Multinational enterprises' lobbying and foreign subsidiary performance: Evidence from the U.S. in the context of the global financial crisis

Whether corporate political activity (CPA) benefits firm performance is contested in the literature. However, the CPA‐performance relationship has been less explored in the international business context or in the context of macroeconomic shocks—notably the global financial crisis—during which multinational enterprises (MNEs) may be forced to revisit their market and non‐market strategies. In this study, we draw upon insights from the institutional theory and legitimacy perspectives to argue that the performance consequences of MNEs' lobbying in a host market are contingent upon the MNE's experience of operating in the host market, their lobbying frequency, and the subsidiary's technological intensity. The empirical analysis used to test our hypotheses is based on a panel dataset of 224 subsidiaries of foreign MNEs operating in the United States, spanning the 8‐year period 2005–2013, covering the years of the financial crisis. We find support for most of our hypotheses and contribute to the performance implications of CPA in international business contexts.