Ahead of our fourth annual Theory of the Firm conference, we are soliciting papers dedicated to the topic of academic lobbying.
Three years ago, the Stigler Center, Harvard Business School, and Oxford University co-organized a conference that discussed what scholars at the time described as a crisis in the standard Neoclassical theory of the firm. The premise of the Neoclassical paradigm in economics, which has come to dominate boardrooms and has largely been accepted by the courts, states that requiring managers to maximize shareholder value is good for society at large.
The shareholder view, however, assumes that firms operate within given rules. The standard economic theory of the firm is silent on the role that firms play in shaping the rules of the game under which they operate. Once we introduce the possibility that firms might lobby to change the rules of the game to their own advantage, the neoclassical theory leads to a paradox: managers are functionally obligated to subvert competition to the firm’s advantage, even when doing so is detrimental to society at large.
While the two conferences that followed the original Theory of the Firm conference dealt with the challenge of quantifying the magnitude of the distortions produced by lobbying and firms’ political activity in general, this year’s conference will turn its attention to an oft-forgotten dimension of corporate political activity: academic lobbying. If lobbying is the use of money by firms or individuals to influence political/regulatory outcomes, to what extent can corporate and individual donations to fund research be seen as a form of lobbying? To what extent do they help underwrite an unbiased information production process, versus one skewed to the advantage of funders?
Academics partake in lobbying in two ways: as recipients and as actors. Academics are recipients of corporate funding to do research. Much (but not all) of this money is channeled through institutions that try to maintain a separation between sponsors and content providers, similar to the one that exists in the newsrooms. In spite of this separation, research has shown that newspapers are affected in their reporting by advertisers. Does the same contamination exist in research? How large is it? How does it differ across academic fields? What are its welfare costs?
Scholars can also become active lobbyists, as a result of their academic aspirations, political ambitions, or commercial interests. Think tanks affiliate with academics to promote their ideas, and in so doing they also promote the visibility of the faculty they hire. Academic success can lead to lucrative employment as consultants, expert witnesses, or advocates of a product or service. While these aspirations are legal and legitimate, they can be exploited by firms to further their interest. More importantly, this process can compromise the integrity of research. Once again, how large is this contamination? How does it differ across academic fields? What are its welfare costs?
The conference is co-sponsored by the Columbia Business School, the Center on Global Economic Governance at the Columbia School of International and Public Affairs, and the Millstein Center for Global Markets and Corporate Ownership at the Columbia Law School. Ahead of the conference, we are soliciting multidisciplinary papers dedicated to academic lobbying.
The ProMarket blog is dedicated to discussing how competition tends to be subverted by special interests. The posts represent the opinions of their writers, not necessarily those of the University of Chicago, the Booth School of Business, or its faculty. For more information, please visit ProMarket Blog Policy.