The Enabling Path of Private Equity Funds in the Growth Process of Emerging Market Enterprises
DOI:
https://doi.org/10.71222/511cxp26Keywords:
private equity funds, emerging markets, enterprise growth, resource-based theory, empowerment pathwaysAbstract
This study investigates how private equity (PE) funds enable the growth of emerging market enterprises through multiple empowerment pathways. It first develops a theoretical framework by outlining the PE fund operation model-capital raising, project screening, post-investment management, and exit-and by interpreting their role in bridging resource gaps faced by emerging market firms through the lens of resource-based theory. Considering the distinctive characteristics of emerging markets, such as underdeveloped financial systems and limited human capital, the study identifies five enabling pathways: financing empowerment (long-term capital and fintech-enabled channels), financial empowerment (standardized accounting and internal control systems), managerial empowerment (governance optimization and strategic goal-setting), human capital empowerment (talent referral and training), and resource integration empowerment (industry-based cooperation networks). It further highlights three key challenges-macroeconomic volatility, weak enterprise foundations, and limited fund management capabilities-and proposes corresponding countermeasures. The findings suggest that PE funds play a crucial role in alleviating resource constraints and promoting sustainable enterprise growth in emerging markets; however, achieving long-term effectiveness requires multi-stakeholder collaboration. Limitations include the absence of regional case studies, and future research is encouraged to explore industry-specific variations in empowerment mechanisms.
References
1. M. S. Pagliari, and S. A. Hannan, "The volatility of capital flows in emerging markets: Measures and determinants," Journal of International Money and Finance, vol. 145, p. 103095, 2024.
2. J. Lerner, and A. Leamon, "Venture capital, private equity, and the financing of entrepreneurship," John Wiley & Sons, 2023.
3. X. Zhang, “Challenges and future directions in the institutionalization of private equity fund management in China,” Economics and Management Innovation, vol. 2, no. 5, pp. 8–14, 2025.
4. A. Amit, S. Sajid, and A.-A. Kafy, “Addressing the dollar crisis by investigating underlying causes, effects, and strategic solutions in emerging economies,” Research in Globalization, vol. 8, p. 100187, 2024.
5. L. Yun, “Analyzing credit risk management in the digital age: Challenges and solutions,” Economics and Management Innovation, vol. 2, no. 2, pp. 81–92, 2025, doi: 10.71222/ps8sw070.
6. X. Hu and R. Caldentey, “Trust and reciprocity in firms’ capacity sharing,” Manufacturing & Service Operations Management, vol. 25, no. 4, pp. 1436–1450, 2023, doi: 10.1287/msom.2023.1203.
7. J. B. Barney, D. J. Ketchen Jr, and M. Wright, "Resource-based theory and the value creation framework," Journal of management, vol. 47, no. 7, pp. 1936-1955, 2021.
8. D. J. Deming, "Four facts about human capital," Journal of Economic Perspectives, vol. 36, no. 3, pp. 75-102, 2022. doi: 10.1257/jep.36.3.75.
9. V. Ediagbonya, and C. Tioluwani, "The role of fintech in driving financial inclusion in developing and emerging markets: issues, challenges and prospects," Technological Sustainability, vol. 2, no. 1, pp. 100-119, 2023. doi: 10.1108/techs-10-2021-0017.
10. E. Nkwinika, and S. Akinola, "The importance of financial management in small and medium-sized enterprises (SMEs): an analysis of challenges and best practices," Technology audit and production reserves, vol. 5, no. 4 (73, pp. 12-20, 2023.
11. X. Min, W. Chi, X. Hu, and Q. Ye, "Set a goal for yourself? A model and field experiment with gig workers," Production and Operations Management, vol. 33, no. 1, pp. 205-224, 2024. doi: 10.1177/10591478231224927.
12. L. Woessmann, "Skills and earnings: A multidimensional perspective on human capital," Annual Review of Economics, vol. 17, 2024. doi: 10.2139/ssrn.5042705.
13. A. Ljungqvist, "The economics of private equity: A critical review," Swedish House of Finance Research Paper, no. 24-07, 2024. doi: 10.2139/ssrn.4723171.
