Management Practices and Firm Performance During the Great Recession

Florian Englmaier, Jose E. Galdon-Sanchez, Ricard Gil, Michael Kaiser and Helene Strandt
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Florian Englmaier: LMU Munich
Jose E. Galdon-Sanchez: Universidad Publica de Navarra
Ricard Gil: IESE Business School
Michael Kaiser: E.CA Economics
Helene Strandt: LMU Munich

No 548, Rationality and Competition Discussion Paper Series from CRC TRR 190 Rationality and Competition

Abstract: This paper empirically examines how management practices affect firm productivity over the business cycle. Using plant-level high-dimensional human resource policies survey data collected in Spain in 2006, we employ unsupervised machine learning to describe clusters of management practices (“management styles”). We establish a positive correlation between a management style associated with structured management and performance prior to the 2008 financial crisis. Interestingly, this correlation turns negative during the financial crisis and positive again in the economic recovery post-2013. Our evidence suggests firms with more structured management are more likely to have practices fostering culture and intangible investments such that they focus in long-run profitability, prioritizing innovation over cost reduction, while having higher adjustment costs in the short-run through higher share of fixed assets and lower employee turnover.

Keywords: management practices; culture; unsupervised machine learning; productivity; great recession (search for similar items in EconPapers)
JEL-codes: C38 D22 M12 (search for similar items in EconPapers)
Date: 2025-10-15
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