Skip to Main content Skip to Navigation
Conference papers

Do Private Equity Firms Foster Innovation? Evidence from French LBOs

Abstract : Agency theory has historically presented buyouts as a superior governance framework that generates economic efficiencies in the short term but these transactions might have a negative impact on long-term growth and innovation. In this study, we use a strategic entrepreneurship perspective to argue that private equity firm's extensive network and relationships, and expertise and competencies help managers to innovate. Using a propensity score methodology, we provide an empirical analysis of the innovative efforts of a sample of 89 French manufacturing firms that underwent a buyout between 2001 and 2005. The matching estimates (average treatment on the treated, ATT) of the effect of LBOs on firm level of innovation expenditures in 2006 show no significant differences between LBO targets and comparable companies that did not go through an LBO. In contrast, we find significant effects of LBOs on both service innovation and marketing innovations in design and packaging and product promotion. Results suggest that private equity firms provide marketing capabilities or encourage managers of LBO targets to build new innovation strategies.
Complete list of metadata

Cited literature [24 references]  Display  Hide  Download

https://halshs.archives-ouvertes.fr/halshs-00773693
Contributor : Anne-Laure Le Nadant Connect in order to contact the contributor
Submitted on : Monday, January 14, 2013 - 3:11:57 PM
Last modification on : Tuesday, October 19, 2021 - 11:34:04 PM
Long-term archiving on: : Monday, April 15, 2013 - 4:03:31 AM

Files

LBOs_and_Innovation_EMNET.pdf
Files produced by the author(s)

Identifiers

  • HAL Id : halshs-00773693, version 1

Citation

Anne-Laure Le Nadant, Frédéric Perdreau. Do Private Equity Firms Foster Innovation? Evidence from French LBOs. International Conference on Economics and Management of Networks (EMNet), Dec 2011, Limassol, Cyprus. ⟨halshs-00773693⟩

Share

Metrics

Record views

255

Files downloads

353