Management Practices in the Manufacturing Sector in Pakistan

For the past few decades, economists have documented surprising differences in firm-level performance between and within developing and more developed countries. The speculation as to why these large differences exist and, particularly why there is such inefficiency in the use of inputs in developing countries has led many business-people and policy-makers to believe that poor business and management skills are a major reason for lower levels of development in Asia, Africa, and Latin America. This project explores whether weak management hinders productivity and innovation, and contributes to the low levels of growth observed in low-income countries.

Drawing on a management and organizational practices survey (MOPS) previously administered to over 30,000 plants through the US Census Bureau, the research team will expand the analysis of management practices in Pakistan, a lower-middle income country (LMIC). Following the literature, the researchers test the hypothesis that poor management practices in Pakistan significantly contribute to the lower levels of development in the country, hamper firms’ ability to innovate, to exploit new technologies, and to react to the challenges of globalization. They will partner with the State Bank of Pakistan and the Pakistan Bureau of Statistics to collect management data from 2,000 firms in Punjab, Pakistan, document how the firms are managed, and examine whether management practices vary with size, industry type, financial particulars, and performance indicators.  

By analysing firms in Pakistan, the researchers will be able to identify the strengths and weakness in management practices in Punjab and explore the ways in which firms in Pakistan can potentially emulate the development path of firms in other Asian middle income countries. The research can identify where management improvements at the firm level are the most necessary, which has great potential to improve productivity. Understanding the mechanisms of firm upgrading through improved management quality will allow for stronger policy recommendations for stimulating growth not only in Pakistan but also in other LMICs. 

Authors

Renata Lemos

University of Cambridge