Building indigenous firm capabilities in an emerging economy: Knowledge and cooperation in Brazilian industry

Not much is known about factors of firm performance in emerging economies (EEs). This study investigates two variables that individually and in combination are posited to affect firms in these turbulent environments: receptivity to the influence of trade associations and dynamic knowledge capabilities. It examines the impact of these determinants on three self-reported measures of performance: innovation adoption, a particularly important indicator in EE environments; and two other dependent variables traditionally used in strategy research: profitability (measured as return on sales), and comparative performance (a self-rating of the firm's performance in comparison to its main industry's competitors). The study also attempts to shed light on the effects of perceived environmental uncertainty as a potential moderator. Five hypotheses drawn from the literature are tested with moderated hierarchical regression. Results indicate support for the two main hypotheses in the case of the innovation adoption measure. Moderation effects are also found in the association between receptivity to the influence of trade associations and innovation adoption. Finally, the study contributes with proposed scales for the two independent variables, which are tested and validated, and with a re-examination of the existing scale for perceived environmental uncertainty.