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Management practices across firms and nations

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

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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File URL: http://eprints.lse.ac.uk/4669/
File Function: Open access version.
Download Restriction: no

Paper provided by London School of Economics and Political Science, LSE Library in its series LSE Research Online Documents on Economics with number 4669.

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Length: 47 pages
Date of creation: Jun 2005
Date of revision:
Handle: RePEc:ehl:lserod:4669
Contact details of provider: Postal: LSE Library Portugal Street London, WC2A 2HD, U.K.
Phone: +44 (020) 7405 7686
Web page: http://www.lse.ac.uk/

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  1. Eve Caroli & John Van Reenen, 2001. "Skill-Biased Organizational Change? Evidence From A Panel Of British And French Establishments," The Quarterly Journal of Economics, MIT Press, vol. 116(4), pages 1449-1492, November.
  2. Juan Botero & Simeon Djankov & Rafael LaPorta & Florencio López-de-Silanes & Andrei Shleifer, . "The Regulation of Labor," Working Paper 19483, Harvard University OpenScholar.
  3. Bertrand, Marianne & Schoar, Antoinette, 2003. "Managing With Style: The Effect of Managers on Firm Policies," Working papers 4280-02, Massachusetts Institute of Technology (MIT), Sloan School of Management.
  4. Mark Doms & Eric J. Bartelsman, 2000. "Understanding Productivity: Lessons from Longitudinal Microdata," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 569-594, September.
  5. Blundell, R. & Bond, S., 1995. "Initial Conditions and Moment Restrictions in Dynamic Panel Data Models," Economics Papers 104, Economics Group, Nuffield College, University of Oxford.
  6. Mark J. Melitz, 2002. "The Impact of Trade on Intra-Industry Reallocations and Aggregate Industry Productivity," NBER Working Papers 8881, National Bureau of Economic Research, Inc.
  7. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
  8. Arellano, Manuel & Bond, Stephen, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," Review of Economic Studies, Wiley Blackwell, vol. 58(2), pages 277-97, April.
  9. Bertrand, Marianne & Mullainathan, Sendhil, 2003. "Enjoying the Quiet Life? Corporate Governance and Managerial Preferences," Scholarly Articles 3429713, Harvard University Department of Economics.
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