Private equity firms and management control: the framing of shareholder-oriented practices

Abstract

This paper seeks to respond to the call for further research into the management control mechanisms (MCMs) used in inter-organizational relationships between private equity (PE) and portfolio firms. We based our analysis on the concept of change agent developed in institutional studies and the concepts of framing and frame alignment. Drawing on a multiple case study, this paper investigates the deployment of MCMs by PE firms with the aim at promoting and sustaining the shareholder focused frame and ensuring an effective alignment of portfolio companies. The study then shifts its focus on the reasons for distinct relevance of such MCMs based on the context-specific frame. Findings show the variety of MCMs that may be used in aligning interests of portfolio firm managers, considering PE firms as a case of inter-firm relationship between interdependent actors.