Revolvers in the Corporate Elite

• In Event: Intersections of Power, Politics, and Corporate Strategies

Abstract

How do firms employ political connections to deal with their non-market environment? We argue that while firms rely on external resources to navigate, the composition of political skill they need will be contingent on the circumstances. Further, these skills are complementary, and multiple different types of connections will improve the firm’s ability to navigate. To shed light on this, we provide the most comprehensive empirical examination of firms’ employment of former public officials — revolvers — to date. Using data on the universe of revolvers on boards and in senior management of publicly traded firms, we present three sets of findings. First, we show that revolvers are extremely prominent in corporate America: 56% of public firms employ them. Further, firms employ certain types of revolvers together, and they employ different types in response to shocks to their non-market environment. Second, revolvers take an active role in the firms, but these roles differ, depending on the revolver’s background. Therefore, the arrival of a revolver increases the firm’s propensity to lobby. Finally, we find that the arrival of a revolver increases sales, and that multiple different types yields higher returns. The sales increases are in part driven by federal contracts.

Authors

• Benjamin Egerod, Copenhagen Business School

• Jan Stuckatz, Copenhagen Business School

• Michael Mueller, Copenhagen Business School