Insecurity versus immaturity: estimating the link between organizational age and indirect risks
PurposeThis 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/approachThe empirical strategy uses randomness in the occurrence of successful terrorist incidents to estimate the hypothesized link in a sample of 1,600 Pakistani firms.FindingsThe 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/valueThe 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.