Do political connections affect a firm's performance?

This study examined the links between political connection and firm performance in Indonesia after the Soeharto era using interviews and archival data. Thirty-four participants including senior professionals were interviewed. The findings from the interviews indicated that connections were still needed for 'political protection', as well as for access to information and regulators. The degree of connection depended on the industry, the scale and the stage of the business. The results of the panel data regression analysis of non-financial companies listed on the Indonesia Stock Exchange showed that connection had significant effect on market-based firm performance, but not accounting-based firm performance.