What drives differences in management practices?

Nicholas Bloom, Erik Brynjolfsson, Lucia Foster, Ron Jarmin, Megha Patnaik, Itay Saporta-Eksten, John Van Reenen

Research output: Contribution to journalReview articlepeer-review

Abstract

Partnering with the US Census Bureau, we implement a new survey of "structured" management practices in two waves of 35,000 manufacturing plants in 2010 and 2015. We fnd an enormous dispersion of management practices across plants, with 40 percent of this variation across plants within the same frm. Management practices account for more than 20 percent of the variation in productivity, a similar, or greater, percentage as that accounted for by R&D, ICT, or human capital. We fnd evidence of two key drivers to improve management. The business environment, as measured by right-to-work laws, boosts incentive management practices. Learning spillovers, as measured by the arrival of large "Million Dollar Plants" in the county, increases the management scores of incumbents.

Original languageEnglish
Pages (from-to)1648-1683
Number of pages36
JournalAmerican Economic Review
Volume109
Issue number5
DOIs
StatePublished - May 2019

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