How to mitigate short-termism in business drawing inspiration from the uniqueness of private equity firm practices.
Author
Olesen, Thomas
Term
4. Term
Publication year
2017
Abstract
This thesis examines the rise of short-termism in business and how to mitigate it by learning from private equity’s long-term management approach. It draws on a thematic literature review of private equity, stakeholders, and agency theory, and on analysis of two portfolio companies managed by 3G Capital (Burger King/Restaurant Brands International and The Kraft Heinz Company). The analysis identifies common practices—such as zero-based budgeting, disciplined cost management, rigorous business reviews, reinvestment in growth, and stakeholder and human capital management—that support long-term objectives. Building on these insights, the thesis proposes a practical framework that non-private equity firms can use to reduce short-term focus while pursuing long-term goals. It also discusses drivers of short-termism and the benefits and weaknesses of the proposed tools, noting empirical evidence that long-term oriented firms tend to achieve higher revenue growth, invest more in R&D, deliver greater shareholder returns, and add more jobs than short-term oriented firms. No original quantitative testing is reported; conclusions rest on literature and case findings, with acknowledged limitations and suggestions for future work.
Dette speciale undersøger den stigende kortsigtethed i erhvervslivet og hvordan den kan afbødes ved at lære af private equitys langsigtede styringspraksis. Udgangspunktet er en tematisk litteraturgennemgang af private equity, interessenter og agency-teori samt en analyse af to porteføljeselskaber under 3G Capital (Burger King/Restaurant Brands International og The Kraft Heinz Company). Analysen identificerer fælles praksisser, herunder zero-based budgeting, disciplineret omkostningsstyring, systematiske business reviews, geninvestering i vækst samt interessent- og kompetencestyring, som understøtter langsigtede mål. På baggrund heraf udvikles et praktisk rammeværk, som ikke-private equity virksomheder kan bruge til at nedbringe kortsigtet fokus uden at ofre langsigtede mål. Specialet diskuterer også drivkræfterne bag kortsigtethed samt fordele og svagheder ved de foreslåede værktøjer og peger på empirisk evidens for, at langsigtede virksomheder typisk opnår højere omsætningsvækst, investerer mere i F&U, leverer bedre afkast til aktionærer og skaber flere jobs end kortsigtede virksomheder. Der rapporteres ingen original kvantitativ test; konklusionerne bygger på litteratur og cases, med erkendte begrænsninger og forslag til fremtidig forskning.
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