What explains differences in productivity across firms and countries? For the past decade, a project called the World Management Survey (WMS) has been collecting management data to understand the role of management practices as an important factor in explaining variation in firm productivity.
Bloom et al. (2016) find three key results, which are briefly summarized and discussed in this article. First, there are large and persistent variations in management practices across firms and countries. Second, these variations in management practices account for much of the variation in productivity, growth, innovation and exporting we see across firms and countries. Finally, the authors find five key factors that are associated with better management practices, which are shown in the box on the right. Hence, policies to open markets, relax ownership controls, increase trade and FDI, deregulate markets and raise workforce skills will help to improve management practices, and thus productivity and growth.