The Importance of Nurturing Political Connections for Emerging Multinationals: Evidence from Brazil

Abstract

Literature on internationalization focuses widely on the challenges that firms face when entering new countries, leaving an opportunity to understand the role of the home country and the exchange of emerging multinational enterprises (EMNEs) with local politicians. We argue that, in the case of EMNEs, nurturing political connections with the home country government is an important driver of internationalization. We use publicly traded Brazilian firms and data covering 2006–2009, comprising years before and after the 2006 election. We measure political connections through corporate financial contribution to candidates in the 2006 election. We find that politically connected firms show greater levels of internationalization than their non-connected counterparts when comparing before and after the election. Our results suggest that EMNEs pursue connections with political actors within their home country's institutions in order to reinforce their international position.

Citation

Bandeira-de-Mello, R., Fernanda Arreola, M. and Marcon, R. (2012), "The Importance of Nurturing Political Connections for Emerging Multinationals: Evidence from Brazil", Hadjikhani, A., Elg, U. and Ghauri, P. (Ed.) Business, Society and Politics (International Business and Management, Vol. 28), Emerald Group Publishing Limited, Leeds, pp. 155-171. https://doi.org/10.1108/S1876-066X(2012)0000028015