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Successful management buyouts: Are they really more entrepreneurial?

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  • Bruining, J.
  • Verwaal, E.

Abstract

The paper explores the impact of entrepreneurial management dimensions on post-MBO financial performance. We use Stevenson’s conceptualization of entrepreneurship (1983), empirically validated by Brown, Davidsson and Wiklund (2001), positing that entrepreneurial companies will be involved in recognizing and exploiting opportunity, regardless of the resources controlled. From the literature we hypothesize positive effects of entrepreneurial management dimensions on post-MBO financial performance. We find that successful buyout managers cannot be classified as entrepreneurs on all entrepreneurial dimensions. Instead they ambidextrously combine the pursuit of valuable opportunities with the exploitation and control of their resources. Implications for theory and managerial practice are discussed.

Suggested Citation

  • Bruining, J. & Verwaal, E., 2005. "Successful management buyouts: Are they really more entrepreneurial?," ERIM Report Series Research in Management ERS-2005-076-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
    • Handle: RePEc:ems:eureri:7130
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    References listed on IDEAS

    as
    1. Malone, Stewart C., 1989. "Characteristics of smaller company leveraged buyouts," Journal of Business Venturing, Elsevier, vol. 4(5), pages 349-359, September.
    2. Zahra, Shaker A., 1995. "Corporate entrepreneurship and financial performance: The case of management leveraged buyouts," Journal of Business Venturing, Elsevier, vol. 10(3), pages 225-247, May.
    3. Danny Miller, 1983. "The Correlates of Entrepreneurship in Three Types of Firms," Management Science, INFORMS, vol. 29(7), pages 770-791, July.
    4. Jones, C. Stuart, 1992. "The attitudes of owner-managers towards accounting control systems following management buyout," Accounting, Organizations and Society, Elsevier, vol. 17(2), pages 151-168, February.
    5. Kaplan, Steven, 1989. "The effects of management buyouts on operating performance and value," Journal of Financial Economics, Elsevier, vol. 24(2), pages 217-254.
    6. Hans Bruining & Mike Wright, 2002. "Entrepreneurial orientation in management buy-outs and the contribution of venture capital," Venture Capital, Taylor & Francis Journals, vol. 4(2), pages 147-168, April.
    7. Smith, Abbie J., 1990. "Corporate ownership structure and performance *1: The case of management buyouts," Journal of Financial Economics, Elsevier, vol. 27(1), pages 143-164, September.
    8. Wright, Mike & Thompson, Steve & Robbie, Ken, 1992. "Venture capital and management-led, leveraged buy-outs: A European perspective," Journal of Business Venturing, Elsevier, vol. 7(1), pages 47-71, January.
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    More about this item

    Keywords

    Entrepreneurial Management; Financial Performance; Management Buyouts;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
    • M - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics

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