Firm responses to violent conflicts

Claudia Custodio, Bernardo Mendes and Diogo Mendes

NOVAFRICA Working Paper Series from Universidade Nova de Lisboa, Nova School of Business and Economics, NOVAFRICA

Abstract: We estimate dynamic treatment effects of violent political conflicts on firm decisions to purchase inventory. We analyze monthly purchase data of 431 clients of a multinational beverage firm in Mozambique, as well as annual survey data. Firms respond to increases in conflict by decreasing purchases of inventory by up to 15%. This effect is significantly more pronounced for smaller firms. Firms exposed to violent conflicts also show greater intention to expand to less violent locations. The eruption of violent conflicts have significant short-term economic impact for small firms however, these do not persist beyond 2 months.

Keywords: Conflicts; inventory management; working capital management; developing countries (search for similar items in EconPapers)
JEL-codes: D22 D74 G31 I32 O12 (search for similar items in EconPapers)
Pages: 62 pages
Date: 2021
New Economics Papers: this item is included in nep-bec
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Persistent link: https://EconPapers.repec.org/RePEc:unl:novafr:wp2106

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