Measuring and Explaining Management PracticesAcross Firms and Countries

We use an innovative survey tool to collect management practice data from 732 medium sizedmanufacturing firms in the US, France, Germany and the UK. These measures of managerialpractice are strongly associated with productivity, profitability, Tobin’s Q, sales growth and survivalrates. Management practices also display significant cross-country differences with US firms onaverage better managed than European firms, and significant within-country differences with a longtail of extremely badly managed firms. We find this is due to: (i) different levels of product marketcompetition, which is associated with better management; and (ii) family firms passing managementcontrol down to the eldest sons (primo geniture), with is associated with worse management.European firms report lower levels of competition, while French and British firms also reportsubstantially higher levels of primo geniture due to the influence of Norman legal origin.[...]

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Year of publication:	2005-11-14
Authors:	Bloom, Nick ; Van Reenen, John
Institutions:	Advanced Institute of Management Research <London>
Subject:	Management \| Wettbewerb \| market microstructure \| Familienbetrieb \| Produktivitätsmessung \| efficiency \| Praxis

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I. INTRODUCTION
II. WHY SHOULD MANAGEMENT PRACTICES VARY?
II.A The degree of product market competition
II.B Family ownership and family management
III. MEASURING MANAGEMENT PRACTICES
III.A Scoring Management Practices
III.B Collecting Accurate Responses
III.C Obtaining Interviews with Managers
III.D Sampling Frame and Additional Data
III.E Evaluating and Controlling for Measurement Error
IV. MANAGEMENT PRACTICES AND FIRM PERFORMANCE
IV.A Econometric Modeling
IV.B Econometric Results
IV.C Contingent management
IV.D Firm performance-related measurement bias
V. ACCOUNTING FOR THE DISTRIBUTION OF MANAGEMENTPRACTICES
V.A The distribution of management practices
V.B Management practices and product market competition
V.C Management practices and family firms
V.D Management Scores and Management Ability
V.E Instrumenting management
VI. EXPLAINING MANAGEMENT PRACTICES ACROSS FIRMSAND COUNTRIES: QUANTIFICATION
VI.A Explaining the Tail of Badly Managed Firms
VI.B Explaining the Cross-Country Variation in Management Scores
VII. CONCLUSIONS
BIBLIOGRAPHY

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