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Management Practice in Production

Author

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  • Thomas Triebs
  • Subal C. Kumbhakar

Abstract

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.

Suggested Citation

  • Thomas Triebs & Subal C. Kumbhakar, 2012. "Management Practice in Production," ifo Working Paper Series 129, ifo Institute - Leibniz Institute for Economic Research at the University of Munich.
  • Handle: RePEc:ces:ifowps:_129
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    References listed on IDEAS

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    More about this item

    Keywords

    Management practice; production functions; semiparametric model;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management

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