The Optimal Use of Management

Robin Sickles, Kai Sun and Thomas P. Triebs
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Thomas P. Triebs: Loughborough U

Working Papers from Rice University, Department of Economics

Abstract: We analyze the management input from the perspective of a shadow cost minimizing firm. With the help of Bloom and Van Reenen (2007)'s management measure we estimate management's shadow price, dual Morishima elasticities of substitution, and relative price eÿciencies vis-a-vis labor and capital. We find that the shadow price of management is about 1.3 million US dollars per survey scale point. Management is a weak complement for labor but a strong complement for capital. Increases in management reduce the relative income share of labor but not capital. Most firms use too little management relative to both labor and capital, but relative use of management improves over time, with the combination of ownership and control, and competition. Our results suggest that management behaves similar to other inputs.

JEL-codes: D22 D24 M11 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (1)

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Journal Article: The optimal use of management (2021)
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Persistent link: https://EconPapers.repec.org/RePEc:ecl:riceco:20-003

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