Entrepreneurial growth through privatization: The upside of management buyouts

We examine the upside potential of privatization of both publicly traded fi rms and state-owned enterprises through the lens of agency and entrepreneur ial cognition theory. In addition to managerial incentives, we argue that s ignificant entrepreneurial progress is made through a cognitive shift from a:managerial to an entrepreneurial mindset. The two perspectives provide a framework for understanding buyouts and how managerial incentives and indiv idual cognition, considered in tandem, effectively expand managerial discre tion and thereby stimulate upside growth.