David R. Valente
A crisis considered by many as the worst since the Great Depression, and the first at the scale of a globalized world, reached in 2008 the world financial systems and the global economy. Two key consequences are likely to come out of this crisis: (1)new regulatory systems; and (2) new stakeholder perceptions on managerial practice. We evaluate in this study the impactthat a business environmental change is likely to have in corporate growth strategies. We find that the debt cost, the firmstock valuation, the investor ownership structure, the executive remuneration incentives and the shareholder risk aversionare all factors that significantly impact the preference of firms to choose acquisitive growth. We find also through a survey of 107 global top executives that the debt cost, the long term executive remuneration schemes and the shareholder riskaversion are likely to increase in the “new normal” business environment. As a conclusion, we find that the movements inthese three indicators are significant to explain an expected long term increase in the preference for firms to choose highorganic growth strategies in detriment of acquisitions. The conclusions are likely to originate new benchmarks for financialinvestors, so that the evaluation on public firms´s performance may be adjusted to a new set of indicators. Finding thecorrect firm positioning in the start of a new business environment is key. We hope to provide in this study a fundamentalbasis to support new benchmarks and managerial sight over the long term firm competitiveness and performance.