Doctoral Student

Jin Hyung Kim

Jin Hyung is a doctoral candidate in the Strategy Unit at Harvard Business School. He studied management during his undergraduate study at Yonsei University in Korea. Upon graduation, he served his military duty as an Air Force officer and then worked as a management consultant at Oliver Wyman. He received his master's degree in International Affairs at Columbia University. His research examines non-market strategy of firms, particularly factors that drive firms to engage in non-market activities and non-market strategies of firms that lead to positive outcomes.

His dissertation examines corporate lobbying strategy and foreign multinational enterprises (MNEs) in the U.S. In particular, his job market paper looks at U.S. defense contracts and lobbying strategies of foreign owned defense contractors. In this paper, Jin Hyung shows that foreign MNEs with liability of foreignness, can achieve better non-market outcomes when they rely on outside political capital. Moreover, positive outcomes are driven by factors that can complement foreign defense contractors' lack of institutional knowledge and political access.

To carry out his research agenda, Jin Hyung employs econometric methods to analyze large datasets that he constructed during his doctoral study. These datasets are (1) U.S. corporate lobbying and campaign financing data with foreign ownership, (2) U.S. Department of Defense (DoD) contract award data with foreign ownership, and (3) historical lobbyists' data.

 

  1. Overview

    by Jin Hyung Kim

    A growing body of strategy and management literature emphasizes the importance of non-market strategy, not only as a stand-alone strategy but also as a part of integrated strategy in dealing with frequent regulatory change and political/regulatory actors and agencies. Nevertheless, many areas in non-market strategy remain unexplored, and empirical studies that can expand the scope of current research are needed. In particular, scant research has examined the non-market behaviors of foreign multinational enterprises (MNEs). For instance, it is expected that foreign MNEs would have varying degrees of engagement in political activities and that incentives gained from those activities in the host country would also differ by institution and by the culture of their country of origin. However, we have limited knowledge on the factors that drive foreign firms’ non-market behaviors, the strategies they use, and the outcomes of their non-market strategies. Hence, my research goal is to examine: (1) non-market strategy, particularly corporate lobbying strategy and foreign MNEs; 2) institutions and corporate lobbying; and 3) regulatory change and business-government relations.

    Keywords: Non-market Strategy; lobbying; Business & government relations; global strategy; institutions;

  2. Corporate Lobbying Strategy and Foreign MNEs

    by Jin Hyung Kim

    “U.S. Defense Contracts and the Lobbying Strategies of Foreign MNEs: The Liability of Foreignness and Make-or-Buy Decisions about Political Goods”

    Many firms engage in lobbying with the expectation that their lobbying efforts will reap benefits. However, the current literature is inconclusive about the effectiveness of lobbying, and we have a limited understanding of how foreign MNEs engage in lobbying. Thus, in my job market paper, I examine whether lobbying by foreign defense contractors leads to positive outcomes and the potential mechanism behind this process, using U.S. Department of Defense (DoD) contract data with lobbying and campaign financing data that I compiled. The defense industry is domestically driven, so foreign defense contractors hardly seem to be able to penetrate the market. Moreover, foreign MNEs suffer from the liability of foreignness, which poses challenges to acquiring and accumulating political capital in the host country. Assuming that foreign MNEs are socially less inclusive and have weaker political capital than domestic firms do, the question arises as to how and why foreign MNEs engage in lobbying, which requires a great deal of political capital, and whether they can achieve non-market outcomes. In this paper, I show that foreign MNEs can purchase political capital through outside lobbyists, a practice that enables them to achieve better contract outcomes. More specifically, foreign MNEs hire more experienced lobbyists and higher-status lobbying firms to win higher government defense contract amounts.

     

    “The Liability of Foreignness and Political Goods: An Impediment to Foreign MNEs’ Make-or-Buy Decision”

    In this paper, I look at the source of the liability of foreignness in political lobbying and identify the factors that penalize or limit the capacity of foreign MNEs to engage in lobbying in the United States. It is generally agreed that there are two sources of liability of foreignness: institutional unfamiliarity and discriminations against foreign MNEs. However, an unexplored area of research remains the actual costs foreign MNEs have to pay from the liability of foreignness and the factors that limit the capacity of foreign firms to execute certain strategies to avoid penalties in the host country. To address this gap in the literature, I use lobbying data from 1998 to 2013 to examine the lobbying fees that firms pay to hire outside lobbyists. The results clearly indicate that foreign MNEs pay higher service fees than U.S. firms, controlling for the types of lobbying services that foreign MNEs are provided. Foreign MNEs pay higher service fees because, relative to similar types of U.S. firms, they are less capable of internalizing good lobbyists with access and expertise. In other words, foreign firms are less likely than U.S. firms to acquire the necessary capabilities internally, which lead them to pay more for lobbyists and make them less capable of executing lobbying strategy. This implies that make-or-buy decisions could be driven by institutional factors that determine the relative costs or benefits of internalization. In other words, even if foreign firms are ready to bear higher costs than their domestic counterparts are, other factors play a deterring role in their internalization decisions. I have completed the data analysis for this study and am currently in the writing phase.

    Keywords: Non-market Strategy; political strategy; lobbying; make v. buy; multinational enterprise; global strategy; United States;

  3. Institutions and Corporate Lobbying

    by Jin Hyung Kim

    “Institutions and Make-or-Buy Decision of Lobbying: The Role of Sociopolitical Legitimacy on Foreign MNEs’ Lobbying Internalization”

    In this study, I examine how legitimacy comes into play in foreign MNEs’ make-or-buy decisions regarding lobbying. Lobbying is a socially interactive process. In other words, the type and degree of reciprocal interaction is defined by the relationship between two parties involved in lobbying. In particular, prior literature suggests that the legitimacy of firms is critical in the lobbying process. This is due to the fact that firms try not only to communicate with but also to exert influence on politicians whose primary interests are to get elected or reelected; as such, interacting with illegitimate or less legitimate players will penalize elected politicians in the upcoming election. Furthermore, lobbyists play a pivotal role as mediators between firms and elected politicians. As their future careers depend on how elected politicians view them, lobbyists are less likely to be associated with firms viewed as less legitimate. Hence, I argue that foreign MNEs from less democratic countries are less likely to be able to lobby elected politicians through their inside lobbying functions than those from more democratic countries. Furthermore, it would be more challenging for those from less democratic countries to internalize capable lobbyists, which makes these firms less likely than those from more democratic countries to have an inside function. Preliminary results strongly support my arguments. I have completed the data analysis for this paper, which is in the writing stage.

     

     “Corruption and Lobbying: The Degree of Home-Country Corruption and the Political Behaviors of Foreign MNEs in the United States”

    In this paper with Jordan Siegel, we explore institutional drivers of the lobbying of foreign multinational enterprises (MNEs). It is widely known and accepted that home country institutions regulate the behaviors of multinational enterprises in foreign countries. However, most literature on foreign MNEs and institutions has focused on how the cultural or institutional distance of home country institutions shapes initial foreign entry, foreign direct investment (FDI), and entry mode. Much less attention has been paid to how home country institutions regulate everyday operations of foreign MNEs, particularly their political behaviors. Therefore, in this paper, we examine how different levels of corruption in the home country influence the political engagement of multinational enterprises. Findings suggest that firms from countries that rank as suffering from higher levels of corruption, based on Worldwide Governance Indicators and the Heritage Foundation’s index of freedom measures, are less likely to engage in lobbying after controlling for country characteristics, such as economic ties between the United States and a focal foreign country. We have completed the data analysis and are working to produce a first draft of the paper.

     

    “Culture and Lobbying: Country Egalitarianism and Foreign MNEs’ Political Adaptation in the United States”

    This paper examines the culture and political behaviors of foreign MNEs in the United States. Specifically, I (with Jordan Siegel) seek to convey how culture influences and regulates foreign MNEs’ degree of political engagement in host countries. Culture has been the central tenet in international business to predict the behaviors of foreign firms. Thus, building on Schwartz’s foundational work on cultural indexes and Siegel’s prior empirical work on culture, egalitarianism, and harmony, we examine how culture influences foreign MNEs’ engagement of lobbying in the United States. Our statistical results strongly support theoretical predictions that foreign firms that come from a country with high levels of egalitarianism are more likely than those lower in egalitarianism to engage in lobbying. Specifically, foreign MNEs from countries with high levels of harmony, as well as cultural values that protect and preserve the status quo rather than change, are less likely than others to engage in lobbying. We are currently in the writing phase of this paper. 

    Keywords: institutions; make v. buy; lobbying; legitimacy; corruption; culture; multinational enterprise; United States;

  4. Regulatory Change/Business-Government Relations

    by Jin Hyung Kim

    “Sources of Learning Heterogeneity: Discontinuous Regulatory Shock and its Impact on Organizational Search Behaviors”

    Co-authoring with Jerry Kim, in this study I look at how discontinuous regulatory shock shapes organizational learning behaviors and what moderates the heterogeneous response of firms. Most literature on organizational learning argues that exploration is a better learning strategy when there is an exogenous shock because the value of existing knowledge would be deteriorated after the shock. However, sudden and discontinuous shock, such as deregulation that increases competition, could drive firms to exploit more in order to survive. Thus, we use the 1984 U.S. Drug Price Competition and Patent Term Restoration Act, widely known as the Hatch-Waxman Act, as an empirical setting to examine this question. The results indicate that pharmaceutical firms reacted to the shock differently depending on their previous learning experiences and capabilities. This is because how they perceived the shock—whether as threatening or munificent—was driven by changes in the relative value of prior learning experiences and capabilities after the shock. Therefore, heterogeneous capabilities make firms either explorative or exploitative, and this becomes the source of firms’ different learning paths and strategies. This study is complete and will be submitted for publication.

     

    “Influencing the Administrative State: Exploring the Bi-Directionality of Agency Embeddedness in U.S. Government Contracting”

    In this paper with Shon Hiatt, we tease apart bi-directionality of agency embeddedness and how U.S. defense contractors benefit from agency embeddedness. Prior literature on agency embeddedness suggests that an administrative state benefits from agency embeddedness by acquiring information and trust and through relationship building. However, in this paper, we argue that firms also use agency embeddedness to maximize their strategic outcomes by influencing regulatory agencies. Using U.S. Department of Defense contract data, we show that agency embeddedness, measured as geographic proximity, increases the amount of defense contracts. Moreover, this effect is moderated by the degree of administrative discretion of lower-level contracting offices, which is a clear indication that agency embeddedness works as a mechanism benefiting firms with higher degree of agency embeddedness. This study is complete and will be submitted for publication.

    Keywords: Business & government relations; regulations; regulatory capture; Pharmaceutical Industry; United States;