Abstract: Resurrection of the Robber Barons: Reassessing the Theory of the Firm
I present Wal-Mart Stores, Inc., as a case study to argue the need for a new theory of the firm to explain and predict corporate political action in democratic systems. I analyze Securities and Exchange Commission filings, corporate bylaws and proxy statements, recorded shareholder meetings, press releases, and political contribution records to answer "Who drives political strategy in the corporation?" This evaluation challenges the belief that managers separated from stockholder-owners govern large publicly traded corporations. Evidence suggests that principal-owner—controlled firms dominate politics at all levels; thus political models based on managerial theories of the firm provide poor estimates of corporate political behavior. Using Walton family, corporation, and financial institution data to exemplify how the principal-owner—controlled firm translates economic power into political currency, I conclude that dynastic families play critical roles in commerce, banking, politics, and philanthropy. Exploring why families control firms and use them for political engagement demands more interdisciplinary dialogue and research by political scientists, economists, and business historians.