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What drives differences in management?

Author

Listed:
  • Nicholas Bloom
  • Erik Brynjolfsson
  • Lucia Foster
  • Ron Jarmin
  • Megha Patnaik
  • Itay Saporta-Eksten
  • John Van Reenen

Abstract

Partnering with the Census we implement a new survey of "structured" management practices in 32,000 US manufacturing plants. We find an enormous dispersion of management practices across plants, with 40% of this variation across plants within the same firm. This management variation accounts for about a fifth of the spread of productivity, a similar fraction as that accounted for by R&D, and twice as much as explained by IT. We find evidence for four "drivers" of management: competition, business environment, learning spillovers and human capital. Collectively, these drivers account for about a third of the dispersion of structured management practices. Any opinions and conclusions expressed herein are those of the authors and do not necessarily represent the views of the U.S. Census Bureau. All results have been reviewed to ensure that no confidential information was disclosed.

Suggested Citation

  • Nicholas Bloom & Erik Brynjolfsson & Lucia Foster & Ron Jarmin & Megha Patnaik & Itay Saporta-Eksten & John Van Reenen, 2017. "What drives differences in management?," CEP Discussion Papers dp1470, Centre for Economic Performance, LSE.
  • Handle: RePEc:cep:cepdps:dp1470
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    References listed on IDEAS

    as
    1. Nicholas Bloom & John Van Reenen, 2007. "Measuring and Explaining Management Practices Across Firms and Countries," The Quarterly Journal of Economics, Oxford University Press, vol. 122(4), pages 1351-1408.
    2. Bloom, Nicholas & Sadun, Raffaella & Van Reenen, John, 2016. "Management as a Technology," CEPR Discussion Papers 11312, C.E.P.R. Discussion Papers.
    3. Ann E. Harrison & Brian J. Aitken, 1999. "Do Domestic Firms Benefit from Direct Foreign Investment? Evidence from Venezuela," American Economic Review, American Economic Association, vol. 89(3), pages 605-618, June.
    4. Michael Greenstone & Richard Hornbeck & Enrico Moretti, 2010. "Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings," Journal of Political Economy, University of Chicago Press, vol. 118(3), pages 536-598, June.
    5. Marianne Bertrand, 2004. "From the Invisible Handshake to the Invisible Hand? How Import Competition Changes the Employment Relationship," Journal of Labor Economics, University of Chicago Press, vol. 22(4), pages 723-766, October.
    6. Nicholas Bloom & John Van Reenen, 2010. "Why Do Management Practices Differ across Firms and Countries?," Journal of Economic Perspectives, American Economic Association, vol. 24(1), pages 203-224, Winter.
    7. Lucia Foster & John C. Haltiwanger & C. J. Krizan, 2001. "Aggregate Productivity Growth: Lessons from Microeconomic Evidence," NBER Chapters, in: New Developments in Productivity Analysis, pages 303-372, National Bureau of Economic Research, Inc.
    8. Catherine Buffington & Lucia Foster & Ron Jarmin & Scott Ohlmacher, 2016. "The Management and Organizational Practices Survey (MOPS): An Overview," Working Papers 16-28, Center for Economic Studies, U.S. Census Bureau.
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    11. Freeman, Richard B. & Shaw, Kathryn L. (ed.), 2009. "International Differences in the Business Practices and Productivity of Firms," National Bureau of Economic Research Books, University of Chicago Press, number 9780226261942, December.
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    13. Richard B. Freeman & Kathryn L. Shaw, 2009. "Introduction to "International Differences in the Business Practice and Productivity of Firms"," NBER Chapters, in: International Differences in the Business Practices and Productivity of Firms, pages 1-11, National Bureau of Economic Research, Inc.
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    15. Catherine Buffington & Kenny Herrell & Scott Ohlmacher, 2016. "The Management and Organizational Practices Survey (MOPS): Cognitive Testing," Working Papers 16-53, Center for Economic Studies, U.S. Census Bureau.
    16. Richard B. Freeman & Kathryn L. Shaw, 2009. "International Differences in the Business Practices and Productivity of Firms," NBER Books, National Bureau of Economic Research, Inc, number free07-1, January-J.
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    19. Thomas J. Holmes, 1998. "The Effect of State Policies on the Location of Manufacturing: Evidence from State Borders," Journal of Political Economy, University of Chicago Press, vol. 106(4), pages 667-705, August.
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    More about this item

    Keywords

    management; productivity; competition; learning;
    All these keywords.

    JEL classification:

    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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