Measuring and Explaining Management Practices Across Firms and Countries

Nicholas Bloom () and John van Reenen ()

CEP Discussion Papers from Centre for Economic Performance, LSE

Abstract: We use an innovative survey tool to collect management practice data from 732 medium sized manufacturingfirms in the US, France, Germany and the UK. These measures of managerial practice are strongly associatedwith firm-level productivity, profitability, Tobin's Q, sales growth and survival rates. Management practicesalso display significant cross-country differences with US firms on average better managed than Europeanfirms, and significant within-country differences with a long tail of extremely badly managed firms. We findthat poor management practices are more prevalent when (a) product market competition is weak and/or when(b) family-owned firms pass management control down to the eldest sons (primo geniture). European firmsreport lower levels of competition, while French and British firms also report substantially higher levels ofprimo geniture due to the influence of Norman legal origin and generous estate duty for family firms. Wecalculate that product market competition and family firms account for about half of the long tail of badlymanaged firms and up to two thirds of the American advantage over Europe in management practices.

Keywords: management practices; productivity; competition; family firms (search for similar items in EconPapers)
JEL-codes: L2 M2 O32 O33 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-bec, nep-com, nep-eec, nep-eff, nep-ent and nep-mkt
Date: 2006-03
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Related works:
Working Paper: Measuring and Explaining Management Practices Across Firms and Countries (2006)
Working Paper: Measuring and Explaining Management Practices Across Firms and Countries (2006)
Journal Article: Measuring and Explaining Management Practices Across Firms and Countries (2007)
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Persistent link: http://EconPapers.repec.org/RePEc:cep:cepdps:dp0716

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