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Management Practices Across Firms and Nations

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  • Nick Bloom
  • Stephen Dorgan
  • John Dowdy
  • Tom Rippin
  • John Van Reenen

Abstract

We use an innovative survey tool to collect management practice data from 731 medium sized manufacturing firms in Europe and the US. We find these are strongly associated with better firm performance in terms of productivity, return on capital employed (profitability), Tobin’s Q and sales growth. We also find a surprisingly large dispersion of management practices across firms with a long ‘tail’ of poorly managed firms. This presents a dilemma - why do so many firms continue to exist while apparently deploying inferior management practices? Our analysis suggests that this is due, in part, to a combination of: (i) competition, with tougher product market competition fostering better management practices; (ii) firm age, with younger market entrants utilising better management techniques; and (iii) regulation, with stronger labour market regulation apparently inhibiting the deployment of best practice management.
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Suggested Citation

  • Nick Bloom & Stephen Dorgan & John Dowdy & Tom Rippin & John Van Reenen, 2005. "Management Practices Across Firms and Nations," CEP Reports 17, Centre for Economic Performance, LSE.
    • Handle: RePEc:cep:cepsps:17
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    Cited by:

    1. Linda Yueh & Linda Yueh & John Van Reenen, 2012. "Why has China grown so fast? The role of international technology transfer," Economics Series Working Papers 592, University of Oxford, Department of Economics.
    2. Philip McCann & Ortega Ortega-Argil?s, 2014. "The Role of the Smart Specialisation Agenda in a Reformed EU Cohesion Policy," SCIENZE REGIONALI, FrancoAngeli Editore, vol. 2014(1), pages 15-32.
    3. Carrera, Leandro N. & Dunleavy, Patrick & Bastow, Simon, 2009. "Understanding productivity trends in UK tax collection," LSE Research Online Documents on Economics 25532, London School of Economics and Political Science, LSE Library.
    4. Gaynor, Martin & Town, Robert J., 2011. "Competition in Health Care Markets," Handbook of Health Economics, in: Mark V. Pauly & Thomas G. Mcguire & Pedro P. Barros (ed.), Handbook of Health Economics, volume 2, chapter 0, pages 499-637, Elsevier.
    5. Nicholas Bloom & Carol Propper & Stephan Seiler & John Van Reenen, 2015. "The Impact of Competition on Management Quality: Evidence from Public Hospitals," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 82(2), pages 457-489.
    6. Nicholas Bloom & Christos Genakos & Ralf Martin & Raffaella Sadun, 2010. "Modern Management: Good for the Environment or Just Hot Air?," Economic Journal, Royal Economic Society, vol. 120(544), pages 551-572, May.
    7. [multiple or corporate authorship]., 2006. "Inherited Family Firms and Management Practices: The Case for Modernising the UK's Inheritance Tax," LSE Research Online Documents on Economics 57990, London School of Economics and Political Science, LSE Library.
    8. Laura Abrardi & Laura Rondi, 2020. "Ownership and performance in the Italian stock exchange: the puzzle of family firms," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 47(4), pages 613-643, December.
    9. Mirko Draca & Stephen Machin & John Van Reenen, 2011. "Minimum Wages and Firm Profitability," American Economic Journal: Applied Economics, American Economic Association, vol. 3(1), pages 129-151, January.
    10. Baldwin, Richard & Robert-Nicoud, Frédéric, 2014. "Trade-in-goods and trade-in-tasks: An integrating framework," Journal of International Economics, Elsevier, vol. 92(1), pages 51-62.
    11. Shaw, Kathryn, 2009. "Insider econometrics: A roadmap with stops along the way," Labour Economics, Elsevier, vol. 16(6), pages 607-617, December.
    12. Richard B. Fabling & Arthur Grimes, 2007. "Practice Makes Profit: Business Practices and Firm Success," Small Business Economics, Springer, vol. 29(4), pages 383-399, December.
    13. Etro, Federico, 2011. "Endogenous market structures and contract theory: Delegation, principal-agent contracts, screening, franchising and tying," European Economic Review, Elsevier, vol. 55(4), pages 463-479, May.
    14. Federico Etro, 2010. "Endogenous Market Structures and Contract Theory," Working Papers 181, University of Milano-Bicocca, Department of Economics, revised Mar 2010.
    15. Fabling, Richard, 2007. "Just How Innovative are New Zealand Firms? Quantifying & Relating Organisational and Marketing Innovation to Traditional Science & Technology Indicators," Occasional Papers 07/4, Ministry of Economic Development, New Zealand.
    16. Mohamed Abdel-Wahab & Bernard Vogl, 2011. "Trends of productivity growth in the construction industry across Europe, US and Japan," Construction Management and Economics, Taylor & Francis Journals, vol. 29(6), pages 635-644.

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    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General

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