The Role of External Actors in Strategic Management

It is widely noted in academic literature that companies relationships with their environment are characterized by mutual influence and interdependence. However, the nature of this relationship, especially the concrete effects external actors have on the various elements of corporate strategy, is not yet fully examined. This thesis, therefore, characterizes non-market external actors and their influence on firms configuration. Pressures exerted by the government are found to be the most important and it is often difficult for companies to deal with them. In order to show possible reactions to these pressures, this thesis classifies strategic responses and summarizes the literature on corporate political activity (CPA). Based on Hillman, Keim, and Schuler s (2004) framework, hypotheses about CPA are proposed and tested using data from a survey conducted among 23 German electricity suppliers. Findings indicate that pursuing a relational approach, participating collectively, being proactive, and integrating both market and political strategy all improve the effectiveness of CPA on public policy in this industry.