Advanced Search
MyIDEAS: Login to save this article or follow this journal

Does competition raise productivity through improving management quality?

Contents:

Author Info

  • Van Reenen, John

Abstract

A classic question in industrial organization is whether competition raises productivity and if so, through what mechanism? I discuss recent empirical evidence from both large-scale databases and specific industries which suggests that tougher competition does indeed raise productivity and one of the main mechanisms is through improving management practices. To establish this, I report on new research seeking to quantify management. I relate this to theoretical perspectives on the economics of competition and management, arguing that management should be seen at least in part as a transferable technology. A range of recent econometric studies suggests that (i) competition increases management quality and (ii) improved management quality boosts productivity.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.sciencedirect.com/science/article/B6V8P-52540J8-1/2/87f787d6fbe27f1557be44e137f54733
Download Restriction: Full text for ScienceDirect subscribers only

As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.

Bibliographic Info

Article provided by Elsevier in its journal International Journal of Industrial Organization.

Volume (Year): 29 (2011)
Issue (Month): 3 (May)
Pages: 306-316

as in new window
Handle: RePEc:eee:indorg:v:29:y:2011:i:3:p:306-316

Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/505551

Related research

Keywords: Management Productivity Organization;

Other versions of this item:

Find related papers by JEL classification:

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
as in new window
  1. Bloom, Nicholas & Sadun, Raffaella & Van Reenen, John, 2007. "Americans Do I.T. Better: US Multinationals and the Productivity Miracle," CEPR Discussion Papers 6291, C.E.P.R. Discussion Papers.
  2. Larry W. Hunter & Annette Bernhardt & Katherine L. Hughes & Eva Skuratowicz, 2001. "It's not just the ATMs: Technology, firm strategies, jobs, and earnings in retail banking," Industrial and Labor Relations Review, ILR Review, Cornell University, ILR School, vol. 54(2), pages 402-424, March.
  3. Nick Bloom & Christos Genakos & Ralf Martin & Raffaella Sadun, 2008. "Modern management: good for the environment or just hot air?," LSE Research Online Documents on Economics 28505, London School of Economics and Political Science, LSE Library.
  4. Andrew Atkeson & Patrick J. Kehoe, 2005. "Modeling and Measuring Organization Capital," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 113(5), pages 1026-1053, October.
  5. Johannes Van Biesebroeck, 2003. "Productivity Dynamics with Technology Choice: An Application to Automobile Assembly," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 70(1), pages 167-198, January.
  6. Vicente Cuñat & Maria Guadalupe, 2007. "Executive compensation and competition in the banking and financial sectors," LSE Research Online Documents on Economics 24497, London School of Economics and Political Science, LSE Library.
  7. Vicente Cuñat & Maria Guadalupe, 2009. "Globalization and the provision of incentives inside the firm: The effect of foreign competition," Economics Working Papers 1134, Department of Economics and Business, Universitat Pompeu Fabra.
  8. Eslava, Marcela & Haltiwanger, John C. & Kugler, Adriana & Kugler, Maurice, 2009. "Trade Reforms and Market Selection: Evidence from Manufacturing Plants in Colombia," IZA Discussion Papers 4256, Institute for the Study of Labor (IZA).
  9. Thomas J. Holmes & James A. Schmitz, Jr., 2010. "Competition and productivity: a review of evidence," Staff Report, Federal Reserve Bank of Minneapolis 439, Federal Reserve Bank of Minneapolis.
  10. Foster, Andrew D & Rosenzweig, Mark R, 1996. "Comparative Advantage, Information and the Allocation of Workers to Tasks: Evidence from an Agricultural Labour Market," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 63(3), pages 347-74, July.
  11. Nick Bloom & Tobias Kretschmer & John Van Reenen, 2006. "Work-life balance, management practices and productivity," LSE Research Online Documents on Economics 4668, London School of Economics and Political Science, LSE Library.
  12. Bee Yan Aw & Mark J. Roberts & Daniel Yi Xu, 2008. "R&D Investments, Exporting, and the Evolution of Firm Productivity," American Economic Review, American Economic Association, vol. 98(2), pages 451-56, May.
  13. Stephen Nickell, 1993. "Competition and Corporate Performance," CEP Discussion Papers dp0182, Centre for Economic Performance, LSE.
  14. Edward P. Lazear, 1999. "Personnel Economics: Past Lessons and Future Directions," NBER Working Papers 6957, National Bureau of Economic Research, Inc.
  15. Vicente Cuñat & María Guadalupe, 2005. "How Does Product Market Competition Shape Incentive Contracts?," CEP Discussion Papers dp0687, Centre for Economic Performance, LSE.
  16. Nina Pavcnik, 2002. "Trade Liberalization, Exit, and Productivity Improvements: Evidence from Chilean Plants," Review of Economic Studies, Oxford University Press, vol. 69(1), pages 245-276.
  17. Amil Petrin & T. Kirk White & Jerome P. Reiter, 2011. "The Impact of Plant-level Resource Reallocations and Technical Progress on U.S. Macroeconomic Growth," NBER Working Papers 16700, National Bureau of Economic Research, Inc.
  18. Gibbons, Robert & Waldman, Michael, 1999. "Careers in organizations: Theory and evidence," Handbook of Labor Economics, Elsevier, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 3, chapter 36, pages 2373-2437 Elsevier.
  19. Patrick Bolton & Mathias Dewatripont, 2005. "Contract Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262025760, December.
  20. Marianne Bertrand & Antoinette Schoar, 2006. "The Role of Family in Family Firms," Journal of Economic Perspectives, American Economic Association, vol. 20(2), pages 73-96, Spring.
  21. Chad Syverson, 2003. "Product Substitutability and Productivity Dispersion," NBER Working Papers 10049, National Bureau of Economic Research, Inc.
  22. Johannes Van Biesebroeck, 2007. "Complementarities in automobile production," Journal of Applied Econometrics, John Wiley & Sons, Ltd., John Wiley & Sons, Ltd., vol. 22(7), pages 1315-1345.
  23. Benjamin Bridgman & Shi Qi & James A. Schmitz, Jr., 2009. "The economic performance of cartels: evidence from the New Deal U.S. sugar manufacturing cartel, 1934-74," Staff Report, Federal Reserve Bank of Minneapolis 437, Federal Reserve Bank of Minneapolis.
  24. Michael Raith, 2003. "Competition, Risk, and Managerial Incentives," American Economic Review, American Economic Association, vol. 93(4), pages 1425-1436, September.
  25. Nicholas Bloom & Christos Genakos & Raffaella Sadun & John Van Reenen, 2012. "Management Practices Across Firms and Countries," NBER Working Papers 17850, National Bureau of Economic Research, Inc.
  26. Nicholas Bloom & Benn Eifert & Aprajit Mahajan & David McKenzie & John Roberts, 2011. "Does Management Matter? Evidence from India," NBER Working Papers 16658, National Bureau of Economic Research, Inc.
  27. Nick Bloom & John Van Reenen, 2006. "Measuring and Explaining Management Practices Across Firms and Countries," CEP Discussion Papers dp0716, Centre for Economic Performance, LSE.
  28. Edward P. Lazear, 1995. "Personnel Economics," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121883, December.
  29. Chang-Tai Hsieh & Peter J Klenow, 2008. "Misallocation and Manufacturing TFP in China and India," 2008 Meeting Papers 121, Society for Economic Dynamics.
  30. Schmidt, Klaus M., 1997. "Managerial Incentives and Product Market Competition," Munich Reprints in Economics, University of Munich, Department of Economics 19772, University of Munich, Department of Economics.
  31. Malcomson, J., 1998. "Individual employment contracts," Discussion Paper Series In Economics And Econometrics 9804, Economics Division, School of Social Sciences, University of Southampton.
  32. Philippe Aghion & Nicholas Bloom & Richard Blundell & Rachel Griffith & Peter Howitt, 2002. "Competition and innovation: an inverted U relationship," IFS Working Papers, Institute for Fiscal Studies W02/04, Institute for Fiscal Studies.
  33. Tor Jakob Klette & Zvi Griliches, 1994. "The Inconsistency of Common Scales Estimators when Output Prices are Unobserved and Endogenous," Discussion Papers, Research Department of Statistics Norway 127, Research Department of Statistics Norway.
  34. Francesco Caselli, 2004. "Accounting for Cross-Country Income Differences," NBER Working Papers 10828, National Bureau of Economic Research, Inc.
  35. Yeaple, Stephen & Helpman, Elhanan & Melitz, Marc, 2004. "Export versus FDI with Heterogeneous Firms," Scholarly Articles 3229098, Harvard University Department of Economics.
  36. David H. Autor & Frank Levy & Richard J. Murnane, 2001. "The Skill Content of Recent Technological Change: An Empirical Exploration," NBER Working Papers 8337, National Bureau of Economic Research, Inc.
  37. James A. Schmitz, Jr., 2005. "What determines productivity? lessons from the dramatic recovery of the U.S. and Canadian iron-ore industries following their early 1980s crisis," Staff Report, Federal Reserve Bank of Minneapolis 286, Federal Reserve Bank of Minneapolis.
  38. Sandra E. Black & Lisa M. Lynch, 1997. "How to Compete: The Impact of Workplace Practices and Information Technology on Productivity," NBER Working Papers 6120, National Bureau of Economic Research, Inc.
  39. Kira R. Fabrizio & Nancy L. Rose & Catherine D. Wolfram, 2007. "Do Markets Reduce Costs? Assessing the Impact of Regulatory Restructuring on US Electric Generation Efficiency," American Economic Review, American Economic Association, vol. 97(4), pages 1250-1277, September.
  40. Nick Bloom & John Van Reenen, 2010. "Why do management practices differ across firms and countries?," LSE Research Online Documents on Economics 47491, London School of Economics and Political Science, LSE Library.
  41. Chad Syverson, 2004. "Market Structure and Productivity: A Concrete Example," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 112(6), pages 1181-1222, December.
  42. Timothy Dunne & Shawn Klimek & James Schmitz, Jr., 2010. "Competition and Productivity: Evidence from the Post WWII U.S. Cement Industry," Working Papers 10-29, Center for Economic Studies, U.S. Census Bureau.
  43. Melitz, Marc J, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," CEPR Discussion Papers 3381, C.E.P.R. Discussion Papers.
  44. Nick Bloom & Carol Propper & Stephan Seiler & John Van Reenen, 2010. "Management practices in the NHS," CentrePiece - The Magazine for Economic Performance, Centre for Economic Performance, LSE 305, Centre for Economic Performance, LSE.
  45. Van Reenen, John, 1994. "The Creation and Capture of Rents: Wages and Innovation in a Panel of UK Companies," CEPR Discussion Papers 1071, C.E.P.R. Discussion Papers.
  46. Olley, G Steven & Pakes, Ariel, 1996. "The Dynamics of Productivity in the Telecommunications Equipment Industry," Econometrica, Econometric Society, Econometric Society, vol. 64(6), pages 1263-97, November.
  47. Kenneth Arrow, 1962. "Economic Welfare and the Allocation of Resources for Invention," NBER Chapters, in: The Rate and Direction of Inventive Activity: Economic and Social Factors, pages 609-626 National Bureau of Economic Research, Inc.
  48. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 1999. "Information Technology, Workplace Organization and the Demand for Skilled Labor: Firm-Level Evidence," NBER Working Papers 7136, National Bureau of Economic Research, Inc.
  49. Pinelopi Koujianou Goldberg & Amit Kumar Khandelwal & Nina Pavcnik & Petia Topalova, 2010. "Imported Intermediate Inputs and Domestic Product Growth: Evidence from India," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 125(4), pages 1727-1767, November.
  50. Michael P. Keane & Susan E. Feinberg, 2007. "ADVANCES IN LOGISTICS AND THE GROWTH OF INTRA-FIRM TRADE: THE CASE OF CANADIAN AFFILIATES OF U.S. MULTINATIONALS, 1984-1995 -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 55(4), pages 571-632, December.
  51. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
  52. N. Gregory Mankiw & Michael D. Whinston, 1986. "Free Entry and Social Inefficiency," RAND Journal of Economics, The RAND Corporation, vol. 17(1), pages 48-58, Spring.
  53. Schmidt, Klaus M, 1997. "Managerial Incentives and Product Market Competition," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 64(2), pages 191-213, April.
  54. Jan De Loecker, 2007. "Product Differentiation, Multi-product Firms and Estimating the Impact of Trade Liberalization on Productivity," NBER Working Papers 13155, National Bureau of Economic Research, Inc.
  55. Zvi Griliches, 1996. "The Discovery of the Residual: A Historical Note," Journal of Economic Literature, American Economic Association, vol. 34(3), pages 1324-1330, September.
  56. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
  57. Paula Bustos, 2009. "Trade liberalization, exports and technology upgrading: Evidence on the impact of MERCOSUR on Argentinean firms," Economics Working Papers 1173, Department of Economics and Business, Universitat Pompeu Fabra.
  58. Prescott, Edward C & Visscher, Michael, 1980. "Organization Capital," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 88(3), pages 446-61, June.
  59. Hopenhayn, Hugo A, 1992. "Entry, Exit, and Firm Dynamics in Long Run Equilibrium," Econometrica, Econometric Society, Econometric Society, vol. 60(5), pages 1127-50, September.
  60. Carol A. Corrado & Charles R. Hulten & Daniel E. Sichel, 2006. "Intangible Capital and Economic Growth," NBER Working Papers 11948, National Bureau of Economic Research, Inc.
  61. Xavier Vives, 2008. "INNOVATION AND COMPETITIVE PRESSURE -super-* ," Journal of Industrial Economics, Wiley Blackwell, vol. 56(3), pages 419-469, December.
  62. Thomas Lemieux & W. Bentley MacLeod & Daniel Parent, 2009. "Performance Pay and Wage Inequality-super-," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 124(1), pages 1-49, February.
  63. Lucia Foster & John Haltiwanger & C. J. Krizan, 2006. "Market Selection, Reallocation, and Restructuring in the U.S. Retail Trade Sector in the 1990s," The Review of Economics and Statistics, MIT Press, vol. 88(4), pages 748-758, November.
Full references (including those not matched with items on IDEAS)

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Nicholas Bloom & Renata Lemos & Raffaella Sadun & Daniela Scur & John Van Reenen, 2014. "The New Empirical Economics of Management," Discussion Papers, Stanford Institute for Economic Policy Research 13-031, Stanford Institute for Economic Policy Research.
  2. Beerkens, Maarja, 2013. "Facts and fads in academic research management: The effect of management practices on research productivity in Australia," Research Policy, Elsevier, vol. 42(9), pages 1679-1693.
  3. Antonelli Cristiano & Fassio Claudio, 2012. "Academic knowledge and economic growth: are scientific fields all alike," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201203, University of Turin.
  4. Werner Hölzl, 2012. "Mobility Barriers and the Speed of Market Selection," WIFO Working Papers, WIFO 437, WIFO.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:eee:indorg:v:29:y:2011:i:3:p:306-316. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Zhang, Lei).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.