be applied to study, gested, historical evidence has the great merit of
for instance, how the strength of the social contract uncovering the direction of causality, given that
between the state and its citizens across a multi- ‘any causal explanation must be consistent with
national company’s different host countries serves both time series and cross-sectional variation’. Ro-
to either legitimize or delegitimize non-market bust historical case studies can be instrumental
strategies and affects the success and failure of in understanding causality, especially if abundant
such strategies. Going beyond normative political case studies are available across a panel of data.
CSR research, Habermasian ideas could help us By extension, historical research could help to
to understand, inter alia, how different discourses address, inter alia, one of the most studied and still
around non-market issues may be manipulated by ambiguous concerns in non-market strategies: the
the media, the companies and governments with nature of the non-market strategy−performance
different vested interests, yielding deeper insights link (cf. Mellahi et al., 2016). Historical case stud-
that are currently unavailable through applied lin- ies of a large number of companies could help us to
guistic analysis. In more general terms, insights confidently answer the question obscured by statis-
from political theory and international relations tical data: whether non-market strategies lead to
can help to explain political changes at the do- positive organizational performance or − as sug-
mestic and global levels that affect the non-market gested by some writers − that it is actually above-
arena inter alia much beyond the currently popu- average organizational performance that enables
lar institutional theory that is unable to effectively managers to spend corporate funds on non-market
explain the structural causes of global institutional initiatives, often as personal perquisites.
changes (cf. Wood, Dibben and Ogden, 2014). The very few available journal articles on CPAs
and CSR that painstakingly utilize evidence from
historical archives (Decker, 2011; Frynas, Mellahi
History and non-market research
and Pigman, 2006; Harvey, 2016) point to the po-
Business history directly informed the birth of tential of historical sources for advancing non-
some business disciplines in the 20th century in market research. Frynas, Mellahi and Pigman’s
that detailed historical evidence informed inter alia (2006) historical evidence on the political activities
John Dunning’s OLI paradigm in international of British oil companies under colonialism demon-
business (Jones and Khanna, 2006) and Alfred D. strates how archival sources (e.g. confidential
Chandler’s ideas in strategic management (Witzel, letters and memos) can tell us what motivated gov-
2012, pp. 164−165). However, as the influence of ernment officials to support some business inter-
business history has gradually waned in business ests, which can provide a more honest picture of
and management generally, its contribution to the personal motivations that would be scarcely possi-
development of non-market strategy scholarship ble through the use of interviews. Harvey’s (2016)
has also been negligible. historical case study of coal mining safety in 19th
We believe that historical evidence could signif- century Britain demonstrates the closeness of so-
icantly enrich our understanding of non-market cial responsibility concerns and the political ties

© 2017 British Academy of Management.

Non-market Social and Political Strategies 569

of companies, which can provide a comparative Liedong, Mellahi and Rajwani show that the effect
reference to today’s ahistorical debates on politi- of MPTs on risk exposure is moderated by public
cal CSR. History has surely much to offer to non- affairs functions, but contrary to the extant liter-
market scholars. ature there is no corroborative evidence of com-
plementarity between MPTs and CSR – contrary
to the assumptions of previous scholars such as
Contributions in this special issue den Hond et al. (2014) and Rehbein and Schuler
(2015).
The first paper in our special issue by Bod- Drawing on the resource dependence theory
dewyn and Buckley (2017) provides a new take and the resource-based view, the fourth paper by
on transaction cost economics in conjunction with Ahammad, Tarba, Frynas and Scola (2017) inves-
relational-model theory, which helps to provide tigates the interactions between market and non-
an explanation of how goods can be obtained market activities of firms in the context of the
from others without using transactions – namely post-merger integration phase in cross-border
through non-contractual reciprocity. The authors mergers and acquisitions (M&As). Based on a
demonstrate how the concept of reciprocity can cross-country survey of 111 M&A practitioners,
provide a fruitful way for integrating social and po- the authors went beyond current research on non-
litical strategies given that CSR strategies such as market strategy in M&As by considering both po-
philanthropy and CPA strategies such as lobbying litical and social aspects of non-market strategy
share the feature of donating valuable resources to in their research design. The authors concluded
non-market recipients. The contribution by Bod- that, among other things, adaptability in the non-
dewyn and Buckley (2017) is particularly valuable market environment is positively correlated with
as it allows for future researchers to investigate the adaptability in the market environment, and in
interactions between social and political aspects of turn adaptability in the market environment leads
non-market strategy with a novel approach at the to positive organizational performance of a cross-
micro-level. border M&A, thus providing further support for
The next paper by Shirodkar, Konara and the value of the alignment between market and
McGuire (2017) utilizes the institutional theory non-market activities and filling a gap in the extant
in tandem with the organizational imprinting lens literature on the market−non-market interactions
to contend that MNEs founded in countries with in post-merger integration.
stronger regulatory institutions are likely to spend In different ways, these four papers fulfil the
more on lobbying in a host country compared to aims of this special issue and help to provide
MNEs founded in countries with weaker regula- novel insights for non-market research. The Bod-
tory institutions. While institutional theory cannot dewyn and Buckley (2017) paper demonstrates
explain why MNEs act on the basis of some in- how a theory from economics (i.e. transaction
stitutional influences but not others, the imprint- cost economics), which has already been used in
ing theory provides a missing explanation for why non-market research for a long time, can provide
home-country institutional influences may imprint very novel insights, while the paper by Shirodkar,
themselves on organizations. In general terms, this Konara and McGuire (2017) demonstrates how
paper demonstrates how non-market strategy re- a theoretical lens with origins in biology (i.e. im-
search can benefit from applying theories with printing theory) that has rarely been mentioned
origins in the natural sciences (imprinting theory in non-market research can yield key missing in-
originated in biology) with regard to providing sights, too. In more general terms, we think that
a better understanding of the evolution of non- both economics and biology may still have much
market strategies. to offer non-market researchers – we can think of
The third paper by Liedong, Mellahi and Austrian economics or the theory of autopoiesis,
Rajwani (2017) integrates social capital and in- for example. But ultimately, we think that non-
stitutional theories to investigate the efficacy of market researchers would greatly benefit from ac-
MPTs and CSR in institutional risk reduction. tually collaborating in joint research projects with
Using survey data from 179 firms in Ghana, the non-business specialists, who will inevitably have
authors find that, whereas CSR reduces institu- a superior understanding of non-business theories
tional risk exposure, MPTs do not. Furthermore, and methodologies. We believe that we need to

© 2017 British Academy of Management.

570 J. G. Frynas, J. Child and S. Y. Tarba

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(2017) provide some novel insights on the integra- formance of government affairs subsidiaries: a study of or-
tion of social and political strategies and the inte- ganisation design and the social capital of European govern-
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 574 J. G. Frynas, J. Child and S. Y. Tarba

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Jedrzej
˛ George Frynas is Professor of CSR and Strategic Management at Roehampton Business
School, University of Roehampton, London, UK. He is the author or co-author of several books,
including Beyond Corporate Social Responsibility – Oil Multinationals and Social Challenges (Cam-
bridge University Press, 2009) and Global Strategic Management (3rd edition, Oxford University Press,
2014), and he published in leading scholarly journals such as the Journal of Management, Strategic
Management Journal, International Journal of Management Reviews and African Affairs.

John Child is Professor of Commerce at the University of Birmingham and Professor of Management
at Plymouth University, UK. In 2006, he was elected a Fellow of the British Academy [FBA]. His
papers have appeared in many international journals. Among his 24 books, Corporate Co-evolution, co-
authored with Suzana Rodrigues, won the 2009 Terry Book Award of the Academy of Management.
His current interests focus on hierarchy in organizations and society, and the internationalization of
SMEs.

Shlomo Y. Tarba is a Reader (Associate Professor), Head of Department of Strategy & International
Business, and a member of Senior Management Team at the Business School, University of Birming-
ham, UK, and a Visiting Full Professor of Strategy at Coller Business School, Tel-Aviv University,
Israel. His research interests include agility, organizational ambidexterity, cross-border mergers and
acquisitions, and resilience. Dr. Tarba has published in the Journal of Management, Journal of Orga-
nizational Behavior, Human Relations, Academy of Management Perspectives, California Management
Review, Human Resource Management, British Journal of Management, Journal of World Business and
others. His consulting experience includes biotechnological and telecom companies, as well as industry
associations such as the Israeli Rubber and Plastic Industry Association, and the US–Israel Chamber
of Commerce.

© 2017 British Academy of Management.

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