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What Drives Differences in Management?

Author

Listed:
  • Bloom, Nicholas

    () (Stanford University)

  • Brynjolfsson, Erik

    (MIT Sloan School of Management)

  • Foster, Lucia

    () (U.S. Census Bureau)

  • Jarmin, Ron

    () (U.S. Census Bureau)

  • Patnaik, Megha

    () (Stanford University)

  • Saporta-Eksten, Itay

    () (Tel Aviv University)

  • Van Reenen, John

    () (MIT Sloan School of Management)

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.

Suggested Citation

  • Bloom, Nicholas & Brynjolfsson, Erik & Foster, Lucia & Jarmin, Ron & Patnaik, Megha & Saporta-Eksten, Itay & Van Reenen, John, 2017. "What Drives Differences in Management?," IZA Discussion Papers 10724, Institute for the Study of Labor (IZA).
  • Handle: RePEc:iza:izadps:dp10724
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    References listed on IDEAS

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    1. 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.
    2. Moretti, Enrico, 2004. "Estimating the social return to higher education: evidence from longitudinal and repeated cross-sectional data," Journal of Econometrics, Elsevier, vol. 121(1-2), pages 175-212.
    3. Ichniowski, Casey & Shaw, Kathryn & Prennushi, Giovanna, 1997. "The Effects of Human Resource Management Practices on Productivity: A Study of Steel Finishing Lines," American Economic Review, American Economic Association, vol. 87(3), pages 291-313, June.
    4. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 2002. "Information Technology, Workplace Organization, and the Demand for Skilled Labor: Firm-Level Evidence," The Quarterly Journal of Economics, Oxford University Press, vol. 117(1), pages 339-376.
    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. 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.
    7. Nicholas Bloom & Erik Brynjolfsson & Lucia Foster & Ron Jarmin & Itay Saporta-Eksten & John Van Reenen, 2013. "Management in America," Working Papers 13-01, Center for Economic Studies, U.S. Census Bureau.
    8. 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.
    9. 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.
    10. 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.
    11. 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.
    12. 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.
    13. Schmalensee, Richard, 1985. "Do Markets Differ Much?," American Economic Review, American Economic Association, vol. 75(3), pages 341-351, June.
    14. 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, edition 0, number 9780226261942, December.
    15. Linda Argote & Sara L. Beckman & Dennis Epple, 1990. "The Persistence and Transfer of Learning in Industrial Settings," Management Science, INFORMS, vol. 36(2), pages 140-154, February.
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    Cited by:

    1. Jeremy Greenwood & David Weiss, 2013. "Mining Surplus: Modeling James A. Schmitz's Link Between Competition and Productivity," Economie d'Avant Garde Research Reports 22, Economie d'Avant Garde.
    2. repec:nbr:nberch:14037 is not listed on IDEAS
    3. Sandra Bernick & Richard Davies & Anna Valero, 2017. "Industry in Britain - An Atlas," CEP Special Papers 34, Centre for Economic Performance, LSE.
    4. 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.
    5. Mario BENASSI & Matteo LANDONI & Francesco RENTOCCHINI, 2017. "University Management Practices and Academic Spin-offs," Departmental Working Papers 2017-11, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.

    More about this item

    Keywords

    learning; competition; productivity; management;

    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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