The Contingent Value of Business Group Affiliation: The Case of Debt Financing in Brazil

Informações

Código: ESO3148
Divisão: ESO - Estratégia em Organizações
Tema de Interesse: ESO-A - Estratégia em Organizações

Autores

Rodrigo Bandeira-de-Mello, Rosilene Marcon

Resumo

Business groups are a pervasive organizational form in emerging economies. Empiricalresults showed that group affiliates outperform independent firms. However, we tested theidea that the value of group affiliation is contingent to the firm political activity level in asociety. From a sample of 332 firms in 14 industries we verified our hypothesis for the case ofdebt financing in Brazil. We gathered data on business membership and firm politicalconnections (campaign contribution and board member political participation) for twodifferent institutional settings, the second term of President Cardoso and the Lula’s firstpresidential term, covering an 8-year period. We found strong support to our contingentmodel. The difference among affiliated and non-affiliated firms concerning the leverageperformancerelationship varied whether the firm had political connections or not. The effectsof business group moderation were greater among firms with no political contacts than amongfirms possessing political connections. These conclusions seem to indicate a persistencephenomenon in Brazil despite changes in the institutional setting.

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