The corporate political activity of MNEs under the pressures of institutional duality

The paper investigates how multinational subsidiaries develop their political strategies within the constraints of institutional duality. Based on the empirical investigation of western subsidiaries operating in the post-socialist institutional context of Hungary, I develop a model that illustrates how political capabilities – affected by institutional duality - underpin the lobbying strategy of MNE subsidiaries. The article makes a theoretical connection between the literatures on institutional duality and corporate political activity (CPA) and makes three distinct theoretical contributions. First, I transfer the analysis of nonmarket strategies from the institutional to the firm level, by opening the black box of how subsidiaries develop host country strategies. Second, by focusing on the process of how subsidiaries turn external and internal resources into political capabilities, I argue that institutional duality should be viewed as an endogenous aspect of the institutional framework, which equips firms with political capabilities, rather than an exogenous factor that constraints companies and disadvantage them in the host environment (Nell et al., 2014, Tempel et al., 2006). Third the study contributes to the theory of MNE parent-subsidiary management literature by extending our knowledge on how parent strategies affect the development of subsidiary’s political strategies.