Managerial-induced Uncertainty and Firm Performance: a Transaction Cost Approach

Nobuiuki Ito (Ibmec São Paulo)

Abstract: This paper investigates the influence of managerial-induced uncertainty on firm performance through a transaction costs economizing lens. I define managerial-induced uncertainty as frequent and hard to predict changes in the interaction rules between a seller and buyer that are generated by a trading party managerial action. In the presence of managerial-induced uncertainty, the costs of transactions are higher, impairing the economic activity, and resulting in lower performance levels. Using a dataset of stadium attendance and revenues in matches of the major soccer championship in Brazil, the empirical results point to negative effect of manager’s deliberate and intense changes in price and place on attendance and revenues. The findings contribute to advancements in Transaction Costs Economics (TCE) literature, as well as the to the link between TCE and management literatures.

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