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Management practices across firms and nations

By Nick Bloom, Stephen Dorgan, John Dowdy, John Van Reenen and Tom Rippin

Abstract

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

Topics: HD Industries. Land use. Labor
Publisher: Centre for Economic Performance, London School of Economics and Political Science
Year: 2005
OAI identifier: oai:eprints.lse.ac.uk:4669
Provided by: LSE Research Online
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