The internal limits to firms' nonmarket activities

It is well documented that firms develop nonmarket strategies to try to shape public policy changes to their advantage. But are there no limits to this? This paper argues that there is in fact an important limitation, internal to the firm, which comes from the necessity for firms to integrate market and nonmarket activities. Because the two types of activities are not always complements but sometimes substitutes, firms end up giving up part of their nonmarket activities to avoid restricting the development of their market strategies. This argument is tested in the context of the European telecommunications industry. Results suggest that there is reasonable ground for optimism regarding the potentially negative influence that firms' nonmarket activities might play in a democracy. European Management Review (2008) 5, 165-174. doi: 10.1057/emr.2008.16