Are we aligned on political activity? An examination of the alignment of risk assessment between the German automotive industry and related lobbying associations – with special attention to geopolitical risks from worsening relations with China.

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Journal Title

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Volume Title

School of Business | Master's thesis

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Date

2024

Department

Johtamisen laitos

Major/Subject

Mcode

Degree programme

Global Management

Language

en

Pages

65 + 21

Series

Abstract

This thesis assesses whether or not the risk assessment conducted by players in the political marketplace, who engage in both individual and collective corporate activity, are in line, given the risk assessment can be interpreted as the underlying driver of actual engagement in CPA. It is imperative that the parties are aligned to reap the maximum benefit of their engagements. Explicitly, this thesis concerns companies within the German automotive industry (taking the position of the player engaging in individual lobbying) as well as lobbying associations that are closely related to the industry (taking the position of the player engaging in collective lobbying). Following the emergence of a number of risks of all natures that emerged in the timeframe covered in this thesis (2018-2023), the industry is currently facing, there appears to be an elevated incentive for it to engage in non-market strategies and, especially corporate political activity. Such crises come primarily in the form of (geo-)political crises, but also other recent developments can be observed to have a substantial impact on the industry’s success. The crises covered include, for example, the Covid pandemic, several wars, and a trade war between the U.S. and China, amongst many others. Given that the German automotive industry is strongly driven by exports and sourcing heavily relies on global value chains, any disruptions to international trade can vastly impact operations and harm their business models. A three-stage test is conducted to assess whether or not the risk assessments of the relevant parties are aligned. The first stage measures the relevant companies’ perceptions of risks emerging from the crises. The first stage asserts that there are proper risk assessment capabilities in place and that the relevant companies do perceive risks from the covered crises even within short timeframes. The second stage of the test examines the risk assessment made by lobbying associations with close ties to the German automotive industry. Also here, a response to the covered crises is obtained. Lastly, the third step examines the correlation between the first two steps to indicate towards a relation between the parties’ risk assessments. From the third step, no clear trend can be obtained, but correlation coefficients between the stages range from almost perfect correlations to strongly negative correlations. Thus, not acting as a clear indication for a proper alignment of interests across the board, what should alarm managers of the relevant companies to more thoroughly invest in aligning the risk assessments made by their companies and the lobbying associations representing them through collective political activity.

Description

Thesis advisor

Niittymies, Aleksi

Keywords

non-market strategy, corporate political activity, geopolitical risk, automotive, Germany

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Citation

Permanent link to this item

https://urn.fi/URN:NBN:fi:aalto-202406234806

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[gradu] Kauppakorkeakoulu / BIZ