Abstract: Leviathan as a Manager in Brazil, 1973-1993: Does the Background of Managers of State-Owned Enterprises Matter?

Aldo Musacchio, Sergio G. Lazzarini, and Claudia Bruschi


There an evolving debate on the feasibility of state-owned enterprises (SOEs) in emerging markets. What lessons can business history provide to SOEs? Between 1970 and 1992 the federal government of Brazil had over 150 state-owned enterprises in industries that ranged from mining and oil to steel, airplanes, and utilities. Some of these SOEs were more efficient than others (measured in operational profitability, in labor productivity, or in their capacity to generate internal funds to invest, among other factors). A large literature attributed the relative success of this group of Brazilian SOEs to two factors: the autonomy that SOEs enjoyed from the government and the fact that some SOEs had low political intervention and were run by managers with technical backgrounds. In this paper we use a newly collected database of careers of hundreds of managers of SOEs and of financial and productivity data in the largest 100 public companies between 1970 and 1992 to explore how much manager autonomy and background mattered to explain differences in performance in state-owned enterprises beyond simple differences in performance due to industry characteristics.