Conference Programme

Corporate political activity (CPA) is a central nonmarket strategy, yet its benefits are often assessed through firm performance outcomes that yield mixed evidence. We reconceptualize CPA as institutionally contingent insurance against social accountability. Drawing on new institutional economics, we argue that CPA’s core value lies less in shaping how rules are enforced: political engagement can expand access and increase the likelihood of regulatory leniency. This insurance logic creates a moral-hazard dynamic – by lowering expected enforcement costs in socially consequential domains, CPA can weaken deterrence and increase firms’ propensity to engage in corporate social irresponsibility (CSI). We further theorize two institutional contingencies that impact the ability of connected political actors to supply forbearance: political homogeneity, which expands the capacity for discretionary enforcement; and institutional disruption, which and reorders institutional salience and destabilizes enforcement expectations. Analyses of U.S. firms in the 2011–2020 period are consistent with these arguments, showing a positive association between CPA and CSI that strengthens under homogeneity, and attenuates during disruption. By shifting attention from market outcomes to enforcement and accountability, this study reframes CPA as a socially consequential strategy and clarifies how institutional context conditions its effects.