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Integrated market and nonmarket strategies: Political campaign contributions around merger and acquisition events in the energy sector

  1. Guy L. F. Holburn1,*,
  2. Richard G. Vanden Bergh2

Article first published online: 15 MAY 2013

DOI: 10.1002/smj.2096

Additional Information

How to Cite

Holburn, G. L. F. and Vanden Bergh, R. G. (2013), Integrated market and nonmarket strategies: Political campaign contributions around merger and acquisition events in the energy sector. Strat. Mgmt. J.. doi: 10.1002/smj.2096

Author Information

  1. 1

    Richard Ivey School of Business, University of Western Ontario, London, Ontario, Canada

  2. 2

    School of Business Administration, University of Vermont, Burlington, Vermont, U.S.A.

*Correspondence to: Guy L. F. Holburn, Richard Ivey School of Business, University of Western Ontario, 1151 Richmond Street North, London, Ontario N6A 3K7, Canada. E-mail: gholburn@ivey.uwo.ca

  1. GUY L. F. HOLBURN and RICHARD G. VANDEN BERGH contributed equally to this paper.

Publication History

  1. Article first published online: 15 MAY 2013
  2. Accepted manuscript online: 1 FEB 2013 03:54AM EST
  3. Manuscript Accepted: 5 JAN 2013
  4. Manuscript Revised: 18 OCT 2012
  5. Manuscript Received: 6 MAR 2012

Funded by

  • The Suncor Energy Foundation
  • The Social Sciences and Humanities Research Council of Canada
  • University of Vermont

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Keywords:

  • nonmarket strategy;
  • political campaign contributions;
  • regulation;
  • mergers and acquisitions;
  • electric utilities

We examine how firms use political strategies to protect economic rents created by mergers and acquisitions against dissipation by regulators. In regulated industries, regulators can impose costly merger conditions, for instance consumer rate reductions in the utilities sector, thereby reducing shareholder gains. We investigate empirically whether and how firms use election campaign contributions to politicians as a method of influencing regulatory merger approvals. In a statistical analysis of campaign contributions by all electric utilities from 1998 to 2006, we find that utilities increased their contributions in the year before they announced a merger and that merging utilities increased their contributions more in states with greater political party competition. Our findings contribute to political strategy research by providing novel evidence that firms integrate market and nonmarket strategies. Copyright © 2013 John Wiley & Sons, Ltd.

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