Measuring and Explaining Management Practices Across Firms and Countries

We use an innovative survey tool to collect management practice data from 732 medium-sized firms in the United States, France, Germany, and the United Kingdom. These measures of managerial practice are strongly associated with firm-level productivity, profitability, Tobin's Q, and survival rates. Management practices also display significant cross-country differences, with U.S. firms on average better managed than European firms, and significant within-country differences, with a long tail of extremely badly managed firms. We find that poor management practices are more prevalent when product market competition is weak and/or when family-owned firms pass management control down to the eldest sons (primogeniture). (c) 2007 by the President and Fellows of Harvard College and the Massachusetts Institute of Technology..