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Management Practice in Production

Listed author(s):
  • Thomas Triebs
  • Subal C. Kumbhakar

In this paper we account for observed management practice in the estimation of a production function. In our model management practice is observable and we allow it to affect output directly (neutral shift) and indirectly by affecting input productivity. This formulation gives us a semiparametric smooth coefficient model. Empirically, we find that estimates of unobserved (in)efficiency do not correlate highly with observed management. We also find that management affects output both directly and indirectly via all factors of production, i.e., the productivity effect of management is non-neutral. Finally, we find that the indirect effects of conventional inputs vary with management.

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File URL: http://www.cesifo-group.de/portal/page/portal/DocBase_Content/WP/WP-Ifo_Working_Papers/wp-ifo-2012/IfoWorkingPaper-129.pdf
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Paper provided by ifo Institute - Leibniz Institute for Economic Research at the University of Munich in its series ifo Working Paper Series with number Ifo Working Paper No. 129.

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Date of creation: 2012
Handle: RePEc:ces:ifowps:_129
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  11. Bill Greene with Antonio Alvarez (Univ. of Oviedo) & Carlos Arias (Univ. of Leon), 2004. "Accounting For Unobservables In Production Models: Management And Inefficiency," Econometric Society 2004 Australasian Meetings 341, Econometric Society.
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  29. Byma, Justin P. & Tauer, Loren W., 2007. "Farm Inefficiency Resulting from the Missing Management Input," Working Papers 127008, Cornell University, Department of Applied Economics and Management.
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