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Convergence to the Managerial Frontier

48 Pages Posted: 20 Apr 2016  

William F. Maloney

World Bank - Poverty and Economic Management Unit; IZA Institute of Labor Economics; World Bank - Development Research Group (DECRG)

Mauricio Sarrias

Universidad Católica Del Norte

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Date Written: March 1, 2014

Abstract

Using detailed survey data on management practices, this paper uses recent advances in unconditional quantile analysis to study the changes in the within country distribution of management quality associated with country convergence to the managerial frontier. It then decomposes the contribution of potential explanatory factors to the distributional changes. The United States emerges as the frontier country, not because of better management on average, but because its best firms are far better than those of its close competitors. Part of the process of convergence to the frontier across the development process represents a trimming of the left tail, much is movement of the central mass and, for rich countries, it is actually the best firms that lag the frontier benchmark. Among potential explanatory variables that may drive convergence, ownership and human capital appear critical, the former especially for poorer countries and that latter for richer countries suggesting that the mechanics of convergence change across the process. These variables lose their explanatory power as firm and average country management quality rises. Hence, once in the advanced country range, the factors that improve management quality are less easy to document and hence influence.

Keywords: Economic Theory & Research, Labor Policies, Investment and Investment Climate, Microfinance, Labor Markets

Suggested Citation

Maloney, William F. and Sarrias, Mauricio, Convergence to the Managerial Frontier (March 1, 2014). World Bank Policy Research Working Paper No. 6822. Available at SSRN: https://ssrn.com/abstract=2417520

William F. Maloney (Contact Author)

World Bank - Poverty and Economic Management Unit ( email )

1818 H Street NW
Washington, DC 20433
United States
202-473-6340 (Phone)
202-522-0054 (Fax)

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

World Bank - Development Research Group (DECRG)

1818 H. Street, N.W.
MSN3-311
Washington, DC 20433
United States

Mauricio Sarrias

Universidad Católica Del Norte

Avenida Angamos 0610
Antofagasta, II Region 1270709
Chile

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