Income inequality is less severe in Germany than in the US. Part of this is due to CEO pay in the US growing faster than in Germany. This column offers some novel explanations for these observations. From the mid-1990s, Germany began offshoring managerial tasks to Eastern Europe, reducing demand for German managers. In addition Germany offshored skill-intensive jobs to Eastern Europe, reducing the skill premium.
Dalia Marin , 23 June 2016
Matthieu Crozet, Emmanuel Milet, 14 December 2015
Industrial classifications tend to depict the economy as a collection of separate sectors, and arbitrary lines are consequently drawn between these sectors. This column argues that this way of thinking ignores the complexity of production processes and management strategies, creating a divide between ‘manufacturing’ and ‘services’ which is stronger than it should be. In fact, manufacturing firms often produce and sell services to third parties – known as ‘servitisation’. Economic policies that fail to take into account the dual aspect of the activities of manufacturing firms may prove inadequate.
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.
Nicholas Bloom, Renata Lemos, Raffaella Sadun, John Van Reenen, 07 December 2014
Schools with greater autonomy often perform well, but there is disagreement over whether this is due to better management or cherry-picking of students. Based on interviews with over 1,800 head teachers, this column finds that management quality is strongly correlated with pupil performance. Autonomous schools have better management, and this result does not appear to be driven by pupil composition or other observable factors. However, autonomy for head teachers is not enough – accountability to school governors is also needed.
Alex Edmans, 25 July 2014
Happy workers might well be more productive than unhappy ones, but high worker satisfaction could also be a sign that workers are overpaid or underworked. This column examines the link between worker satisfaction and future stock returns in 14 countries. In most but not all countries, employee satisfaction is associated with higher future stock returns. Abnormal returns to companies with high worker satisfaction are significantly increasing in the flexibility of their countries’ labour markets.
Hiromi Ishizuka, 10 July 2014
Japan has one of the highest labour market gender gaps among the advanced economies. This column examines the current status of gender diversity in management in Japan, China, and South Korea. Despite some pronounced differences, economic gender gaps are large in all of the three countries. But overall, gender diversity in management in Japan is slowly beginning to emerge.
Masayuki Morikawa, 19 June 2014
Headquarters play important strategic roles in modern companies, but downsizing of headquarters is often advocated as a cost-cutting measure. This column presents evidence from Japanese firm-level data that the size of headquarters is positively associated with firms’ overall productivity. Moreover, the benefits of ICT are greater for companies with relatively large headquarters. Downsizing headquarters to cut costs may thus be harmful for long-term company performance.
Masayuki Morikawa, 26 August 2014
Headquarters play important strategic roles in modern companies, but downsizing of headquarters is often advocated as a cost-cutting measure. This column presents evidence from Japanese firm-level data that headquarters size is positively associated with firms’ overall productivity. Moreover, the benefits of ICT are greater for companies with relatively large headquarters. Downsizing headquarters to cut costs may thus be harmful for long-term company performance.
Amanda Goodall, John McDowell, Larry Singell, 31 January 2014
Much of human knowledge is produced in the world’s university departments, yet little is known about how these hundreds of thousands of departments are best organised and led. This column explores the association between the personal research output of a department head and the department’s subsequent performance. Results suggest that if a department wants to improve its reputation in the world, then the chair should be a highly cited researcher.
Fadi Hassan, Gianmarco I.P. Ottaviano, 30 November 2013
The long-lasting stagnation in Italy has often been explained by the country’s lost of competitiveness, but focus on total factor productivity has been scarce. This column discusses the effect of capital and labour misallocation on the productivity slowdown. Such misallocation could not result from labour rigidity, but could be due to limited ICT investment and penetration. Rigid non-meritocratic management practices can greatly affect ICT exploitation, and subsequently – overall productivity growth.
Imran Rasul, Daniel Rogger, 19 November 2013
Around the world, civil service reform is viewed as necessary to deliver public services effectively and to foster development. However, evidence is thin on how the management of bureaucrats affects the provision of public services. This column presents new evidence from Nigeria linking completion rates of government projects to bureaucractic management practices. Greater autonomy is associated with higher completion rates, whereas performance monitoring and incentive schemes seem to backfire. The most effective private-sector management practices may not be suited to public sector bureaucracies.
John McCormack, Carol Propper, Sarah Smith, 07 November 2013
The conventional wisdom is that managing academics is futile. This column challenges this view by comparing management performance in UK universities with measures of research and teaching quality. Universities with better management have better performance. This holds for all types of universities, and the results are not driven by differences in resources. Recruitment, retention, and promotion are the most important aspects of management in universities, but management at the level of academic departments – not human resources departments – is what matters.
Alex Bryson, 21 October 2011
A growing body of evidence indicates that certain modern management practices increase firm profitability. What remains largely unknown is their effect on workers’ wellbeing. This column uses data from Finland and suggests high-involvement management – that is, engaging workers more fully in their jobs – is associated with higher job satisfaction, non-tiredness, and a lower probability of accident.
Andrea Prat, Oriana Bandiera, Luigi Guiso, Raffaella Sadun, 28 May 2011
What do CEOs get up to all day? Most accounts are based on surprisingly small samples. A new study of how CEOs allocate their time yields some surprising results.
Anne Murphy, 22 May 2011
Working 9 to 5, Monday to Friday is the typical grind in Anglo-Saxon economies. In some professions, longer hours and low pay for junior workers is justified by the end reward of much better pay and a better work-life balance as they gain seniority. This column examines the workings of the Bank of England in 1783 to show the beginnings of this working culture.
Nicholas Bloom, Aprajit Mahajan, David McKenzie, John Roberts, 13 April 2011
“The Office”, a popular British television programme, has been shown in more than 50 countries. Its international appeal likely stems from its universal theme: managerial incompetence. This column looks at the case of India and shows how the poor management of its companies is holding the country back.
Chad Syverson, 25 June 2010
This column summarises a wealth of literature that tries to understand what determines productivity, which is often referred to as a measure of our ignorance. It concludes with a call for more data – including currently unmeasured aspects of business’s production practices such as producer-level prices. While collecting more data is costly, this column argues that there is much to be gained in exchange.
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.
Evren Örs, Frédéric Palomino, Eloïc Peyrache, 21 July 2008
What causes the persistent gender gap among high-income earners? Using entrance exams from an elite French university, this column suggests that part of the explanation may lie in gender differences in performing under competitive pressure.
Nicholas Bloom, Raffaella Sadun, John Van Reenen, 12 July 2007
US firms typically have better management practices than their European counterparts. This ‘management gap’ has a direct impact on productivity differences. Policies on competition, labour market flexibility and education are key to closing the gap.