Nicholas Bloom, Stanford University
Nicholas Bloom, Stanford University
What Drives Differences in Management
What Drives Differences in Management
17 Oct 20161:00 PM – 2:30 PM
Faculty and doctoral students only
Location:
Baker Library | Bloomberg Center 103
Organizer:
This presentation analyzes a recent Census Bureau survey of “structured” management practices in over 30,000 U.S. plants. Analyzing these data reveals massive variation in management practices across plants, with half of this variation being across plants within the same firm. The management index accounts for just under a fifth of the spread of TFP between the 90th and 10th percentiles, a similar fraction to that explained by R&D and over twice as much as explained by IT. We find evidence for four causal “drivers” of structured management: product market competition (e.g. the Lerner index, exchange rate shocks), state business environment (as proxied by “Right to Work” laws), learning spillovers (e.g. proximity to “Million Dollar Plant” openings) and human capital (e.g. proximity to land grant colleges). Collectively these drivers account for around one third to the total variation in management, suggesting the need to draw upon a wider range of theories to explain the remaining variation.