The Impact of the Institution of Religion on Organizational Decision Making: The Case of Leveraged Buyouts
Aviad Pe’er A*
Sauder School of Business, University of British Columbia, Canada
- *Corresponding Author:
- Aviad Pe’er A
Sauder School of Business, University of
British Columbia, Canada
E-mail: [email protected]
Received Date: November 16, 2015; Accepted Date: January 20, 2016; Published Date: January 30, 2016
Citation: Pe’er AA (2016) The Impact of the Institution of Religion on Organizational Decision Making: The Case of Leveraged Buyouts. J Entrepren Organiz Manag 5:163. doi:10.4172/2169-026X.1000163
Copyright: © 2016 Pe’er AA. This is an open-access article distributed under the terms of the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited.
This paper sheds light on the role of religion as a separated institutional logic on firm behavior and performance, particularly in the context of corporate development strategies and decision making. We argue that religiosity in a firm’s environment influences decision making of organizations when initiating and evaluating corporate development strategies and hence leading to uneven distribution of economic activity. We focus on leveraged buyouts (LBOs) an important strategic initiative associated with high levels of perceived risk from increased financial leverage, a drastic change in governance structure, and potential conflicts between stakeholders. We contend that local religiosity reduces the likelihood of LBO transactions that nonetheless creates a favorable selection process resulting in a lower rate of LBO bankruptcies. We find results supporting our predictions in a unique sample of 4,633 US buyouts in 1980-2003.