Cultural determinants of countries management efficiency:A random coefficients stochastic frontier approach

From a country’s perspective, management refers to the organization of inputs, such as national capital or labor. In this paper, we investigate i) the mechanism in which countries management impacts national income, and ii) the cultural sources of dierent management levels among countries. We found that countries management mainly aects income due to its interaction with physical capital, rather than through its relation with labor or education. Furthermore, management levels are shown to be positively correlated to language and religious homogeneity, the existence of Britishstyle institutions and the degree of individualism. Our methodology is twofold. First, using data of 62 countries from 1980 to 2004, we estimated a management input without the use of proxies. For this purpose, we employed a stochastic production frontier with random coecients. Second, we regressed by OLS the estimated management input on cultural variables, for a sub-sample of 33 countries with available cultural data.