Coffee, Donuts, and Contracts: The Community Interplay of Business and Government Agencies and the Execution of Public Policy

Although management studies suggest that firms seek to enhance their outcomes by influencing government officials, evidence on the efficacy of their efforts is mixed. We propose that these inconsistent findings could result in part from research that has overlooked the role of the administrative state and how local community relations between firms and government agencies influence the implementation of government policy. Using government contract data from the United States Department of Defense, we examine how community embeddedness between firms and government agencies influences the outcomes of firms by increasing information exchange and enhancing rapport between firms’ employees and agency officials. The findings show that when firms and the contracting office are located in the same community (co-located), the relative size of awarded contracts increases; the results also reveal that this effect varies depending on the geographic distance between the firm and government agency, the similarity of community logics, and agency discretion.