Social Ties and the Political Participation of Firms

It is well established that connections to government officials confer important benefits to firms. However, past work has ignored the crucial role that ties to other firms in the same industry (peer ties) also play in facilitating firms' political participation. We develop new theory that contrasts the effects of these two distinct types of social ties. We argue that peer ties facilitate collective action, most often with respect to broad policy issues that affect many firms. In contrast, we expect that direct ties to government officials (government ties) are primarily used to pursue narrow, particularistic benefits. Using a new survey of foreign- owned firms operating in the Philippines, we find that peer ties facilitate firms' political participation at the national level, where issues are more likely to affect large numbers of firms. Government ties are also valuable, though primarily at the local level, where issues are narrower in scope