The Social Network and Washington Access

At UCLA, I sometimes teach at the business school.  As far as I know, until recently the business school curriculum has not emphasized how companies influence government policy to create “rules of the game” that help that company.  So, in the case of Google or Facebook, what policies can the Obama Administration enact that will help them or hurt them?   I started to think about this after reading today’s NY Times article about Sheryl Sandberg’s huge payoff from the Facebook IPO.  She is clearly a brilliant Harvard person (She was one of Dr. Summers’ stars) but what does she do for Facebook?  How big a part of her job is connecting with government VIPs?  $1.6 billion is a big payoff.  I know she was an Econ major at Harvard.  How much of her success is due to her wise choice in majors?    Economists have estimated the value of political connections to firms.  Here is one of the best studies by Ray Fisman.

My theory is that Google and Facebook are well aware that Microsoft under-invested in “playing nice” with Washington in the early 1990s and they are determined to not make the same mistake.

Author: Matthew E. Kahn

Professor of Economics at UCLA.

2 thoughts on “The Social Network and Washington Access”

  1. The New Yorker ran an article last summer on what Sheryl Sandberg does for Facebook: . In short, she saved their bacon by getting them organized as a business. For that she deserves some percentage of the IPO loot. Whether that measures in the billions is not up to her, or a reflection on her alma mater.

    She’s clearly alert to the politics of FB’s position these days – she recently hosted a fundraiser for the President, along with Lady Gaga (who was a student at a summer math camp with Mark Zuckerberg, during high school days.) But that has not been all or even the most important part of her job.

  2. “a brilliant Harvard person (She was one of Dr. Summers’ stars)”

    Well, OK then. Why not? Definitely good enough. But I’d be even more impressed if she were a brilliant Berkeley, Bruin, or Chicago person. And totally awed if she could combine, say, Harvard-UCLA, Chicago-UCLA, Princeton-Harvard-Chicago, Yale-Harvard-Cambridge-UCLA (I think that’s called hitting for the cycle!). That would be the cat’s pajamas, for sure.

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