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"Corporate Governance as a Bridge: Examining the Impact of Political…
"Corporate Governance as a Bridge: Examining the Impact of Political Intervention and Managerial Autonomy on Firm Performance in Pakistan"
Research Challange
Pakistan's firms face a unique institutional paradox: recurring political instability (World Bank Political Stability Score: −1.9) creates governance challenges, while managerial autonomy remains critical for performance. Yet these forces rarely interact in empirical research.
Political Volatility:Weak governance indicators and political interference undermine firm operations.
Autonomy Paradox
Managerial freedom benefits firms, but only within strong governance structures.
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Research Objectives:
RO2: Try to investigate the mediating role of corporate governance mechanisms in the relationship between political intervention ,managerial autonomy with firm performance.
RO3:To determine the relationship of variables: political intervention, corporate governance mechanisms, managerial autonomy, and firm performance.
RO1:To analyze the direct effect of political intervention and managerial autonomy on firm performance.
Research Questions
RQ2:Do corporate governance mechanisms mediate the relationship between political intervention,managerial autonomy with firm performance?
RQ3:What is the nature of the correlation exist among political intervention, governance mechanisms, autonomy, and firm performance?
RQ1:What is the effect of managerial autonomy and political intervention on firm performance in Pakistan?
Base Theories
Resource Dependency Theory (Pfeffer & Salancik, 1978)
Strategic Choice Theory (Child, 1972)
Agency Theory (Jensen & Meckling, 1976)
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Implications
For Policymakers
Reduce political interference in corporate operations and enforce governance frameworks to unlock firm performance potential in developing economies.
For Investors
Assess governance quality as a critical risk factor; firms with robust mechanisms better withstand political volatility.
For Corporate Leaders
Strengthen internal governance structures to buffer political pressures while enabling managerial decision-making autonomy.
Hypothesis
H2:The relation between political intervention and firm performance is mediated by corporate governance mechanisms.
H3:The relation between managerial autonomy and firm performance is mediated by corporate governance mechanisms.
H1:There is negative impact of political intervention and positive impact of managerial autonomy on firm performance.
H4:There is positive correlation of managerial autonomy, corporate governance mechanisms and firm performance while a negative correlation of all these variables with political intervention.
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