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JEEA-FBBVA LECTURE 2013: THE NEW EMPIRICAL ECONOMICS OF MANAGEMENT
The editor in charge of this paper was Fabrizio Zilibotti.
Acknowledgements: This paper is based on Van Reenen's FBBVA lectures held in the 2013 San Diego AEA meeting and in Madrid. John Van Reenen gratefully acknowledges support from the BBVA Foundation. Comments from seminar participants and an anonymous referee have helped improve the paper. The WMS has received financial support from the Economic and Social Research Council, the International Growth Center, PEDL, the UK Department of Business, and the National Science Foundation. Our partnership with McKinsey and Company (from whom we received no funding) has been essential for the project, and we thank in particular Pedro Castro, Stephen Dorgan, John Dowdy, and Dennis Layton.
Abstract
Over the last decade the World Management Survey (WMS) has collected firm-level management practices data across multiple sectors and countries. We developed the survey to try to explain the large and persistent total factor productivity (TFP) differences across firms and countries. This review paper discusses what has been learned empirically and theoretically from the WMS and other recent work on management practices. Our preliminary results suggest that about a quarter of cross-country and within-country TFP gaps can be accounted for by management practices. Management seems to matter both qualitatively and quantitatively for performance at the level of the firm and the nation. Competition, governance, human capital, and informational frictions help account for the variation in management. We make some suggestions for both policy and future research.