Raffaella Sadun
Assistant Professor of Business Administration
Raffaella Sadun is an Assistant Professor of Business Administration in the Strategy Unit at Harvard Business School. Professor Sadun's research focuses on the economics of productivity, management and organizational change. Her research documents the economic and cultural determinants of managerial choices, as well as their implications for firm performance. Most recently, Professor Sadun has led an international research project with colleagues from the London School of Economics, Stanford University and McKinsey & Company studying the role of management for the performance of acute care hospitals and secondary schools in Europe and North America. Professor Sadun's work has appeared in leading peer reviewed journals including the American Economic Review, the Quarterly Journal of Economics and the Economic Journal, and has been featured in the business press, including The New York Times, The Economist, The Wall Street Journal, and the Financial Times. She is a Faculty Research Fellow at the National Bureau of Economic Research and a Faculty Associate at the Centre for Economic Performance at the London School of Economics. In 2012 Professor Sadun was nominated as a Junior Faculty Fellow at the Kauffman Foundation.
Professor Sadun completed her PhD in Economics at the London School of Economics. Prior to her doctoral studies, Professor Sadun earned a M.Sc. in Economics from Pompeu Fabra University in Barcelona.
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Article
| Quarterly Journal of Economics
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The Organization of Firms Across Countries
Nicholas Bloom, Raffaella Sadun and John Van Reenen
We argue that social capital as proxied by trust increases aggregate productivity by affecting the organization of firms. To do this we collect new data on the decentralization of investment, hiring, production, and sales decisions from Corporate Headquarters to local plant managers in almost 4,000 firms in the United States, Europe, and Asia. We find that firms headquartered in high trust regions are more likely to decentralize, with trust accounting for about half of the variation in decentralization in our data. To help identify causal effects, we look within multinational firms, and show that higher levels of bilateral trust between the multinational's country of origin and subsidiary's country of location increases decentralization, even after instrumenting trust using religious and ethnic similarities between the countries. Trust raises aggregate productivity through two channels: (1) trust facilitates reallocation between firms by allowing more efficient firms to grow as CEOs can decentralize more decisions and (2) trust complements the adoption of new technologies, thereby increasing productivity within firms during times of rapid technological change.
Keywords: Decentralization;
Social capital;
Theory of the Firm;
Firm Objectives, Organization, and Behavior;
business economics;
Management of Technological Innovation and R＆D;
Technological Change: Choices and Consequences;
Diffusion Processes;
Organizational Structure;
Performance Productivity;
Trust;
Technology Adoption;
Multinational Firms and Management;
Citation: Bloom, Nicholas, Raffaella Sadun, and John Van Reenen. "The Organization of Firms Across Countries." Quarterly Journal of Economics 127, no. 4 (November 2012). ( Slides from 2008, Harvard Business School Working Paper, No. 12-005, August 2011.)
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Article
| Harvard Business Review
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Does Management Really Work?
Nicholas Bloom, Raffaella Sadun and John Van Reenen
HBR's 90th anniversary is a sensible time to revisit a basic question: Are organizations more likely to succeed if they adopt good management practices? The answer may seem obvious to most HBR readers, but these three economists cast their net much wider than that. In a decade-long study of thousands of organizations in 20 countries, they and their interview team assessed how well manufacturers, schools, and hospitals adhere to three management basics: targets, incentives, and monitoring. They found that huge numbers of companies follow none of those fundamentals, that adopting the basics yields big improvements in outcomes such as productivity and longevity, and that good nuts-and-bolts management at individual firms shapes national performance. At 14 textile manufacturers in India, for example, an intervention—involving free, high-quality advice from a consultant who was on-site half-time for five months—cut defects by half, reduced inventory by 20%, and raised output by 10%. A control group saw no such gains. The authors' global data set suggests that implementing good management at schools and hospitals yields change more slowly than at manufacturers—but it does come eventually. And the macroeconomic potential—for incomes, productivity, and delivery of critically needed services—is huge. A call for "better management" may sound prosaic, but given the global payoffs, it's actually quite radical.
Keywords: BEST practices;
CONSULTING firms;
CORPORATIONS;
COST control;
employee training;
EXECUTIVE ability (Management);
executives--training of;
hospitals--administration;
industrial management--research;
pProductiviy incentives;
SCHOOL management teams;
work environment;
Management;
Research;
Citation: Bloom, Nicholas, Raffaella Sadun, and John Van Reenen. " Does Management Really Work?" Harvard Business Review 90, no. 11 (November 2012).
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Article
| American Economic Review
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Americans Do IT Better: US Multinationals and the Productivity Miracle
Nicholas Bloom, Raffaella Sadun and John Van Reenen
US productivity growth accelerated after 1995 (unlike Europe's), particularly in sectors that intensively use information technologies (IT). Using two new micro panel datasets we show that US multinationals operating in Europe also experienced a "productivity miracle." US multinationals obtained higher productivity from IT than non-US multinationals, particularly in the same sectors responsible for the US productivity acceleration. Furthermore, establishments taken over by US multinationals (but not by non-US multinationals) increased the productivity of their IT. Combining pan-European firm-level IT data with our management practices survey, we find that the US IT related productivity advantage is primarily due to its tougher "people management" practices.
Keywords: IT productivity;
American IT productivity;
Information Technology;
Performance Productivity;
Multinational Firms and Management;
Management Practices and Processes;
United States;
Europe;
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Article
| Academy of Management Perspectives
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Management Practices across Firms and Countries
Nicholas Bloom, Christos Genakos, Raffaella Sadun and John Van Reenen
For the last decade we have been using double-blind survey techniques and randomized sampling to construct management data on over 10,000 organizations across 20 countries. On average, we find that in manufacturing American, Japanese, and German firms are the best managed. Firms in developing countries, such as Brazil, China, and India tend to be poorly managed. American retail firms and hospitals are also well managed by international standards, although American schools are more poorly managed than those in several other developed countries. We also find substantial variation in management practices across organizations in every country and every sector, mirroring the heterogeneity in the spread of performance in these sectors. One factor linked to this variation is ownership. Government, family, and founder owned firms are usually poorly managed, while multinational, dispersed shareholder, and private-equity owned firms are typically well managed. Stronger product market competition and higher worker skills are associated with better management practices. Less regulated labor markets are associated with improvements in incentive management practices such as performance-based promotion.
Keywords: Management Practices and Processes;
Competency and Skills;
Governing Rules, Regulations, and Reforms;
Organizations;
Developing Countries and Economies;
Economic Sectors;
Performance;
Business and Shareholder Relations;
Private Equity;
Multinational Firms and Management;
United States;
Germany;
Japan;
China;
India;
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Article
| Economica
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Regulation and UK Retailing Productivity: Evidence from Microdata
Jonathan Haskel and Raffaella Sadun
We explore the effects of planning regulation on the UK retail sector between 1997 and 2003 using micro-data from the UK census. We document a shift to smaller shops following a 1996 regulatory change that increased the costs of opening large stores. Our analysis suggests that total factor productivity (TFP) of multi-store retail chains fell after the introduction of the reform due to the reduction in store size. Overall, the reduction in store size was associated with TFP of retail chains falling by 0.4% per annum, or 40% of the post-1995 slowdown in UK retail TFP growth.
Keywords: Governing Rules, Regulations, and Reforms;
Performance Productivity;
Growth and Development;
Economic Slowdown and Stagnation;
Management Analysis, Tools, and Techniques;
Change;
Cost;
Retail Industry;
United Kingdom;
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Journal Article
| Economic Journal (Royal Economic Society)
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Modern Management: Good for the Environment or Just Hot Air?
Nicholas Bloom, Christos Genakos, Ralf Martin and Raffaella Sadun
We use an innovative methodology to measure management practices in over 300 manufacturing firms in the U.K. We then match this management data to production and energy usage information for establishments owned by these firms. We find that establishments in better managed firms are significantly less energy intensive. This effect is quantitatively substantial: going from the 25th to the 75th percentile of management practices is associated with a 17.4% reduction in energy intensity. Better managed firms are also significantly more productive. These results suggest that management practices that are associated with improved productivity are also linked to lower greenhouse gas emissions.
Keywords: Energy Conservation;
Management Practices and Processes;
Performance Productivity;
Environmental Sustainability;
Pollution and Pollutants;
Manufacturing Industry;
United Kingdom;
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Article
| American Economic Review: Papers and Proceedings
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Does Product Market Competition Lead Firms to Decentralize?
Nicholas Bloom, Raffaella Sadun and John Van Reenen
There is a widespread sense that over the last two decades firms have been decentralizing decisions to employees further down the managerial hierarchy. Economists have developed a range of theories to account for delegation, but there is less empirical evidence, especially across countries. This has limited the ability to understand the phenomenon of decentralization. To address the empirical lacuna, we have developed a research program to measure the internal organization of firms-including their decentralization decisions-across a large range of industries and countries.
Keywords: Product;
Markets;
Competition;
Business Ventures;
Geographic Location;
Employees;
Research;
Programs;
Decisions;
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Article
| Annual Review of Economics
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Recent Advances in the Empirics of Organizational Economics
Nicholas Bloom, Raffaella Sadun and John Van Reenen
We present a survey of recent contributions in empirical organizational economics, focusing on management practices and decentralization. Productivity dispersion between firms and countries has motivated the improved measurement of firm organization across industries and countries. There appears to be substantial variation in management practices and decentralization not only between countries, but also especially within countries. Much of the poorer average management quality in countries like Brazil and India seems to result from a long tail of poorly managed firms, which barely exist in the United States. Some stylized facts include the following: (1) competition seems to foster improved management and decentralization; (2) larger firms, skill-intensive plants, and foreign multinationals appear better managed and are more decentralized; (3) firms that are both family owned and managed appear to have worse management and are more centralized; and (4) firms facing an environment of lighter labor market regulations and more human capital specialize relatively more in people management. There is evidence for complementarities between information and communication technology, decentralization, and management, but the relationship is complex, and identification of the productivity effects of organizational practices remains a challenge for future research.
Keywords: Economics;
Management Practices and Processes;
Performance Productivity;
Geographic Location;
Motivation and Incentives;
Factories, Labs, and Plants;
Competition;
Human Capital;
Markets;
Governing Rules, Regulations, and Reforms;
Multinational Firms and Management;
India;
Brazil;
United States;
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Working Paper
| HBS Working Paper Series
| 2011
Does Planning Regulation Protect Independent Retailers?
Raffaella Sadun
Entry regulations against big-boxes have been introduced in many countries to protect independent retailers. Analyzing a planning reform launched in the U.K. in the 1990s, I show that entry regulations may in fact accelerate the decline of independents by increasing the attractiveness of smaller in-town store formats for retail chains. The causal impact of planning regulation is estimated using variation in local political control across the U.K., which exogenously affects the ease of entry for big-boxes in this specific institutional framework. The analysis shows that up to 17% of the independents' employment decline between 1998 and 2004 can be attributed to the regulatory reform.
Keywords: Country;
Governing Rules, Regulations, and Reforms;
Employment;
Governance Controls;
Framework;
Planning;
Market Entry and Exit;
Retail Industry;
United Kingdom;
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Working Paper
| HBS Working Paper Series
| 2011
Span of Control and Span of Activity
Oriana Bandiera, Andrea Prat, Raffaella Sadun and Julie Wulf
For both practitioners and researchers, span of control plays an important role in defining and understanding the role of the CEO. In this paper, we combine organizational chart information for a sample of 65 companies with detailed data on how their CEOs allocate their work time, which we define as their span of activity. Span of activity provides a direct measure of the CEO's management style, including the attention devoted to specific subordinates and functions, the time devoted to individual work and outside constituencies, a preference for multilateral or bilateral interaction, the degree of planning, etc. We find that CEOs with a larger number of reports spend more time with subordinates, more time on large meetings, less time on unplanned activities. The presence of a delegate, such as the COO, allows the CEO to reduce the time spent with insiders and to focus on bilateral and unplanned activities. These results suggest that time-use information is helpful in interpreting how span of control determines management style.
Keywords: Conferences;
Data and Data Sets;
Leadership Style;
Management Style;
Managerial Roles;
Time Management;
Planning;
Citation: Bandiera, Oriana, Andrea Prat, Raffaella Sadun, and Julie Wulf. " Span of Control and Span of Activity." Harvard Business School Working Paper, No. 12–053, December 2011. (Revised February 2012.)
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Working Paper
| HBS Working Paper Series
| 2011
What Do CEOs Do?
Oriana Bandiera, Luigi Guiso, Andrea Prat and Raffaella Sadun
We develop a methodology to collect and analyze data on CEOs' time use. The idea-sketched out in a simple theoretical set-up-is that CEO time is a scarce resource and its allocation can help us identify the firm's priorities as well as the presence of governance issues. We follow 94 CEOs of 600 top Italian firms over a pre-specified week and record the time devoted each day to different work activities. We focus on the distinction between time spent with insiders (employees of the firm) and outsiders (people not employed by the firm). Individual CEOs differ systematically in how much time they spend at work and in how much time they devote to insiders vs. outsiders. We analyze the correlation between time use, managerial effort, quality of governance, and firm performance and interpret the empirical findings within two versions of our model, one with effective and one with imperfect corporate governance. The patterns we observe are consistent with the hypothesis that time spent with outsiders is on average less beneficial to the firm and more beneficial to the CEO and that the CEO spends more time with outsiders when governance is poor.
Keywords: Corporate Governance;
Employee Relationship Management;
Managerial Roles;
Time Management;
Performance Productivity;
Italy;
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Working Paper
| HBS Working Paper Series
| 2010
The Distinct Effects of Information Technology and Communication Technology on Firm Organization
Nicholas Bloom, Luis Garicano, Raffaella Sadun and John Van Reenen
Empirical studies on information communication technologies (ICT) typically aggregate the "information" and "communication" components together. We show theoretically and empirically that this is problematic. Information and communication technologies have very different effects on the decisions taken at each level of an organization. Better information access pushes decisions down, as it allows for superior decentralized decision making without an undue cognitive burden on those lower in the hierarchy. Better communication pushes decisions up, as it allows employees to rely on those above them in the hierarchy to make decisions. Using an original dataset of firms from the US and seven European countries we study the impact of ICT on worker autonomy, plant manager autonomy and span of control. Consistent with the theory we find that better information technologies (Enterprise Resource Planning, ERP, for plant managers and CAD/CAM for production workers) are associated with more autonomy and a wider span of control. By contrast, communication technologies (like data networks) decrease autonomy for both workers and plant managers. Treating technology as endogenous using instrumental variables (distance from the birthplace of ERP and heterogeneous telecommunication costs arising from different regulatory regimes) strengthens our results.
Keywords: Communication Technology;
Decision Making;
Governance Controls;
Knowledge Acquisition;
Knowledge Dissemination;
Organizational Structure;
Information Technology;
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Working Paper
| HBS Working Paper Series
| 2010
Matching Firms, Managers, and Incentives
Oriana Bandiera, Luigi Guiso, Andrea Prat and Raffaella Sadun
We exploit a unique combination of administrative sources and survey data to study the match between firms and managers. The data includes manager characteristics, such as risk aversion and talent; firm characteristics, such as ownership; detailed measures of managerial practices relative to incentives, dismissals and promotions; and measurable outcomes, for the firm and for the manager. A parsimonious model of matching and incentive provision generates an array of implications that can be tested with our data. Our contribution is twofold. We disentangle the role of risk-aversion and talent in determining how firms select and motivate managers. In particular, risk-averse managers are matched with firms that offer low-powered contracts. We also show that empirical findings linking governance, incentives, and performance that are typically observed in isolation, can instead be interpreted within a simple unified matching framework.
Keywords: Executive Compensation;
Contracts;
Management Practices and Processes;
Managerial Roles;
Marketplace Matching;
Family Ownership;
Mathematical Methods;
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Working Paper
| 2007
Retail Market Structure and Dynamics: A Three Country Comparison of Japan, the UK and the US
Jonathan Haskel, Ron S. Jarmin, Kazuyuki Motohashi and Raffaella Sadun
This paper compares structure and dynamics of the Retail Trade Sectors in Japan, the U.K. and the U.S. This is done using confidential establishment and firm level data for each country. By using micro data we are able to perform much more detailed comparisons than could be accomplished using publicly available information. We examine cross sectional differences in the size, age, and productivity distributions of retail establishments and firms in the three countries. We also compare entry and exit rates and job creation and destruction rates across the three countries controlling for size, age, and retail industry. We also focus on the role large chain stores play across the three countries.
Keywords: Industry Structures;
Market Entry and Exit;
Jobs and Positions;
Size;
Performance Productivity;
Japan;
United Kingdom;
United States;
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Chapter
| The Global Economic Impact of Private Equity Report 2009
| 2009
Do Private Equity-owned Firms Have Better Management Practices?
Nicholas Bloom, Raffaella Sadun and John Van Reenen
We use an innovative survey tool to collect management practice data from over 4,000 medium sized manufacturing firms across Asia, Europe and the US. These measures of managerial practice are strongly associated with firm-level performance (e.g. productivity, profitability and stock market value). Private equity firms are significantly better managed than government, family and privately owned firms. Although they are also better managed on average than publicly listed firms with dispersed owners, this difference is not statistically significant. Looking at management practices in detail we find that private equity owned firms have strong people management practices (hiring, firing, pay and promotions) but even stronger operations management practices (lean manufacturing, continuous improvement and monitoring). This suggests that private equity ownership is associated with broad based operational improvement in management rather than just stronger performance incentives. Finally, looking at changes in management practices over time, it appears that PE targets poorly managed firms and these firms improve their management practices at a faster rate than other ownership types.
Keywords: Private Equity;
Management Practices and Processes;
Production;
Private Ownership;
Performance Improvement;
Performance Productivity;
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Chapter
| Producer Dynamics: New Evidence from Micro Data
| 2009
Entry, Exit and Labour Productivity in U.K. Retailing: Evidence from Micro Data
Jonathan Haskel and Raffaella Sadun
The paper investigates the U.K. retail sector using store and firm-level data between 1998 and 2003. First, we present the first exhaustive description of the U.K. retail sector using micro data sources. Second, in the spirit of Foster, Haltiwanger, and Krizan (2002), we look at the contributions of firm entry and exit for the productivity growth of the sector. Third, we provide some new evidence of the recent shift of large U.K. retailers toward smaller retail formats, which followed the introduction of new and more restrictive planning constraints for the opening of large retail stores. We suggest that this change in the store configurations of the major retailers might be one of the factors behind the recent TFP slowdown experienced by the industry in the U.K.
Keywords: Business Ventures;
Market Entry and Exit;
Organizational Change and Adaptation;
Performance Productivity;
Retail Industry;
United Kingdom;
Citation: Haskel, Jonathan, and Raffaella Sadun. "Entry, Exit and Labour Productivity in U.K. Retailing: Evidence from Micro Data." Chap. 7 in Producer Dynamics: New Evidence from Micro Data, edited by Timothy Dunne, J. Bradford Jensen, and Mark J. Roberts. University of Chicago Press, 2009. ( Working Paper version.)
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Chapter
| The Oxford Handbook of Information and Communication Technologies
| 2007
Productivity and ICTs: A Review of the Evidence
Mirko Draca, Raffaella Sadun and John Van Reenen
Keywords: Performance Productivity;
Citation: Draca, Mirko, Raffaella Sadun, and John Van Reenen. " Productivity and ICTs: A Review of the Evidence." Chap. 5 in The Oxford Handbook of Information and Communication Technologies, edited by Robin Mansell, Chrisanthi Avgerou, Danny Quah, and Roger Silverstone, 100–147. Oxford University Press, 2007. (August 2006 version available at IDEAS.)
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Other Unpublished Work
| 2010
Does Management Matter: New Empirics and Old Theories
Nicholas Bloom, Christos Genakos, Raffaella Sadun and John Van Reenen
We collect data on management practices on nearly 6,000 firms in 17 countries in the Americas, Europe, and Asia. We present several "stylized facts" finding support for some basic economic theories of management practices–e.g. the positive size-management quality correlation (Lucas, 1978) and the positive relation between exports and management quality (Melitz, 2003). US firms appear on average to have the highest management scores due to their relative absence of a long tail of very badly managed firms. This appears primarily related to more powerful selection effects in North America as the correlation between both firm size and firm growth with management quality is much stronger there. Using new panel data on changes in management practices over time, we argue that more intense product market competition generates both powerful selection effects and incentivizes incumbent firms to upgrade their management practices.
Keywords: Management Practices and Processes;
Organizational Change and Adaptation;
Performance Productivity;
Competition;
Citation: Bloom, Nicholas, Christos Genakos, Raffaella Sadun, and John Van Reenen. "Does Management Matter: New Empirics and Old Theories." 2010.
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