To compare management practices between Japanese and Korean firms, we conducted interview surveys on organizational and human resource management based on Bloom and Van Reenen (2007). The average management scores resulting from the interview surveys in Japanese firms were higher than in Korean firms. The gap in the scores between Japan and Korea can be explained by more conservative human resource management practices in Korean small and medium sized firms. We regressed some indicators representing management practices on firm performance. Estimation results suggest that human resource management affects firm performance in Korean firms. In Japanese firms, we expect that organizational reform plays a role in improving firm performance in the service sector.