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Terrorism and Firm Performance: Empirical Evidence from Pakistan

Author

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  • Mazhar Ummad

    (Suleman Dawood School of Business, Lahore University of Management Sciences, DHA Sector U, Lahore Cant54792, Lahore, Pakistan)

Abstract

A secure business environment for private enterprises is desired by all states and is endorsed as a part of United Nation’s sustainable development goals. However, the risk exposure of private enterprises against terrorism, particularly in developing countries, is not adequately studied. Using Enterprise Surveys (ES) data for more than 2000 firms located across the four provinces of Pakistan, this paper studies the link between the risk of terrorism and firm performance. It finds, after controlling for various firm specific performance determinants as well as provincial and sector specific heterogeneities, that terrorism has a significant negative effect on firms’ performance which is independent of firm size. This effect is robust against different specifications and estimation methods including instrumental variables strategy. Beyond much explored aggregate consequences, terrorism has direct consequences for production processes at micro level.

Suggested Citation

  • Mazhar Ummad, 2019. "Terrorism and Firm Performance: Empirical Evidence from Pakistan," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 19(1), pages 1-17, January.
    • Handle: RePEc:bpj:bejeap:v:19:y:2019:i:1:p:17:n:3
    DOI: 10.1515/bejeap-2018-0041
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    References listed on IDEAS

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    Cited by:

    1. Ummad Mazhar & Fahd Rehman, 2019. "Diehard or delicate? Violence and young firm performance in a developing country," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 54(4), pages 236-247, October.
    2. Ummad Mazhar, 2021. "Women empowerment and insecurity: firm-level evidence," Business Economics, Palgrave Macmillan;National Association for Business Economics, vol. 56(1), pages 43-53, January.
    3. Khurrum S. Mughal & Friedrich G. Schneider & Zafar Hayat, 2020. "Intensity of Regulations as a Cause of the Informal Sector," Journal of South Asian Development, , vol. 15(2), pages 135-154, August.
    4. Ummad Mazhar, 2021. "Terrorism Risk and the Mediating Role of Manager Experience: Empirical Evidence," Asian Economic Journal, East Asian Economic Association, vol. 35(3), pages 317-337, September.

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    More about this item

    Keywords

    terrorism; business enterprises; firms; employment growth; Pakistan;
    All these keywords.

    JEL classification:

    • L10 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - General
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions

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