Lobbying is a positive driver of firm performance and is likely to continue to be used by companies, however, our findings also reveal that there are costs to firm lobbying that arise when accounting for customer effects.

1. Shedding Light on the Dark Side
of Firm Lobbying:
A Customer Perspective
Vadakkepatt, Arora, Martin, and Paharia (2021)

2. Background
• Lobbying is a critical mechanism through
which firms influence policy makers.
• Lobbying expenditures have grown in
the past two decades and an increasing
number of firms now have government
affairs functions.
• Importantly, past studies have shown
that lobbying results in increased firm
value, generally through paths that are
not customer focused.
Vadakkepatt, Arora, Martin, and Paharia (2021)

3. Key Takeaway 1
• Lobbying reduces firm customer satisfaction
and therefore reduces the positive impact of
lobbying on firm value.
• The negative effect of lobbying on customer
satisfaction is because the dual focus on
regulators and customers leads to customer
focus loss.
Implication: A firm’s non-product market
strategy can influence its product market
performance because companies might be
unable to simultaneously balance two disparate
activities.
Vadakkepatt, Arora, Martin, and Paharia (2021)

4. Key Takeaway 2
• A marketing CEO, firms’ resource allocation on marketing
activities, namely advertising and R&D spending, and product-
issue lobbying can reduce the negative effect of lobbying on
customer satisfaction.
Implication: Firms have access to customer-focused strategic
levers which could be used to minimize the negative effect of
lobbying on customer satisfaction.
Vadakkepatt, Arora, Martin, and Paharia (2021)