Lobbying as a potent political marketing tool for product diversification: an examination of firm-government interaction

Government agencies can shape and impact organizations' opportunity sets and corresponding competitive environments. Therefore, firms realize that maintaining a close relationship with government agencies is crucial to create a favorable regulatory environment. Firms use lobbying as an effective method for influencing these agencies. Previous research studied the impact of public policies on firm outcomes and urged managers to understand the process of having successful relationships with government agencies. This research aims to capture the impact of firms' lobbying intensity on product diversification through firm-government agency interactions, building on the Resource-Based View. Findings indicate that higher firms' lobbying intensity is associated with higher levels of firm-government agency interactions. In addition, a greater amount of repeat firm-government agency interactions was associated with greater product diversification. The results suggest the importance of firms' lobbying intensity and firms-government interactions when seeking ways to increase firms' growth through product diversification.