Modern Management: Good for the Environment or Just Hot Air?

36 Pages Posted: 10 Oct 2008 Last revised: 29 Oct 2014

See all articles by Nicholas Bloom

Nicholas Bloom

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Christos Genakos

Cambridge University; Centre for Economic Performance (CEP)

Ralf Martin

London School of Economics & Political Science (LSE) - Department of Economics; Imperial College Business School

Raffaella Sadun

Harvard University - Strategy Unit; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 3 versions of this paper

Date Written: October 2008

Abstract

We use an innovative methodology to measure management practices in over 300 manufacturing firms in the UK. We then match this management data to production and energy usage information for establishments owned by these firms. We find that establishments in better managed firms are significantly less energy intensive. They use less energy per unit of output, and also in relation to other factor inputs. This is quantitatively substantial: going from the 25th to the 75th percentile of management practices is associated with a 17.4% reduction in energy intensity. This negative relationship is robust to a variety of controls for industry, location, technology and other factor inputs. Better managed firms are also significantly more productive. One interpretation of these results is that well managed firms are adopting modern lean manufacturing practices, which allows them to increase productivity by using energy more efficiently. This suggests that improving the management practices of manufacturing firms may help to reduce greenhouse gas emissions.

Suggested Citation

Bloom, Nicholas and Genakos, Christos and Martin, Ralf and Sadun, Raffaella, Modern Management: Good for the Environment or Just Hot Air? (October 2008). NBER Working Paper No. w14394. Available at SSRN: https://ssrn.com/abstract=1281886

Nicholas Bloom (Contact Author)

Stanford University - Department of Economics ( email )

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Christos Genakos

Cambridge University ( email )

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Centre for Economic Performance (CEP) ( email )

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Ralf Martin

London School of Economics & Political Science (LSE) - Department of Economics ( email )

Houghton Street
London WC2A 2AE
United Kingdom

Imperial College Business School ( email )

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Raffaella Sadun

Harvard University - Strategy Unit ( email )

Harvard Business School
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Boston, 02163
United States

HOME PAGE: http://people.hbs.edu/rsadun

London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP) ( email )

Houghton Street
London WC2A 2AE
United Kingdom

HOME PAGE: http://cep.lse.ac.uk/_new/staff/person.asp?id=1758

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Centre for Economic Policy Research (CEPR) ( email )

London
United Kingdom

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