Week 5 - Nonmarket Strategy

• Bach and Allen (2010)

  The IA^3 Framework

  1. Issue —> Actors
  2. Interests —> Arenas
  3. Information —>Assets
• Bach and Allen (2010)

  4 factors driving success of NM strategy

  1. Multiple audiences
  2. Globalisation (e.g., use social media)
  3. New regulations
  4. Competitive edge
• Bertrand (2014); The Revolving Door

  The revolving door highlights the move of politicians from politics to business

  • It is not what they work with, it is who they work with
  • More connections = premium
  • The federal lobbying industry is worth $4bn a year
• Baron (2012); Issue life cycle

  • Identification --> Interest Formation --> Legislation --> Administration --> Enforcement
• Baron (2012); Issue life cycle

  Firm Responses:

  Pro-active --> Anticipatory --> Active Response --> Damage Control
• Nonmarket Strategies:

  1. Representation: Can mobilise stakeholders for non market action
  2. Majority-Building: Recruits voters for petitions etc
  3. Informational: Lobbying, giving out notices, public advocacy
• Non-market forces that limit strategic advantages?

  1. Anti-competitive deals stopped
  2. Animal Welfare activists
  3. Strategic Compliments: Facebook banned from using WhatsApp data
• How are most issues resolved in the non market environment?

  Through government institutions with the power to set and enforce the rules of the game

  (Unlike voluntary agreements as in markets)
• Representation:


  Elected officials will seek to represent the stakeholders interests in order to be re-elected
• Majority-Building


  Recruiting the needed votes in a legislature to enact or defeat a policy proposal

  Oreskes and Conway (2015); Potential Downsides: Lobbying against climate change
• Information Strategy:


  Providing information to government officeholders

  Interest groups may provide technical information
• Issue Framing


  Proactively framing the issue helps shape the nonmarket environment:

  ‘ sharing economy’ or ‘gig economy’

  Does your product ‘provide jobs’ or is it just a car?

  Good/Bad press

  ‘Lifeline for the disabled’
• Political Capital:


  A stock variable accumulated by flows

  Strategic rersource

  Competitive advantage

  Can provide:

  1. Public Image
  2. Financial Commitment
  3. Reputational Resources
• Hung and Tse (2008)

  Guanxi:

  Durable social connections and networks a firm can use to exchange favours for organisational gain
• Marianne Bertrand, Matilde Bombardini (2014)


  Is it Whom you Know or What you Know?
• Revolving Door:


  The practice of public officials or employees abandoning public service for lobbying/business positions

  General value of a political connection = 1.43% CAR