IDEAS home Printed from https://ideas.repec.org/p/iza/izadps/dp11399.html
   My bibliography  Save this paper

The Impact of Management Practices on SME Performance

Author

Listed:
  • Forth, John

    (Cass Business School)

  • Bryson, Alex

    (University College London)

Abstract

We examine the impact of management practices on firm performance among SMEs in Britain over the period 2011-2014, using a unique dataset which links survey data on management practices with firm performance data from the UK's official business register. We find that SMEs are less likely to use formal management practices than larger firms, but that such practices have demonstrable benefits for those who use them, helping firms to grow and increasing their productivity. The returns are most apparent for those SMEs that invest in human resource management practices, such as training and performance-related pay, and those that set formal performance targets.

Suggested Citation

  • Forth, John & Bryson, Alex, 2018. "The Impact of Management Practices on SME Performance," IZA Discussion Papers 11399, Institute of Labor Economics (IZA).
  • Handle: RePEc:iza:izadps:dp11399
    as

    Download full text from publisher

    File URL: https://docs.iza.org/dp11399.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Philippe Askenazy & John Forth, 2016. "Work Organisation and Human Resource Management: Does Context Matter?," Post-Print halshs-01379273, HAL.
    2. David E. Guest & Jonathan Michie & Neil Conway & Maura Sheehan, 2003. "Human Resource Management and Corporate Performance in the UK," British Journal of Industrial Relations, London School of Economics, vol. 41(2), pages 291-314, June.
    3. Nicholas Bloom & Renata Lemos & Raffaella Sadun & John Van Reenen, 2015. "Does Management Matter in schools?," Economic Journal, Royal Economic Society, vol. 0(584), pages 647-674, May.
    4. Alexander Hijzen & Richard Upward & Peter W. Wright, 2010. "Job Creation, Job Destruction and the Role of Small Firms: Firm‐Level Evidence for the UK," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 72(5), pages 621-647, October.
    5. Bloom, Nicholas & Sadun, Raffaella & Van Reenen, John, 2016. "Management as a Technology," CEPR Discussion Papers 11312, C.E.P.R. Discussion Papers.
    6. Sandra Broszeit & Marie‐Christine Laible & Ursula Fritsch & Holger Görg, 2019. "Management Practices and Productivity in Germany," German Economic Review, Verein für Socialpolitik, vol. 20(4), pages 657-705, November.
    7. 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.
    8. Criscuolo, Chiara & Gal, Peter N. & Menon, Carlo, 2014. "The dynamics of employment growth: new evidence from 18 countries," LSE Research Online Documents on Economics 60286, London School of Economics and Political Science, LSE Library.
    9. Nicholas Bloom & Renata Lemos & Raffaella Sadun & Daniela Scur & John Van Reenen, 2014. "The New Empirical Economics of Management," NBER Working Papers 20102, National Bureau of Economic Research, Inc.
    10. Nicholas Bloom & Renata Lemos & Raffaella Sadun & Daniela Scur & John Van Reenen, 2016. "International Data on Measuring Management Practices," American Economic Review, American Economic Association, vol. 106(5), pages 152-156, May.
    11. Edward P. Lazear, 2000. "Performance Pay and Productivity," American Economic Review, American Economic Association, vol. 90(5), pages 1346-1361, December.
    12. Sandra E. Black & Lisa M. Lynch, 2001. "How To Compete: The Impact Of Workplace Practices And Information Technology On Productivity," The Review of Economics and Statistics, MIT Press, vol. 83(3), pages 434-445, August.
    13. John Paul Macduffie, 1995. "Human Resource Bundles and Manufacturing Performance: Organizational Logic and Flexible Production Systems in the World Auto Industry," ILR Review, Cornell University, ILR School, vol. 48(2), pages 197-221, January.
    14. Amitabh Chandra & Amy Finkelstein & Adam Sacarny & Chad Syverson, 2013. "Healthcare Exceptionalism? Productivity and Allocation in the U.S. Healthcare Sector," NBER Working Papers 19200, National Bureau of Economic Research, Inc.
    15. Nicholas Bloom & Christos Genakos & Raffaella Sadun & John Van Reenen, 2011. "Management Practices Across Firms and Countries," CEP Discussion Papers dp1109, Centre for Economic Performance, LSE.
    16. Stephen Machin, 1995. "Plant Closures and Unionization in British Establishments," British Journal of Industrial Relations, London School of Economics, vol. 33(1), pages 55-68, March.
    17. 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.
    18. Thomas Amossé & Alex Bryson & John Forth & Héloïse Petit (ed.), 2016. "Comparative Workplace Employment Relations," Palgrave Macmillan Books, Palgrave Macmillan, number 978-1-137-57419-0.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mahvish Farhan & Karl Taylor, 2021. "The Impact of a New Quality Management Practice on Firm Performance: Evidence From Pakistan," Working Papers 2021008, The University of Sheffield, Department of Economics.
    2. Kostadin Kolarov & Maria Vasilska, 2019. "The Bulgarian Entrepreneur as a Manager – background, managerial approaches and some reflections on SMEs performance," Conference Proceedings Chapters, in: Kiril Todorov & Jan Degadt (ed.), Youth and Women Entrepreneurship in Challenging International (Global) Business Environment. Proceedings of the Ninth International Conference, 11 – 1, edition 1, chapter 127, pages 170-187, Bulgarian Association for Management Development and Entrepreneurship.
    3. Rico Belda, Paz & Cabrer-Borrás, Bernardí, 2021. "La importancia de los factores internos y externos en el éxito empresarial || The importance of internal and external factors in business success," Revista de Métodos Cuantitativos para la Economía y la Empresa = Journal of Quantitative Methods for Economics and Business Administration, Universidad Pablo de Olavide, Department of Quantitative Methods for Economics and Business Administration, vol. 32(1), pages 241-256, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Michael White & Alex Bryson, 2018. "HPWS in the Public Sector: Are There Mutual Gains?," DoQSS Working Papers 18-10, Quantitative Social Science - UCL Social Research Institute, University College London.
    2. Alex Bryson & Lucy Stokes & David Wilkinson, 2018. "Is Pupil Attainment Higher in Well-managed Schools?," DoQSS Working Papers 18-09, Quantitative Social Science - UCL Social Research Institute, University College London.
    3. Barry, Michael & Bryson, Alex & Gomez, Rafael & Kaufman, Bruce E. & Lomas, Guenther & Wilkinson, Adrian, 2018. "The "Good Workplace": The Role of Joint Consultative Committees, Unions and HR Policies in Employee Ratings of Workplaces in Britain," IZA Discussion Papers 11860, Institute of Labor Economics (IZA).
    4. Andy Feng & Anna Valero, 2020. "Skill-Biased Management: Evidence from Manufacturing Firms," The Economic Journal, Royal Economic Society, vol. 130(628), pages 1057-1080.
    5. Sivropoulos-Valero, Anna Valero, 2021. "Education and management practices," LSE Research Online Documents on Economics 114436, London School of Economics and Political Science, LSE Library.
    6. Anna Valero, 2021. "Education and management practices," Oxford Review of Economic Policy, Oxford University Press, vol. 37(2), pages 302-322.
    7. Bloom, Nicholas & Van Reenen, John, 2011. "Human Resource Management and Productivity," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 19, pages 1697-1767, Elsevier.
    8. Ohlsbom, Roope, 2021. "Management Practices Drive Productivity – But Not Without Human Capital," ETLA Working Papers 88, The Research Institute of the Finnish Economy.
    9. Casey Ichniowski & Kathryn L. Shaw, 2009. "Insider Econometrics: Empirical Studies of How Management Matters," NBER Working Papers 15618, National Bureau of Economic Research, Inc.
    10. Gilbert CETTE & Jimmy LOPEZ & Jacques MAIRESSE & Giuseppe NICOLETTI, 2020. "Economic Adjustment during the Great Recession: The Role of Managerial Quality," Working Papers 2020-26, Center for Research in Economics and Statistics.
    11. Stefan Bender & Nicholas Bloom & David Card & John Van Reenen & Stefanie Wolter, 2018. "Management Practices, Workforce Selection, and Productivity," Journal of Labor Economics, University of Chicago Press, vol. 36(S1), pages 371-409.
    12. Karplus, Valerie J. & Geissmann, Thomas & Zhang, Da, 2021. "Institutional complexity, management practices, and firm productivity," World Development, Elsevier, vol. 142(C).
    13. Derek C. Jones & Takao Kato, 2011. "The Impact of Teams on Output, Quality, and Downtime: An Empirical Analysis Using Individual Panel Data," ILR Review, Cornell University, ILR School, vol. 64(2), pages 215-240, January.
    14. Maloney, William F. & Sarrias, Mauricio, 2017. "Convergence to the managerial frontier," Journal of Economic Behavior & Organization, Elsevier, vol. 134(C), pages 284-306.
    15. 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.
    16. Dang, Thang & Dung, Thai Tri & Phuong, Vu Thi & Vinh, Tran Dinh, 2016. "Human Resource Management Practices and Firm Outcomes: Evidence from Vietnam," MPRA Paper 75359, University Library of Munich, Germany.
    17. Michael White & Alex Bryson, 2019. "High performance work systems and public sector workplace performance in Britain," DoQSS Working Papers 19-03, Quantitative Social Science - UCL Social Research Institute, University College London.
    18. Alex Bryson & Lucy Stokes & David Wilkinson, 2020. "Can Human Resource Management Improve Schools' Performance?," LABOUR, CEIS, vol. 34(4), pages 427-440, December.
    19. Natalie Chun & Soohyung Lee, 2015. "Bonus compensation and productivity: evidence from Indian manufacturing plant-level data," Journal of Productivity Analysis, Springer, vol. 43(1), pages 47-58, February.
    20. Fibla Gasparín, Ma. Teresa, 2010. "Productivity in southern European small firms: When and how work organization complements process innovation," Working Papers 2072/179600, Universitat Rovira i Virgili, Department of Economics.

    More about this item

    Keywords

    workplace closure; productivity; high-growth firms; employment growth; small and medium-sized enterprises; SMEs; management practices; HRM; recession;
    All these keywords.

    JEL classification:

    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance
    • L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • M52 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Compensation and Compensation Methods and Their Effects
    • M53 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Personnel Economics - - - Training

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:iza:izadps:dp11399. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: . General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Holger Hinte (email available below). General contact details of provider: https://edirc.repec.org/data/izaaade.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.