Recent Advances in the Empirics of Organizational Economics

Nicholas  Bloom; Raffaella  Sadun; John  Van Reenen

Article | Annual Review of Economics

Recent Advances in the Empirics of Organizational Economics

by Nicholas Bloom, Raffaella Sadun and John Van Reenen

Abstract

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;

Format: Print

33 pages

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Citation:

Bloom, Nicholas, Raffaella Sadun, and John Van Reenen. "Recent Advances in the Empirics of Organizational Economics." Annual Review of Economics 2 (2010): 105–137.

Case | HBS Case Collection | September 2019

Earth Bank of Codes: Making Nature's Biological Assets Visible and Valuable for the Benefit of All

Tarun Khanna, Raffaella Sadun and Susie Ma

In 2019, entrepreneur Juan Carlos Castilla-Rubio was developing a project he hoped could generate and share wealth from the natural resources of the Amazon without destroying those resources. His idea, called Earth Bank of Codes (EBC), would create a library of the genomic codes of all known species that could be tapped for discovery and innovation, from new medical interventions to more efficient manufacturing processes. He proposed to use blockchain technology to make the data both accessible and trackable so that its use could be monitored. Castilla-Rubio envisioned a time when a company in the U.S. could access a biological asset from the Peruvian Amazon, develop and commercialize a product based on the asset, and have a fraction of the resulting sales land directly in the bank account of various beneficiaries, including the Peruvian government and indigenous communities. Now he was facing major decisions about how to structure EBC to achieve his goals. Should he start at the top and build partnerships with national governments and inter-governmental organizations as the cornerstone of EBC? Or would it be better to forge ahead with a few stakeholders in an entrepreneurial project?

Keywords: Decision Making; Development Economics; Entrepreneurship; Innovation and Invention; Intellectual Property; Emerging Markets; Market Design; Marketplace Matching; Science; Genetics; Natural Environment; Environmental Sustainability; Weather and Climate Change; Social Enterprise; Strategy; Strategic Planning; Technology; Ownership; Social Psychology; Trust; Society; Biotechnology Industry; South America; Amazon Basin;

Citation:

Khanna, Tarun, Raffaella Sadun, and Susie Ma. "Earth Bank of Codes: Making Nature's Biological Assets Visible and Valuable for the Benefit of All." Harvard Business School Case 720-356, September 2019. View Details

Cite View Details Educators

Plant management at Pasta Serafina, a pasta producer in the south of Italy, is struggling to contain employee absenteeism. While the misbehavior is concentrated in a minority of the workers, its effects impact not only the plant’s performance, but also the climate and work environment. Embedded in an institutional and legal environment that allows very little room for corrective action, and already dealing with persistent low margins, management decides to address the issue by asking the employees themselves to find a solution to the problem. The case exposes students to managerial challenges associated with curbing moral hazard and changing the company culture in a setting where standard legal and contractual tools, such as firing workers for performance or using incentives to influence behaviors, are not available.

The case complements Pasta Serafina (A) by describing the aftermath of a town hall meeting in which management had publicly denounced the absenteeism problem and challenged the employees to find a solution. In spite of the initial mistrust against management, the fear of an imminent plant closure coupled with the relief associated with finally being able to be heard by management, pushes the employees to act to contain the problem themselves. Within a short time, absenteeism hits record lows. Management, however, is left wondering about the sustainability of the new culture.

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Recent Advances in the Empirics of Organizational Economics

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