The Cost of Dancing with the Government: A Conservation of Resources Theory of Political Networking and CEO Burnout

Abstract

Although prior research on the dark side of corporate political activity (CPA) has examined the negative impact of CPA on firms from the perspective of the macro cost of CPA (i.e., organizational loss) and the self-interested motives of executives (i.e., personal gain), it has largely overlooked the negative repercussions of CPA for individuals intimately engaged in that process (i.e., personal loss). Drawing on the conservation of resources (COR) theory and focusing on Chief Executives Officers (CEOs) who engage in political networking (PN), we investigate how PN affects CEO burnout. We conceptualize PN as a form of relational exchanges between firms and political entities, positing that PN entails substantial resource depletion for those deeply involved, primarily due to significant ethical and moral challenges (i.e., identity threat). As PN intensifies, CEOs are compelled to allocate more time, effort and energy to navigate these escalating challenges, consequently exacerbating CEO burnout. Through the analysis of a 2-year matched survey of CEOs and comprehensive archive data, we find robust support for our hypothesis. Furthermore, our findings suggest that CEO altruism and institutional knowledge weaken the relationship between PN and CEO burnout, indicating that individual intentions to benefit the collective and the ability to navigate such networking practices alter CEOs’ perceived identity challenges. Our study contributes an individual-level resource-depletion perspective of CPA and cautions against the propensity of CEOs to engage in CPA driven by Machiavellian logic.