ID: 17639
Authors:
Rodrigo Bandeira de Mello, Rosilene Marcon.
Source:
Revista de Administração Contemporânea, v. 9, n. n.spe1, p. 41-64, June, 2005. 24 page(s).
Keyword:
firm heterogeneity , firm performance , political strategies , turbulent environments , variance decomposition
Document type: Article (English)
Show Abstract
In this
paper, firm heterogeneity in turbulent environments is addressed. It is
argued that previous studies have not taken into account effects of a
turbulent environment, like the Brazilian context, in which firms must
face a weak and erratic government. In such an environment, the large
portion of variance usually attributed to firm effects may be explained,
not by the usual assumptions of mainstream scholars, but by a more political view
of firm differences, namely, the ability to manage valuable political
alliances. To account for these differences, a multivariate performance
measure was construed and a new factor, politics effects, has
been introduced to the usual model. Company donations for campaign funds
in elections was used as a proxy for this factor. A sample of 607
observations, of 177 firms in 15 sectors was used. Results suggest that
the presence of politics effects were found to be not significant
(using COV and Hierarchical ANOVA). However, different from previous
studies, transient industry effects appear to be more important than
stable effects. Findings also indicate that a better model specification
for turbulent environments is needed and highlight the importance of
the cost of capital.