Institutional environment and Business Groups' resilience in Brazil

• Published in: Journal of business research Vol. 67; no. 5; pp. 900 - 907
• Main Authors: Xavier, Wlamir Gonçalves, Bandeira-de-Mello, Rodrigo, Marcon, Rosilene
• Format: Journal Article
• Language: English
• Published: New York Elsevier Inc 01-05-2014; Elsevier Sequoia S.A
• Subjects: Brazil; Business government relations; Business Groups; Business organization; Economic theory; Financial performance; Institutional environment; Institutionalism; Latin America; Organization theory; Organizational behaviour; Political connections; Political economy; Studies; Transitions; Work environment; Brazil; Business Groups; Institutional environment; Political connections; Political economy
• ISSN: 0148-2963; 1873-7978
• DOI: 10.1016/j.jbusres.2013.07.009

This article combines the institutional theory and political economy approaches to test hypotheses about how transitions in institutional environments affect the performance of Business Groups. Its primary hypothesis is that the different types of political connections established by Business Groups have moderating effects on this relationship. A sample of 1709 observations, from 317 distinct groups operating in Brazil between 2001 and 2009, was used in unobserved effects panel data models, which included the moderating effects of political connections. Our findings suggest that the institutional environment significantly affects Business Groups' performance and that this effect is moderated by political connections, when assessed in terms of the local or federal government as a minor shareholder of the Business Group. The moderating effects of political connections assessed through campaign donations were not conclusive.