The political connection influence on Brazilian business group diversification

• Autor(a) principal: Costa, Maick
• Data de Publicação: 2013
• Outros Autores: Mello, Rodrigo Bandeira de, Marcon, Rosilene
• Tipo de documento: Artigo
• Idioma: por
• Título da fonte: Revista de Administração de Empresas
• Texto Completo: https://periodicos.fgv.br/rae/article/view/30026
• topic: Business groups; political economics; diversification; political connections; transaction costs; Grupos empresariales; economía política; diversificación; conexiones políticas; Grupos empresariais; economia política; diversificação; conexões políticas

The theoretical approach based on political economics is shown to provide alternative explanations for the phenomenon of business group diversification in Brazil in relation to the approach based on transaction costs economics. Business donations to election campaigns are used as a proxy for political connections to test the political economics approach compared to the mainstream transaction costs approach. A regression model is elaborated on a fixed effect panel with a sample of 760 observations of 95 business groups in 8 years in Brazil. Strong evidence for using the political economics approach is found as a plausible alternative explanation for the diversification of Brazilian business groups. These results contribute towards showing the evidence of political issues on the preferred organizational corporate strategy for diversified companies in Brazil.