Unpacking firm effects: modeling political alliances in variance decomposition of firm performance in turbulent environments

In this paper, firm heterogeneity in turbulent environments is addressed. It is argued that previous studies have not taken into account effects of a turbulent environment, like the Brazilian context, in which firms must face a weak and erratic government. In such an environment, the large portion of variance usually attributed to firm effects may be explained, not by the usual assumptions of mainstream scholars, but by a more 'political' view of firm differences, namely, the ability to manage valuable political alliances. To account for these differences, a multivariate performance measure wa...