Better management practices are associated with better firm performance, and the quality of management practices is also associated with per capita income. This column explores the effect of business practices on small firms in developing countries. The findings indicate that better business practices are correlated with higher productivity, higher firm profits, and higher rates of survival. Poor business practices are holding back small firms in developing countries.
David McKenzie, Christopher Woodruff, 21 September 2015
Toshihiro Okubo, Yukako Ono, Yukiko Umeno Saito, 04 September 2015
The productivity of a firm depends on its interaction with its suppliers and customers. This column uses unique data from Japan to investigate the wholesalers’ role in transaction networks, considering both sides of the transaction. The likelihood that a firm uses wholesalers increases with smaller buyer-side firms and larger seller-side firms. In addition, wholesalers tend to be located closer to their manufacturing buyers and further from their manufacturing sellers than manufacturers are to their direct manufacturing partners.
Virginia Di Nino, 08 June 2015
The high-flying productivity of exporting firms is one of the reasons governments promote exporting. This column presents new evidence on ‘carry along trade’, i.e. exports by firms who did not produce the final good. In Italy, about a quarter of manufacturing exports involve goods sold by a manufacturer which is not the actual producer. These firms hold a sizeable productivity premium and many superstar firms are not super-producers.
Oriana Bandiera, Andrea Prat, Raffaella Sadun, 12 February 2015
The hypothesis that family firms are good for growth has come under scrutiny in recent years. This paper presents novel evidence on fundamental differences in behaviour between family and professional CEOs. Family managers tend to work at least 9% less than non-family ones, which is driven by their preferences for leisure and work. Family CEOs are typically wealthier and thus increase their consumption of leisure, which is a normal good. However, this behaviour may have adverse effects on family owned firms since hours worked by CEOs are strongly related with productivity. Given the ubiquity of family-run firms, this can impact the entire economy.
Colin Hottman, Stephen Redding, David E. Weinstein , 14 October 2014
Recent research highlights that important factors for firm size are costs, quality, markups, and product scope. This column explores the sources that make these factors differ across firms. Quality, including in the form of variation in product scope, is the chief determinant of firm sales. Marginal cost variations do not matter much for firm size.
Filippo di Mauro, 11 March 2014
Policies aimed at enhancing firm productivity may greatly benefit from firm-level evidence. Unfortunately, micro-founded data, particularly of cross-country nature, remain largely unavailable. This column presents a new firm-level database built by a research network of the EU system of central banks (CompNet). This data base allows investigating how firm size and labour costs interact at different levels of productivity. This new cross-country data base, and its potential to expand, could be of great policy value.
John Van Reenen, 05 March 2010
How important are management practices in driving the performance of firms and the productivity of nations across Asia, Europe and North America? John Van Reenen, director of the Centre for Economic Performance (CEP) at the London School of Economics, talks to Romesh Vaitilingam about CEP’s research programme on the economics of management and productivity. The interview was recorded in London in February 2010.
Dean Yang, 24 March 2009
Many emphasise the importance of export growth in economic development, but does exporting increase economic growth or does growth increase exports? This column presents evidence from a natural experiment – demand shocks experienced by Chinese exporters due to the Asian financial crisis – suggesting that exporting improves firm performance.
Sandra Poncet, 16 February 2009
This column says that less-productive Japanese firms are more sensitive to distance and institutional quality in their locational decisions abroad. Alternatively, the greater responsiveness of low-productivity firms to the presence of an export promotion agency or a Japanese community indicates that networks and spillovers may help to mitigate these impediments.