Mapping the Dynamics of Management Styles— Evidence from German Survey Data

Florian Englmaier, Michael Hofmann and Stefanie Wolter
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Michael Hofmann: LMU München
Stefanie Wolter: IAB Nürnberg

No 481, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: We study how firms adjust the bundles of management practices they adopt over time, using repeated survey data collected in Germany from 2012 to 2018. By employing unsupervised machine learning, we leverage high-dimensional data on human resource policies to describe clusters of management practices (management styles). Our results suggest that two management styles exist, one of which employs many and highly structured practices, while the other lacks these practices but retains training measures. We document sizeable differences in styles across German firms, which can (only) partially be explained by firm characteristics. Further, we show that management is highly persistent over time, in part because newly adopted practices are discontinued after a short time. We suggest miscalculations of cots-benefit trade-offs and non-fitting corporate culture as potential hindrances of adopting structured management. In light of previous findings that structured management increases firm performance, our findings have important policy implications since they show that firms which are managed in an unstructured way fail to catch up and will continue to underperform.

Keywords: management practices; personnel management; panel data analysis; machine learning (search for similar items in EconPapers)
JEL-codes: C38 D22 M12 (search for similar items in EconPapers)
Date: 2023-12-14
New Economics Papers: this item is included in nep-bec, nep-big, nep-cmp, nep-eur, nep-hrm and nep-sbm
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