Abstract

This study attempts to establish the importance of firm-level interactions with sociopolitical stakeholders in explaining firms prospects for survival. Institutional arguments are proposed to explain the effects of internal structures-both organizational and phenomenological-on firms sociopolitical relational strategies, whereas arguments grounded in the stakeholder view of the firm are advanced to explain effects of sociopolitical stakeholder relations on firm performance. Findings indicate that firms tended to adopt cooptative relationships with sociopolitical stakeholders. Furthermore, firms cooperativeness toward sociopolitical stakeholders had little effect on financial performance but, under some conditions, had positive effects on social performance. Implied is that markets may not be an effective governance mechanism to ensure firms alignment with democratic institutions in a plural society and that public policies may be needed to address these failures.