This research investigates the mechanism driving firms' engagement in corporate political activity (CPA). Based on the behavioral theory of the firm, a mediation model is developed, incorporating organizational slack, entrepreneurial orientation (EO), and CPA. Using data from 303 Chinese firms, the study finds that EO mediates the relationship between slack and CPA. Financial slack is more impactful than operational slack in developing capabilities. The two EO sub-dimensions (managerial attitude and entrepreneurial behavior) exhibit heterogeneous mediation effects. Managerial attitude also mediates the effect of entrepreneurial behavior on CPA. This study contributes to the understanding of CPA antecedents and engagement mechanisms, extending the behavioral theory of the firm.

Yanyan Li, Yu Gao, Shanxing Gao