This research investigates the relationship between CPA and CFP and the
complementary interaction effect as moderators of the other non-market strategy CSR
through a quantitative approach. We analyze 584 firms gathered from the Fortune 500 list between the years 2010 and 2016. Although there are tremendous existing studies on non-market strategies and their impact on firms’ performance, scholars have not achieved consensus yet. Building on RBV theory, we argue that both CPA strategies (aggregated CPA or individual CPA strategies) positively influence CFP because the firms operate their political resources to form substantial competitive advantages leading to higher performance. We also expect the aggregated CPA would have a stronger impact than individual strategies, namely information strategy and financial incentives (Barney, 1991; Chen et al., 2015; Baron, 1995; Schuler et al., 2002). Our findings present a positive relationship between all the CPA strategies and CFP.
However, the aggregated CPA strategy does not always work better than individual strategies when looking at direct relations with different measurements of CFP. Future research could look into different dimensions of CPA strategy as well as CFP for a comprehensive examination.
To examine CSR's interaction effect on the CPA-CFP relationship, we introduce the stakeholder theory to add to the RBV theory. We first compare the external CSR and internal CSR (Tang et al., 2012; Brammer et al., 2007). We
hypothesize that CSR positively impacts the effect of CPA on CFP and external CSR has stronger positive effect than internal CSR by arguing that the external
stakeholders, by the trust generated from the external CSR, could increase the
political access based on the Stakeholder theory (Freeman, 1984; Liedong et al., 2015;
Orlitzky et al., 2003). However, our findings do not provide any statistical evidence
for the interaction effect of external CSR and internal CSR on the CPA-CFP relationship. The reason may be that the conflicts of strategic targets between CSR and CPA offset the interaction. To further analyze CSR’s moderating impact, we combine the industry types of B2C and B2B and predict that higher visibility of the CSR activities in the B2C industry will influence more positively on CPA-CFP relation than CSR in B2B (Bowen, 2000; Hoejmose et al., 2012). Nevertheless, the results of our study are opposite to the formulated hypotheses. Our findings show a negative moderating impact of CSR in B2C and no evidence of CSR’s interaction effect in the B2B sector, indicating that higher exposure possibly leads to higher risks.
Therefore, we suggest that future researches should work on more CSR dimensions or test the moderating impact of CPA on the CSR-CFP relationship.
All in all, we conclude that the CPA strategy could increase firms’ financial performance. However, predominant findings present that CSR does not play an interactive role in the CPA-CFP relationship, only CSR in the B2C industry shows a negative interaction. This research paves the way for future researches to reconsider the interrelationship between non-market strategies, CSR and CPA, and their connections with CFP.
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