Faculty & Research

• HBS Book

This Advanced Introduction provides an illustrative guide to private equity, integrating insights from academic research with examples to derive practical recommendations. Paul Gompers and Steven Kaplan begin by reviewing the history of private equity then exploring the evidence on performance of private equity investments at both the portfolio company level and fund level, documenting the creation of economic value. The book then presents a set of actionable frameworks for driving value creation in private equity investments. It concludes by examining how private equity investors raise funds and how they successfully manage their private equity firms.

• Journal of Financial Economics 148, no. 2 (May 2023): 150-173.

Does investors' political ideology shape international capital allocation? We provide evidence from two settings—syndicated corporate loans and equity mutual funds—to show ideological alignment with foreign governments affects the cross-border capital allocation by U.S. institutional investors. Ideological alignment on both economic and social issues plays a role. Our empirical strategy ensures direct economic effects of foreign elections or government ties between countries are not driving the result. Ideological distance between countries also explains variation in bilateral investment. Combined, our findings imply ideological alignment is an important, omitted factor in models of international capital allocation.

• Business & Environment Initiative

Patagonia’s change of ownership from a privately held company to a perpetual purpose trust and 501(c)(4) nonprofit in order to use the company’s profit to fight the environmental crisis and be a model for future businesses.

• Featured Case

In 2020, the Mars Petcare Leadership Team found themselves dealing with critically important inclusion and diversity issues. Social unrest, including unprecedented protests for racial justice in the U.S. and across the globe, generated an urgency for substantive action. Mars Petcare's 100,000 employees were ready for visible signs of progress. How could they build on their existing Diversity, Equity, and Inclusion efforts and effectively capitalize on the energy for change?

• Featured Case

Walmart’s Live Better U (LBU) program, which allowed its frontline employees and managers to attend college at Walmart’s expense, had expanded and changed over the course of five years. How could Walmart better develop the program for its associates and use it to meet the company’s own talent needs?

• HBS Working Paper

Large language models (LLMs) have quickly become popular as labor-augmenting tools for programming, writing, and many other processes that benefit from quick text generation. In this paper we explore the uses and benefits of LLMs for researchers and practitioners who aim to understand consumer preferences. In contrast to prior work, we focus on the distributional nature of LLM responses, and query GPT to generate hundreds of survey responses to each prompt. We offer two sets of results to illustrate our approach and assess it. First, we show that the Generative Pre-trained Transformer 3 (GPT-3) model, a widely-used LLM, responds to sets of survey questions in ways that are consistent with economic theory and well-documented patterns of consumer behavior, including downward-sloping demand curves and state dependence. Second, we show that estimates of willingness-to-pay for products and features generated by GPT-3 are of realistic magnitudes and match estimates from a recent study that elicited preferences from human consumers.

• HBS Working Paper

Companies are facing increased pressure to “walk the talk” on diversity, equity, and inclusion (DEI) in their operations. One specific call-to-action from stakeholders is the public disclosure of EEO-1s. Companies with 100+ employees are federally mandated to annually report the intersectional diversity data of their workforce in the EEO-1. We examine how consumers perceive the strategic decision companies make regarding whether to disclose workforce diversity information. We find no evidence that a company’s disclosure of its workforce diversity data negatively affects attitudes or perceived company commitment to diversity, even when it reveals racial disparities across job categories. Instead, we find that consumers perceive firms that disclose their workforce data more positively and to be more committed to DEI initiatives, relative to firms that choose not to disclose, particularly when these disclosures reveal diversity within the workforce.