Working Paper: CEPR ID: DP15987
Authors: Fabiano Schivardi; Megha Patnaik; Andrea Linarello; Andrea Lamorgese
Abstract: Do organizational practices help or hinder the firm's capacity to adapt to a changing environment? We use the spread of COVID-19 in Italy, the first Western country hit by the pandemic, to investigate the role of structured management practices in responding to a large shock. We find a sizable, positive effect of structured management practices on firm performance: a one-standard deviation increase in the management score reduces the drop in year-ahead expected sales by 30 percent. Evidence points to the fact that firms with more structured practices were more likely to implement a comprehensive set of changes, such as demand, supply chain and labor management, including more intense use of remote work.
Keywords: management; firm performance; covid19
JEL Codes: D22; D24; L20; L25; M11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| structured management practices (SMPs) (L23) | firm performance (L25) |
| structured management practices (SMPs) (L23) | less severe declines in expected sales (L68) |
| structured management practices (SMPs) (L23) | comprehensive changes (O30) |
| comprehensive changes (O30) | adaptation to the shock (F32) |
| structured management practices (SMPs) (L23) | increased remote work adoption (J62) |
| increased remote work adoption (J62) | better equipped to transition to remote work arrangements (J62) |