Working Paper: CEPR ID: DP9886
Authors: Nicholas Bloom; Erik Brynjolfsson; Lucia Foster; Ron Jarmin; Megha Patnaik; Itay Saporta-Eksten; John Van Reenen
Abstract: The Census Bureau recently conducted a survey of management practices in over 30,000 plants across the US, the first large-scale survey of management in America. Analyzing these data reveals several striking results. First, more structured management practices are tightly linked to higher levels of IT intensity in terms of a higher expenditure on IT and more on-line sales. Likewise, more structured management is strongly linked with superior performance: establishments adopting more structured practices for performance monitoring, target setting and incentives enjoy greater productivity and profitability, higher rates of innovation and faster employment growth. Second, there is a substantial dispersion of management practices across the establishments. We find that 18% of establishments have adopted at least 75% of these more structured management practices, while 27% of establishments adopted less than 50% of these. Third, more structured management practices are more likely to be found in establishments that export, who are larger (or are part of bigger firms), and have more educated employees. Establishments in the South and Midwest have more structured practices on average than those in the Northeast and West. Finally, we find adoption of structured management practices has increased between 2005 and 2010 for surviving establishments, particularly for those practices involving data collection and analysis.
Keywords: IT; Management; Organization; Productivity
JEL Codes: M2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| structured management practices (L23) | higher IT intensity (L86) |
| structured management practices (L23) | superior performance (D29) |
| higher IT intensity (L86) | improved operational efficiency (L23) |
| structured management practices (L23) | greater productivity (O49) |
| structured management practices (L23) | greater profitability (L21) |
| structured management practices (L23) | greater innovation (O35) |
| structured management practices (L23) | faster employment growth (J68) |
| larger establishments (L68) | adoption of structured management practices (L23) |
| higher employee education (J24) | adoption of structured management practices (L23) |
| exporting firms (F10) | adoption of structured management practices (L23) |
| geographic location (South and Midwest) (R23) | adoption of structured management practices (L23) |
| time (2005 to 2010) (C41) | increase in adoption of structured management practices (L23) |