Skip to Main Content
HBS Home
  • About
  • Academic Programs
  • Alumni
  • Faculty & Research
  • Baker Library
  • Giving
  • Harvard Business Review
  • Initiatives
  • News
  • Recruit
  • Map / Directions
Faculty & Research
  • Faculty
  • Research
  • Featured Topics
  • Academic Units
  • …→
  • Harvard Business School→
  • Faculty & Research→
Publications
Publications
  • 2009
  • Chapter
  • The Global Economic Impact of Private Equity Report 2009

Do Private Equity-owned Firms Have Better Management Practices?

By: Nicholas Bloom, Raffaella Sadun and John Van Reenen
  • Format:Print
ShareBar

Abstract

We use an innovative survey tool to collect management practice data from over 4,000 medium sized manufacturing firms across Asia, Europe and the US. These measures of managerial practice are strongly associated with firm-level performance (e.g. productivity, profitability and stock market value). Private equity firms are significantly better managed than government, family and privately owned firms. Although they are also better managed on average than publicly listed firms with dispersed owners, this difference is not statistically significant. Looking at management practices in detail we find that private equity owned firms have strong people management practices (hiring, firing, pay and promotions) but even stronger operations management practices (lean manufacturing, continuous improvement and monitoring). This suggests that private equity ownership is associated with broad based operational improvement in management rather than just stronger performance incentives. Finally, looking at changes in management practices over time, it appears that PE targets poorly managed firms and these firms improve their management practices at a faster rate than other ownership types.

Keywords

Private Equity; Management Practices and Processes; Production; Private Ownership; Performance Improvement; Performance Productivity

Citation

Bloom, Nicholas, Raffaella Sadun, and John Van Reenen. "Do Private Equity-owned Firms Have Better Management Practices?" Chap. 1 in The Global Economic Impact of Private Equity Report 2009, edited by Josh Lerner and Anuradha Gurung, 1–23. Globalization of Alternative Investments Working Papers. Geneva, Switzerland: World Economic Forum, 2009. (Slides.)
  • Read Now

About The Author

Raffaella Sadun

Strategy
→More Publications

More from the Authors

    • Harvard Business Review

    The C-Suite Skills That Matter Most

    By: Raffaella Sadun, Joseph B. Fuller, Stephen Hansen and PJ Neal
    • International Journal of Human-Computer Studies

    Multitasking While Driving: A Time Use Study of Commuting Knowledge Workers to Assess Current and Future Uses

    By: Thomaz Teodorovicz, Andrew L. Kun, Raffaella Sadun and Orit Shaer
    • 2021
    • Faculty Research

    The Anatomy of a Hospital System Merger: The Patient Did Not Respond Well to Treatment

    By: Martin Gaynor, Adam Sacarny, Raffaella Sadun, Chad Syverson and Shruthi Venkatesh
More from the Authors
  • The C-Suite Skills That Matter Most By: Raffaella Sadun, Joseph B. Fuller, Stephen Hansen and PJ Neal
  • Multitasking While Driving: A Time Use Study of Commuting Knowledge Workers to Assess Current and Future Uses By: Thomaz Teodorovicz, Andrew L. Kun, Raffaella Sadun and Orit Shaer
  • The Anatomy of a Hospital System Merger: The Patient Did Not Respond Well to Treatment By: Martin Gaynor, Adam Sacarny, Raffaella Sadun, Chad Syverson and Shruthi Venkatesh
ǁ
Campus Map
Harvard Business School
Soldiers Field
Boston, MA 02163
→Map & Directions
→More Contact Information
  • Make a Gift
  • Site Map
  • Jobs
  • Harvard University
  • Trademarks
  • Policies
  • Accessibility
  • Digital Accessibility
Copyright © President & Fellows of Harvard College