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Modern Management: Good for the Environment or Just Hot Air?*
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We thank the Anglo-German Foundation, the Economic and Social Research Council, the Advanced Institute for Management Research and the British Academy for financial support, Albert Bollard, Max Floetotto and John Van Reenen for helpful comments and Pedro Castro, Rebecca Homkes, Stephen Dorgan and John Dowdy for their help with the development of the survey. This work contains statistical data from ONS which is Crown copyright and reproduced with the permission of the controller of HMSO and Queen’s Printer for Scotland. The use of the ONS statistical data in this work does not imply the endorsement of the ONS in relation to the interpretation or analysis of the statistical data. This work uses research datasets which may not exactly reproduce National Statistics aggregates.
Abstract
We use an innovative methodology to measure management practices in over 300 manufacturing firms in the UK. We then match this management data to production and energy usage information for establishments owned by these firms. We find that establishments in better managed firms are significantly less energy intensive. This effect is quantitatively substantial: going from the 25th to the 75th percentile of management practices is associated with a 17.4% reduction in energy intensity. Better managed firms are also significantly more productive. These results suggest that management practices that are associated with improved productivity are also linked to lower greenhouse gas emissions.