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Workforce Trust in Leveraged Buyouts

Bacon, N. ORCID: 0000-0002-1031-1246, Boodoo, M. U. & Hoque, K. (2022). Workforce Trust in Leveraged Buyouts. Academy of Management Proceedings, 2022(1), doi: 10.5465/ambpp.2022.52


Wealth transfer theory predicts that hostile takeovers such as leveraged buyouts (LBOs) abrogate contracts with the workforce, which in turn reduces trust in management. The alternative strategic entrepreneurship perspective implies that where firms are acquired to invest in growth opportunities for sustainable expansion, trust may be maintained, or even enhanced. Developing this argument, we propose an Innovation-Participation-Trust (IPT) model within which LBOs introduce operational innovation, which enhances workforce participation, thus increasing workforce trust in management. Empirical analysis of nationally representative matched data supports the model, thus suggesting that LBOs enhance the ability of firms to contract efficiently with the workforce.

Publication Type: Article
Subjects: H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HF Commerce
Departments: Bayes Business School
Bayes Business School > Management
SWORD Depositor:
[thumbnail of Workforce-trust-leveraged-buyouts AoM.pdf] Text - Accepted Version
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