Measuring and Explaining Management Practices Across Firms and Countries

Abstract

We use an innovative survey tool to collect management practice data from 732 medium sized firms in the U.S., France, Germany and the U.K. These measures of managerial practice are strongly associated with firm-level productivity, profitability, Tobin's Q and survival rates. Management practices also display significant cross-country differences with U.S. firms on average better managed than European firms, and significant within-country differences with a long tail of extremely badly managed firms. We find that poor management practices are more prevalent when product market competition is weak and/or when family-owned firms pass management control down to the eldest sons (primo geniture).