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Insecurity versus immaturity: estimating the link between organizational age and indirect risks

Ummad Mazhar (Suleman Dawood School of Business, Lahore University of Management Sciences, Lahore, Pakistan)

Journal of Economic Studies

ISSN: 0144-3585

Article publication date: 28 July 2020

Issue publication date: 9 April 2021

67

Abstract

Purpose

This study explores the role of firm age as a mediating variable in the link between performance and the risk of terrorism. Theoretically, there can be vulnerabilities, liabilities or learning effects associated with age.

Design/methodology/approach

The empirical strategy uses randomness in the occurrence of successful terrorist incidents to estimate the hypothesized link in a sample of 1,600 Pakistani firms.

Findings

The results suggest a significant effect of terrorism for organizations lying beyond the 50th percentile of the age distribution. In addition to relevant controls – like size, ownership and location effects – the baseline results withstand alternative empirical specifications and the use of instrumental variables.

Originality/value

The study helps us understand the role of firm age in its performance, taking into account the presence of risks posed by weak law and order.

Keywords

Acknowledgements

The author is grateful to the Editor Mohsen Bahmani-Oskooee and anonymous referees for useful comments and suggestions. All the remaining errors belong to the author aloneCompliance with ethical standards: This study was not funded by any grant.Conflict of interest: The author declares no conflict of interest.

Citation

Mazhar, U. (2021), "Insecurity versus immaturity: estimating the link between organizational age and indirect risks", Journal of Economic Studies, Vol. 48 No. 3, pp. 616-640. https://doi.org/10.1108/JES-02-2020-0089

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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