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Recent Advances in the Empirics of Organizational Economics

  • Nicholas Bloom
  • Raffaella Sadun
  • John Van Reenen

    ()

    (Department of Economics, Stanford University, Stanford, California 94305, Center for Economic Performance, and NBER
    Harvard University, Graduate School of Business, Boston, Massachusetts 02163, and Center for Economic Performance
    Center for Economic Performance, London School of Economics, London WC2A 2AE United Kingdom, NBER, and CEPR)

We present a survey of recent contributions in empirical organizational economics, focusing on management practices and decentralization. Productivity dispersion between firms and countries has motivated the improved measurement of firm organization across industries and countries. There appears to be substantial variation in management practices and decentralization not only between countries, but also especially within countries. Much of the poorer average management quality in countries like Brazil and India seems to result from a long tail of poorly managed firms, which barely exist in the United States. Some stylized facts include the following: (a) Competition seems to foster improved management and decentralization; (b) larger firms, skill-intensive plants, and foreign multinationals appear better managed and are more decentralized; (c) firms that are both family owned and managed appear to have worse management and are more centralized; and (d) firms facing an environment of lighter labor market regulations and more human capital specialize relatively more in people management. There is evidence for complementarities between information and communication technology, decentralization, and management, but the relationship is complex, and identification of the productivity effects of organizational practices remains a challenge for future research.

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Article provided by Annual Reviews in its journal Annual Review of Economics.

Volume (Year): 2 (2010)
Issue (Month): 1 (09)
Pages: 105-137

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Handle: RePEc:anr:reveco:v:2:y:2010:p:105-137
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