Political Activities of Foreign Multinational Corporations in the United States

The aim of this dissertation is to understand the political interests and activities of foreign multinational corporations (MNCs)in the United States. Foreign firms have strong incentives to influence US policies, as these policies heavily impact the firms’ existing or potential sales and investment. While certain US laws restrict foreign participation in political activities, domestically incorporated foreign firms have equal standing with American firms under US federal election and lobbying laws. Therefore, I argue that foreign firms may create new subsidiaries in the US or utilize existing subsidiaries as their domestic political agents, as a way to access and influence US policymakers. I call this phenomenon ‘political foreign investment.’ In the following chapters, I provide evidence in support of this theory. For instance, in “Foreign Direct Investment in Political Influence,” I demonstrate that majority foreign-owned subsidiaries, relative to American firms, are more likely to sponsor Political Action Committees and give a greater amount of campaign contributions to federal candidates. In “Foreign Lobbying through Domestic Subsidiaries,” I similarly find that majority foreign-owned firms tend to lobby more often and spend more on lobbying than American firms. The positive association between foreign ownership and political activity in the two papers holds after controlling for firm size, industry, state, and the extent of global integration. Moreover, I demonstrate that features of the foreign parent MNCs explain the outsized political activities of the domestic subsidiaries. Finally, in “Political FDI through Cross-border M&A” I conduct within-firm panel analyses showing that foreign acquisition of domestic firms increase their PAC and lobbying activities. Collectively, this dissertation highlights the political role of foreign direct investment, and sheds light on an understudied mechanism of foreign influence in the US. Also, the disproportionate political activities of the domestic subsidiaries raise normative questions on whether loopholes in US laws are circumvented by foreign interests.PhDPublic Policy & Political ScienceUniversity of Michigan, Horace H. Rackham School of Graduate Studieshttp://deepblue.lib.umich.edu/bitstream/2027.42/162954/1/leejieun_1.pd