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We argue that the influence of public stakeholders (the state) and private stakeholders (nonstate social or economic stakeholders) on corporate philanthropy is interdependent, in that satisfying the state may increase the degree of scrutiny and pressure exerted by private stakeholders on the firm, particularly in institutional environments that place few checks and balances on the power of the state – thus creating suspicion that political patronage shelters firms’ social and moral wrongdoing. To test this theory, we examine the circumstances under which politically patronized firms engage more (or less) in corporate philanthropy. Utilizing a dataset that encompasses both publically traded and unlisted private firms in China, we find that corporate philanthropy is negatively associated with political patronage among unlisted firms but positively associated with political patronage among listed firms. These results are consistent with the predictions made based on our theoretical arguments. This chapter aims to foster further discussion regarding the interdependence of the influences exerted by different stakeholders on firms.

In this chapter we study internal and external, formal and informal, financing sources of Chinese firms during the period 1997–2006, by analyzing balance sheet data from the Chinese Industrial Surveys of Medium-sized and Large Firms for 2000–2006 and survey data from the Large-Scale Survey of Private Enterprises in China conducted in 1997, 2000, 2002, 2004, and 2006.

The following stylized facts emerge from our analysis: (1) State-owned firms continue to enjoy more generous external finances than other types of Chinese firms. (2) Chinese private firms have resorted to various ways of overcoming financial constraints, including reliance on the increasingly more mature informal financial markets, cost savings through lower inventory and other working capital requirements, and greater reliance on retained earnings. (3) Substantial variations exist in financial access among private firms, with small private firms facing more financial constraints whereas more established firms having financial access more equal to their SOE counterparts. (4) Although not as accessible as for SOEs, the Chinese formal financial sector does provide Chinese private firms with substantial financial resources, especially for their short-term needs during daily operations. (5) The most pressing financial constraint facing Chinese private firms is their limited ability to secure long-term funds to invest for growth, and resolving this issue should be one of the top goals of financial reforms in China.

We investigate whether active involvement of private equity firms in their portfolio companies during the holding period of a later-stage private equity investment is related to increased levels in operating performance of these companies. Our analysis of unique survey data on 267 European buyouts and secondary performance data on 29 portfolio companies using partial least squares structural equation modeling indicates that private equity firms, that is, their board representatives, can increase operating performance not only by monitoring the behavior of top managers of portfolio companies, but also by becoming involved in strategic decisions and supporting top managers through the provision of strategic resources. Strategic resources, in particular expertise and networks, provided by private equity firm representatives in the form of financial and strategic involvement are associated with increases in the financial performance and competitive prospects of portfolio companies. Operational involvement, however, is not related to changes in operating performance. In addition to empirical insights into the different types of involvement and their effects, this chapter contributes to the buyout literature by providing support for the suggested broadening of the theoretical discussion beyond the dominant perspective of agency theory through developing and testing a complementary resource-based view of involvement. This allows taking into account not only the monitoring, but also the more entrepreneurial supporting element of involvement by private equity firms.

The volume of acquisitions involving privately held targets has far surpassed that of publicly traded firms in recent years; yet, surprisingly little research has examined private target acquisitions. By analyzing the unique features of the market for private targets, we compare the potential for value creation and value capture in private and public target acquisitions. We argue that the corporate context of private targets does not provide the same opportunities for curbing agency costs and sharing intangible resources than the context of public targets, which reduces the value creation potential for the buyer. On the other hand, private targets have lower bargaining power vis-à-vis acquirers because of higher failures in the market for corporate control of private firms and liquidity discount, which increases the value creation potential for the buyer. The net value creation potential of acquiring private targets, therefore, depends on the relative importance of their agency costs, resource sharing opportunities, and bargaining power.

The primary purpose of this chapter is to provide insight as to why some privately held small-to-medium sized firms (SMEs) have been able to outperform their peers in terms of their performance defined as revenue growth, profit growth, growth in number of employees and markets. Little is known about privately held firms and what drives their performance. The second purpose is to synthesize and provide clarity to the extant literature on rapid-growth SMEs (gazelles). The third purpose is to bring a unifying theoretical lens to the literature.

The research was conducted using elite interviews with 47 informants drawn from 21 rapid-growth, private companies. Qualitative methods were used to identify themes related to the strategies used by these firms to outperform their peers over a five-year period.

The study organizes and summarizes the extant literature on rapid-growth companies, provides support for some findings, and clarifies equivocal findings. It also suggests that early strategic choices made by the owners of private firms along with their attitudes and capabilities positioned the private firms for rapid growth. The Morgan and Hunt (1994) trust–commitment theory of relationship marketing emerged from the data as the model used most often by rapid-growth private firms and the one that best integrates the factors driving private firm performance. A modified, two-stage model appears to be warranted. The first stage focuses on respect for the value employees bring, and building their trust and commitment is an essential first step that subsequently drives the second stage of the model – building customer trust and commitment. While some of the outcomes are similar to those suggested by Morgan and Hunt, new outcomes (collaborative innovation, citizenship behaviors, sustained growth, and premium prices) also emerged as important outcomes in this study.

This study provides owners of private firms with insight on how to build and grow their firms in a rapid and sustainable fashion.

Little research has been undertaken on private firms. This study addresses this knowledge gap. The modified trust–commitment relationship marketing model that emerged from the data had not been utilized to date in the field of rapid-growth firms and it provides an integrating theory that explains the performance of rapid-growth private firms.

We empirically investigate the hypothesis that the less transparent (more difficult to value) the target’s assets are the more likely it is that the acquiring firm can obtain higher short- and long-term returns. We analyze a sample of 1,538 friendly acquisitions partitioned in two separate dimensions: acquisitions of public versus private firms, and acquisitions of a firm’s assets versus acquisitions of a firm’s assets and its management. Using a sample of (nondiversifying) real estate transactions with a public REIT as the acquirer, we find that acquisitions of public firms have insignificant short-term abnormal returns. Acquisitions of private targets have positive and significant short-term abnormal returns. The acquirer’s abnormal returns are higher in both cases when the transactions involve acquisition of the target firm’s management. We find parallel results when analyzing the acquirer’s Q over the merger year and the three following years. Our conclusions are robust to the type of financing (cash, stock, or a combination) used in the acquisition.

This paper investigates the capital structure of a large sample of U.S. private firms from 2004 to 2013. There is a considerable heterogeneity in private firm capital structure not only in terms of the level of leverage but also with regard to the issuance of specific debt instruments. Leverage, debt type usage, and debt specialization are dynamic and strongly related to observable firm characteristics largely in support of contract theory. Unobservable firm and industry characteristics are strong determinants of leverage levels and debt specialization. Macro credit conditions are not related to private firm leverage but are strong determinants of the degree to which firms diversify their debt capital structures.

This paper provides a perspective on the field of nonmarket strategy. It does not attempt to survey the literature but instead focuses on the substantive content of research in the field. The paper discusses the origins of the field and the roles of nonmarket strategy. The political economy framework is used and contrasted with the current form of the resource-based theory. The paper argues that research should focus on the firm level and argues that the strategy of self-regulation can be useful in reducing the likelihood of challenges from private and public politics. The political economy perspective is illustrated using three examples: (1) public politics: Uber, (2) private politics: Rainforest Action Network and Citigroup, and (3) integrated strategy and private and public politics: The Fast Food Campaign. The paper concludes with a discussion of research issues in theory, empirics, and normative assessment.

This chapter focuses on public research as one possible external source of knowledge available for private companies seeking scientific support in relation to product development projects, and analyses inter-organizational relations between public research institutions and innovative firms including enabling conditions for effective knowledge creation in such public-private interactions. Two case studies of product development projects based on sensor technology are used to illuminate how innovation is carried out in such interactions. The chapter concludes with extracting crucial features for successful public-private collaboration on knowledge creation and innovation.

We examine the effect of firm ownership status on three environmentally relevant variables: energy efficiency, toxic emissions, and spending on pollution abatement. Prior research has demonstrated that public firms invest less than private firms and suggests this difference is due pressure from investors to strongly favor short over long-term earnings. We extend this logic to other firm behavior, examining whether publicly owned facilities invest in energy efficiency and pollution reduction differently than privately owned facilities. Using data from the US Census of Manufactures from 1980 to 2009, information on pollution from the Environmental Protection Agency Toxic Release Inventory (TRI) and pollution abatement spending from the Pollution Abatement Costs and Expenditures survey, we find that facilities switching to public ownership are less energy efficient and spend less on pollution abatement than their privately owned counterparts. However, we also find that facilities switching to public ownership have lower toxic emissions than other facilities. We also examine how different sources of external pressures alter these results and find that increased regulatory scrutiny is correlated with increased energy efficiency, toxic emissions, and abatement spending. More concentrated institutional ownership in public firms is associated with lower energy efficiency as is a greater brand focus. These latter results are broadly consistent with the idea that publicly owned firms respond to pressures from investors with a reduced focus on environmentally relevant variables. However, since facilities switching to public ownership have lower toxic emissions, this suggests that there are two competing pressures in publicly owned facilities: cost pressures, consistent with lowered energy efficiency, and public perceptions, consistent with lower toxic emissions, particularly since TRI data became available. In this sense, the combination of ownership and transparency of information appears to influence how firms prioritize different stakeholders.