Electronic Thesis and Dissertation Repository

Thesis Format

Integrated Article

Degree

Doctor of Philosophy

Program

Business

Supervisor

Holburn, Guy L.F.

Abstract

The non-market environment, which includes “the rules of the game” that govern economic interactions in the market, plays a central role in the ability of firms to create economic value and to sustain competitive advantage. This dissertation focuses on firms’ interactions with different elements of the non-market environment and is comprised of three essays.

Essay 1 examines the conditions under which firms reach agreements with environmental activists in regulatory agency proceedings to mutually settle disputes. The chapter argues that actions of firms will be dictated by the features of the regulatory decision-making process and the heterogeneity in the attributes of firms, activists, and the regulators. Statistical analysis in the context of regulatory proceedings in the U.S. electric utilities sector demonstrates that alongside firms and activist attributes, external pressures emanating from multiple stakeholder interests and the political ideology of regulators influence the likelihood of agreements.

Essay 2 examines how differences in the political resources and capabilities of incumbent firms and sharing economy market entrants manifest in their lobbying strategies when they compete in the non-market environment to shape regulatory entry standards. Results from a statistical analysis in the ridesharing industry in Toronto, Canada, demonstrate that the incumbent (taxicab firms) and the market entrant (Uber), targeted different types of legislators for lobbying as they seek the legislators’ support for their respective regulatory positions.

Essay 3 examines how government intervention in the management of private firms affects the performance of firms. Undertaken in the context of Chrysler’s bailout by the U.S. Federal Government in 2008, the chapter quantifies the effect of government’s intervention, which extended beyond capital injection and affected the day-to-day operations of the firm, on Chrysler and its constituent brands. Results demonstrate that all four brands of Chrysler experienced a decrease in their sales during the period of government intervention. However, this decrease was felt differentially across the brands and ranged between a 51 percent and 19 percent of average monthly sales.

Overall, this dissertation aims to expand and enrich the knowledge on strategies of firms as they navigate the uncertainties associated with the non-market environment.

Summary for Lay Audience

Research on strategic management seeks to understand both the internal competencies of firms as well as how the external environment shapes firms’ ability to perform in the market. This dissertation focuses on the interactions of firms with different elements of its external environment such as the government, regulatory agencies, and ideological stakeholders.

Essay 1 examines how firms respond to opposition they face from environmental activists, who often target firms to discourage their contentious practices. The essay aims to understand the conditions under which firms reach agreements with environmental activists, in the context of regulatory rulemaking procedures, that allow both parties to mutually settle disputes. Findings demonstrate that besides attributes of firms and activists, external pressures emanating from firms’ other stakeholders and the political ideology of regulators, factors unique to the regulatory decision-making process, affect the likelihood of agreements.

Essay 2 argues that incumbent firms and market entrants differ inherently with respect to their political endowments, on which they rely to shape industry regulations, and these differences will manifest in their political actions. Conducted in the context of Uber’s entry into the regulated taxicab industry in Toronto, Canada, this research finds that the incumbent (taxicab firms) and the market entrant (Uber) targeted different types of legislators for lobbying to seek support for their preferred policy positions.

Essay 3 examines the case of Chrysler’s bailout by the U.S. Federal Government in 2008, to quantify the impact of government’s intervention, that included involvement in Chrysler’s day-to-day operations, on its performance and that of its constituent brands. Employing a novel empirical method the study finds that Chrysler and its four brands experienced a decrease in their sales during the period of government intervention. However, this decrease was felt differentially across the brands, which I argue is a manifestation of the government’s involvement in Chrysler’s management.

Overall, this dissertation aims to expand and enrich the knowledge on strategies of firms as they navigate the uncertainties associated with their external environment in pursuit of competitive advantages in the market.

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