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AbstractNowadays, a growing number of firms utilize corporate lobbying to advocate for more environmentally friendly policies and regulations, deviating from the traditional lobbying mainly used to minimize regulatory burdens. In this study, we investigate what motivates firms to engage in such an unusual type of lobbying—environmental lobbying. Focusing on the product strategy of firms, we suggest that firms with greater green product intensity are more likely to engage in environmental lobbying. When environmental lobbying raises environmental hurdles in the market, firms with an intensive focus on green products can bear adjustment costs with little effort, leaving other "less green" firms relatively disadvantaged under the newly regulated market conditions. Moreover, those firms can address demand-side issues more easily by lobbying the government to provide greater incentives for purchasing green products or to request subsidies that can be used to improve their cost structure. Our analyses based on the US light vehicle market indicate that, indeed, the more electric vehicles automakers sell relative to their total sale volumes, the more they will engage in environmental lobbying. We also find that this relationship becomes more salient when a firm has greater market share or originally comes from a foreign country with more stringent environmental regulations than the United States.

AbstractWe argue that a taken-for-granted category gives way to a new category when strategic behavior becomes stigmatized. As a result, even bystander firms that have engaged in similar strategic behavior, such as lobbying, will be penalized by their association with the culpable strategic behavior. The extent of their association with the culpable behavior will determine the level of punishment they receive. However, if a trustworthy third party administers a corrective measure, the affected firms can regain their lost legitimacy. The extent of their restoration is proportional to the amount of legitimacy that was lost. We provide empirical evidence for this argument by analyzing the Jack Abramoff case, one of the most notorious corrupt lobbying cases in US history. We find that bystander firms were penalized by shareholders when the corrupt lobbying was revealed. Furthermore, the penalty was more severe for bystander firms that engaged in more lobbying activities and hired more revolving-door lobbyists. We also find that the subsequent legal remedy helped the bystander firms that were penalized the most to recover the most from their losses. We confirm the theoretical notion using the Enron case as well.