Private equity and entrepreneurial management in management buy-outs

Critics claim that short-term profit orientation and high deal price strategies of private equity (PE) firms can negatively affect the ability of management buyouts to initiate and sustain entrepreneurial management. This study investigates this claim by comparing effects of majority PE backed and other buy-outs at different levels of financial leverage on post buy-out increases in entrepreneurial management. We propose that PE can be used as an organizational refocusing device that simultaneously increases entrepreneurial and administrative management. We find that majority PE-backed buy-outs significantly increase entrepreneurial management practices. Furthermore, the increased financial leverage positively affects administrative management in management buy-outs. However, the effect of high financial leverage is larger for majority PE-backed buy-outs. These results support the notion that PE firms help buy-out companies develop ambidextrous organizational change: i.e. simultaneously develop entrepreneurial and administrative management practices. The findings have important implications for practitioners and policy makers.

A streamlined life-cycle assessment and decision tool for used tyres recycling

In order to achieve progress towards sustainable resource management, it is essential to evaluate options for the reuse and recycling of secondary raw materials, in order to provide a robust evidence base for decision makers. This paper presents the research undertaken in the development of a web-based decision-support tool (the used tyres resource efficiency tool) to compare three processing routes for used tyres compared to their existing primary alternatives. Primary data on the energy and material flows for the three routes, and their alternatives were collected and analysed. The methodology used was a streamlined life-cycle assessment (sLCA) approach. Processes included were: car tyre baling against aggregate gabions; car tyre retreading against new car tyres; and car tyre shred used in landfill engineering against primary aggregates. The outputs of the assessment, and web-based tool, were estimates of raw materials used, carbon dioxide emissions and costs. The paper discusses the benefits of carrying out a streamlined LCA and using the outputs of this analysis to develop a decision-support tool. The strengths and weakness of this approach are discussed and future research priorities identified which could facilitate the use of life cycle approaches by designers and practitioners.

Risk-informed decision-making in the presence of epistemic uncertainty

An important issue in risk analysis is the distinction between epistemic and aleatory uncertainties. In this paper, the use of distinct representation formats for aleatory and epistemic uncertainties is advocated, the latter being modelled by sets of possible values. Modern uncertainty theories based on convex sets of probabilities are known to be instrumental for hybrid representations where aleatory and epistemic components of uncertainty remain distinct. Simple uncertainty representation techniques based on fuzzy intervals and p-boxes are used in practice. This paper outlines a risk analysis methodology from elicitation of knowledge about parameters to decision. It proposes an elicitation methodology where the chosen representation format depends on the nature and the amount of available information. Uncertainty propagation methods then blend Monte Carlo simulation and interval analysis techniques. Nevertheless, results provided by these techniques, often in terms of probability intervals, may be too complex to interpret for a decision-maker and we, therefore, propose to compute a unique indicator of the likelihood of risk, called confidence index. It explicitly accounts for the decisionmaker’s attitude in the face of ambiguity. This step takes place at the end of the risk analysis process, when no further collection of evidence is possible that might reduce the ambiguity due to epistemic uncertainty. This last feature stands in contrast with the Bayesian methodology, where epistemic uncertainties on input parameters are modelled by single subjective probabilities at the beginning of the risk analysis process.