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Does management matter? Evidence from India

Bloom, Nicholas, Eifert, Ben, Mahajan, Aprajit, McKenzie, David and Roberts, John (2013) Does management matter? Evidence from India. Quarterly Journal of Economics, 128 (1). pp. 1-51. ISSN 0033-5533

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Identification Number: 10.1093/qje/qjs044

Abstract

A long-standing question is whether differences in management practices across firms can explain differences in productivity, especially in developing countries where these spreads appear particularly large. To investigate this, we ran a management field experiment on large Indian textile firms. We provided free consulting on management practices to randomly chosen treatment plants and compared their performance to a set of control plants. We find that adopting these management practices raised productivity by 17% in the first year through improved quality and efficiency and reduced inventory, and within three years led to the opening of more production plants. Why had the firms not adopted these profitable practices previously? Our results suggest that informational barriers were the primary factor explaining this lack of adoption. Also, because reallocation across firms appeared to be constrained by limits on managerial time, competition had not forced badly managed firms to exit.

Item Type: Article
Official URL: http://qje.oxfordjournals.org/
Additional Information: © The Author(s) 2012. Published by Oxford University Press, on behalf of President and Fellows of Harvard College.
Divisions: Centre for Economic Performance
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HD Industries. Land use. Labor > HD2329 Industrialization
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
JEL classification: L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior
M - Business Administration and Business Economics; Marketing; Accounting > M2 - Business Economics
O - Economic Development, Technological Change, and Growth > O1 - Economic Development > O14 - Industrialization; Manufacturing and Service Industries; Choice of Technology
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O32 - Management of Technological Innovation and R&D
O - Economic Development, Technological Change, and Growth > O3 - Technological Change; Research and Development > O33 - Technological Change: Choices and Consequences; Diffusion Processes
Sets: Research centres and groups > Centre for Economic Performance (CEP)
Date Deposited: 02 Sep 2014 11:03
Last Modified: 20 May 2019 01:34
Funders: Alfred Sloan Foundation, Freeman Spogli Institute, International Initiative, Graduate School of Business at Stanford, International Growth Centre, Institute for Research in the Social Sciences, Kauffman Foundation, Murthy Family, Knowledge for Change Trust Fund, National Science Foundation, Toulouse Network for Information Technology, World Bank
URI: http://eprints.lse.ac.uk/id/eprint/59335

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