Book Description

Scholars and the public alike have long shared concerns about corporate influence on sovereign states' regulatory powers. However, despite the documentation of some well-known cases of corporate interference with government regulation, an investigation of the overarching mechanism that drives both corporations' willingness and ability to shape regulatory processes is lacking. This dissertation builds on Stigler (1971)'s insight that government regulation is often a corporate demand because of its potential to create an external environment conducive to private benefits. The proposed argument posits that highly innovative firms within complex industries are more likely to support regulatory initiatives proposed by governments, both at the domestic and global levels, because these firms have an interest in locking in a favorable regulatory environment for the exercise of their competitive advantage over rivals. Such support by innovative firms should accelerate the adoption and spread of regulations across countries. On the other hand, less innovative firms within low-complexity industries should be more likely to try to delay or block regulation, thus contributing to slower regulatory processes. I employ a variety of novel data sources to test a series of observable implications derived from this theory at the levels of analysis of global industries, domestic industries, individual firms and specific regulations. I estimate statistical models that leverage the measurement of not only the likelihood of corporate influence on regulation and the direction of such influence, but also of its effects on the timing and pace of regulatory initiatives. I also employ qualitative evidence obtained from interviews and from the analysis of primary and secondary sources to illustrate the mechanism proposed. Results largely corroborate the positive relationship between corporate innovativeness, support for regulation and the acceleration of global regulatory processes. They also show that even though less innovative firms can effectively delay governments' regulatory efforts, such effects can be limited and temporary. These results imply that solutions for complex global problems in areas such as environmental protection and public health can be facilitated by committed governments and innovative corporations. However, by devising policies that benefit innovative firms, governments might end up over empowering already large and politically influential corporations