Causal factors for Developing Non-market Strategies at the Firm and Institutional Level: Findings of a Systematic Review

Objective Companies are increasingly embracing corporate social responsibility (CSR) and corporate political activity (CPA). It has been observed that some companies have established an independent unit, referred to as the political, social responsibility, or non-market unit. However, the impact of non-market actions on company performance has not always been positively reported in the literature. When looking for a way to explain the strategic orientation of a non-market activity in the literature, it is observed that no method has been proposed to distinguish strategic non-market activity from stand-alone ones. Even more concerning, it is unclear from this literature which factors lead to the development of non-market strategies. Referring to these facts, this research aims to identify the factors that lead to the development of non-market strategies by firms to leverage them to propose a pattern to explain the strategic orientation of non-market activities. Methodology This is a systematic review that presents a new configuration of existing knowledge to understand the issues that result in the development of non-market strategies by identifying clues from previous studies and combining them into a cohesive whole. We selected 101 articles that provide insights into the research problem within the broad, multi-dimensional, and underdeveloped non-market literature. Clues were extracted using a retroduction/abduction approach. The coding of firm-level and institutional-level factors was conducted through qualitative content analysis employing thematic analysis. This process began with open coding of article content and concluded with the identification and synthesis of broader themes and meta-themes encompassing related themes. Findings The main findings of this research are the categorizations of issues at the firm and institutional levels that potentially lead to the development of non-market strategies. Key firm-level themes include: lack of competitiveness, complementing competitive advantage, national competitive advantage, institutional risk management, management of external stakeholders (legitimacy), organizational mission and values, and agency problems. The corresponding meta-theme for these issues is “the institutional costs of the transaction.” Similarly, key institutional-level themes comprise: rent seeking, market failure, government failure, political risk, and ethics. The meta-theme for these themes is “the management of institutional context.” Conclusion Based on the findings, this research critiques the dominance of sociological institutional theories within the institutional discourse on non-market strategy and emphasizes the need to foreground economic institutional theories in this context. Furthermore, this study introduces a typology of transaction costs and explains it through the meta-theme “institutional costs of the transaction.” Building on this typology, it proposes a framework for an integrated market and non-market strategy at the level of a firm’s macro-orientations. This framework can also be used to explain the strategic orientation of non-market activities. In doing so, this research advances the scientific discourse on non-market strategy by identifying the causal factors that lead to its development at both firm and institutional levels, and by establishing a foundation for understanding the strategic orientation of non-market activities as part of an integrated strategy.