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Why do management practices differ across firms and countries?

Nicholas Bloom () and John van Reenen ()

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: Economists have long puzzled over the astounding differences in productivity between firms and countries. For example, looking at disaggregated data on U.S. manufacturing industries, Syverson (2004a) found that plants at the 90th percentile produced four times as much as the plant in the 10th percentile on a per-employee basis. Only half of this difference in labor productivity could be accounted for by differential inputs, such as capital intensity. Syverson looked at industries defined at the four-digit level in the Standard Industrial Classification (SIC) system (now the North American Industry Classification System or NAICS) like 'Bakeries and Tortilla Manufacturing' or 'Plastics Product Manufacturing.' Foster, Haltiwanger, and Syverson (2008) show large differences in total factor productivity even within very homogeneous goods industries such as boxes and block ice. Some of these productivity differences across firms and plants are temporary, but in large part they persist over time. At the country level, Hall and Jones (1999) and Jones and Romer (2009) show how the stark differences in productivity across countries account for a substantial fraction of the differences in average per capita income. Both at the plant level and at the national level, differences in productivity are typically calculated as a residual-that is, productivity is inferred as the gap between output and inputs that cannot be accounted for by conventionally measured inputs.

JEL-codes: F23 L25 M10 (search for similar items in EconPapers)
Date: 2010-09
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Related works:
Journal Article: Why Do Management Practices Differ across Firms and Countries? (2010) Downloads
Working Paper: Why do Management Practices Differ Across Firms and Countries? (2010) Downloads
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