Performance effects of stakeholder interaction in emerging economies: evidence from Brazil
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Firm survival in emerging economies is often related to having access to valuable resources that are in stakeholders' hands. However, the literature on strategy in emerging economies provides scant information on the efficiency of acquiring stakeholder resources and its effect on firm performance. We investigated the stakeholder interaction effects on performance of domestic firms competing in an emerging market (Wright, Filatotchev, Hoskisson, & Peng, 2005) from a contractual perspective (Williamson, 1985). We argue that interacting stakeholders in a contractual set yield synergistic governance structures that allow firms more efficient access to external resources. Using a sample of 267 firms in Brazil (secondary data), we explored different patterns in stakeholder contracting with community, government, top management, and employees. A three-stage analysis process was devised: cluster analysis, general linear model estimation and verification tests. Results suggest that stakeholder interaction has a positive impact on firm performance. The conjoint effect of government and community contracts was found to yield superior firm performance as they provide a basic structure for contracting with other interacting stakeholders.