Does leadership ideology make difference in new firms creation?

• Grant number: 19/14450-4
• Support Opportunities: Regular Research Grants
• Start date: October 01, 2019
• End date: June 30, 2022
• Field of knowledge: Applied Social Sciences - Administration - Business Administration
• Principal Investigator: Paulo Roberto Arvate
• Grantee: Paulo Roberto Arvate
• Host Institution: Escola de Administração de Empresas de São Paulo (EAESP). Fundação Getúlio Vargas (FGV). São Paulo , SP, Brazil

Abstract

Our main purpose is to verify if there is a difference in the creation of new firms when we compare right-wing leaders to leftist leaders. Right and left leaders represent different visions of the economic world. Right-wing leaders are seen as pro-market and leftist leaders are seen as distributivists. Indeed, these economic worldviews must impact the creation of new firms. The environment with right-wing leaders should be more conducive to creating new businesses than the environment with leftist leaders. We will work with elected municipal leaders (mayors). In order to avoid problems of endogeneity (omission of variables) in the definition of municipal leaders, we will adopt the following procedure: the leader will be constituted through municipal majority closed elections (with margin of victory close to zero) with a right and left candidate fighting for victory (only two candidates of different competing ideology). In this type of election (a quasi-experiment), the literature has already shown that candidates are equal for voters in observable and non-observable characteristics. Thus, the electoral victory of a leader is almost randomly. Comparing municipalities with right and left leaders (the group of municipalities with right-wing leaders are the treatment and the group of municipalities with left-wing leaders will be the control group) on the creation of formal firms (firms obtained from the RAIS database) and applying the procedures of a regression discontinuity, we will have how to answer our main target. (AU)