Working Paper: NBER ID: w29591
Authors: Nicholas Bloom; Takafumi Kawakubo; Charlotte Meng; Paul Mizen; Rebecca Riley; Tatsuro Senga; John Van Reenen
Abstract: We link a new UK management survey covering 8,000 firms to panel data on productivity in manufacturing and services. There is a large variation in management practices, which are highly correlated with productivity, profitability and size. Uniquely, the survey collects firms’ micro forecasts of their own sales and also macro forecasts of GDP. We find that better managed firms make more accurate micro and macro forecasts, even after controlling for their size, age, industry and many other factors. We also show better managed firms appear aware that their forecasts are more accurate, with lower subjective uncertainty around central values. These stylized facts suggest that one reason for the superior performance of better managed firms is that they knowingly make more accurate forecasts, enabling them to make superior operational and strategic choices.
Keywords: No keywords provided
JEL Codes: J0
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Management practices (M54) | Forecasting accuracy (C53) |
| Management practices (M54) | Micro forecasts (E17) |
| Management practices (M54) | Macroeconomic indicators forecasting (GDP growth) (E27) |
| Management practices (M54) | Firm performance metrics (productivity and profitability) (L25) |
| Better-managed firms (D22) | Lower subjective uncertainty regarding forecasts (C53) |