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  • American Economic Review: Papers and Proceedings

Do Private Equity Firms Have Better Management Practices?

By: Nicholas Bloom, Raffaella Sadun and John Van Reenen
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Abstract

Using an innovative survey measure of management practices on over 15,000 firms, we find private equity firms are better managed than government, family, and privately owned firms, and have similar management to publicly listed firms. This is true both in developed and developing countries. 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 monitoring management practices (lean manufacturing, continuous improvement, and monitoring). Plant managers working in private equity owned firms also report greater autonomy from headquarters over sales, marketing, and new product introduction.

Keywords

Private Equity; Management Practices and Processes

Citation

Bloom, Nicholas, Raffaella Sadun, and John Van Reenen. "Do Private Equity Firms Have Better Management Practices?" American Economic Review: Papers and Proceedings 105, no. 5 (May 2015): 442–446.
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About The Author

Raffaella Sadun

Strategy
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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
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