WORKING PAPERS

The ties that bind: implicit contracts and the adoption of management technology in the firm
with R. Lemos

Covered on: World Bank’s Development Impact blog, The Economist, LSE Business Review, VoxDev

Awarded Accessit Best Paper at IOEA 2018.
[project website] [CEPR Discussion Paper]

We investigate how implicit contracts between firm managers and employees are linked to the adoption of productivity-enhancing organizational practices. We collect new data on ownership successions and show the first causal evidence that maintaining family control leads to lower adoption of managerial best practices. We use gender composition of the outgoing CEO’s children as identifying variation at the succession point. We explore firm “reputation costs” as a novel mechanism constraining investment in management, and build a new proxy using data on eponymy — firms named after the family name. We find suggestive evidence that implicit contracts matter for management adoption.

Building a productive workforce: the role of management practices (under review)
with C. Cornwell and I. Schmutte

Covered on: IDE Inclusive Innovation, MIT Ideas made to matter
[project summary] [CEPR Discussion Paper]

While it is well established that management practices matter for productivity, the mechanisms behind this stylized fact are less well understood. In this paper, we explore how personnel management practices relate to actual HR outcomes and productivity. We match management practices data from the World Management Survey to AKM estimates of worker and firm fixed effects from ten years of Brazilian employment administrative data. We five key findings: first, consistent with the literature, we find that worker and manager fixed effects are positively correlated with TFP. Second, we find that better managed firms capture a higher share of total employment over time, consistent with a reallocation story. Third, we find evidence of positive recruitment: better managed firms hire a larger share of their new recruits from the top of the distribution of worker fixed effects. Fourth, we find suggestive evidence of better worker matching and retention from lower separation rates. Fifth, we decompose the variation of personnel management practices and find that promotion and retention practices show the strongest correlation with manager fixed effects.

Measuring and explaining management in schools: New approaches using public data (under review)
with C. Leaver and R. Lemos

[CEPR Discussion Paper]

Why do some students learn more in some schools than others? One consideration receiving growing attention is school management. To study this, researchers need to be able to measure school management accurately and cheaply at scale, and also explain any observed relationship between school management and student learning. This paper introduces a new approach to measurement using existing public data, and applies it to build a management index covering 15,000 schools across 65 countries, and another index covering nearly all public schools in Brazil. Both indices show a strong, positive relationship between school management and student learning. The paper then develops a simple model that formalizes the intuition that strong management practices might be driving learning gains via incentive and selection effects among teachers, students and parents. The paper shows that the predictions of this model hold in public data for Latin America, and draws out implications for policy.

The capacity to be aggressive: structured management and profit shifting practices in the firm [new version coming soon]
with Kat Bilicka

​This paper uses data on corporate profits and taxes matched to data on management practices to consider the effect of management practices on tax planning behavior of multinational companies. Management practices improve productivity and hence should increase taxable corporate income of firms. However, better managed firms may also be better at tax avoidance. We show that better managed multinational firms have higher reported profits in low tax countries relative to high tax countries. This is especially true for better managed multinationals from high tax countries. These firms also tend to report close to zero returns on assets in high tax countries. These patterns are consistent with better managed firms shifting profits out of high tax country affiliates into low tax country affiliates. We will further explore these patterns using the confidential population of UK tax returns.

School management and productivity in the public sector: evidence from India [slides]
with R. Lemos and K. Muralidharan

This paper uses two new datasets to study management and productivity in primary schools in India. We report four main sets of results. First, management quality in public schools is low on average, but there is meaningful variation across public schools that is correlated with both independent measures of teaching practice, as well as measures of student value added. Second, we find higher management scores in private schools, and this advantage is mainly driven by differences in people management (as opposed to operations management). Third, we find that the private school advantage over public schools in student value-added is largely accounted for by differences in people management practices. Fourth, we find that the private-school advantage in measures of people management is consistent with independent measures of personnel policy. Specifically, private school teacher pay is positively correlated with measures of teacher value-added, and private schools are more likely to retain teachers with higher value-addition and let go teachers with lower value-addition. Neither pattern is seen in public schools.

SELECTED WORK IN PROGRESS: FIRMS

Family firms, female leadership and management in Denmark
with M. Bennedsen and M. Tsoutsoura

We have collect data on management structures of almost 5000 firms in Denmark, mirroring the US Census Management and Organizational Practices Survey. In this project, we match the MOPS Denmark data to family history, production and employee roster datasets to build a unique database to explore new patterns. One key question to explore circles around issues of gender in management styles and productivity. For example, do female CEOs have different management styles and what impact does this have on productivity and workers?

SELECTED WORK IN PROGRESS: SCHOOLS

Where the money goes: school management and resource allocation in Brazil
with D. Clarke and T. Teodorovicz

Teachers account for one of the largest chunks of expenditures of public school systems, and teachers are also one of the key inputs into the education production function. Public school systems are often constrained in wage-setting and cannot actively implement incentive-pay schemes. So what works in improving teacher performance in public schools? We explore a change in the funding formula for public schools in Brazil that mandates an exogenously set share of resources that must be used in the teacher wage bill of school systems. This change affected Brazil’s municipalities differently as some received different amounts of funds, and chose to spend their funds in different ways. In this paper, we first provide a long-term look at 20 years of data and document how teacher salaries, number of teachers employed and student-teacher ratios have changed over time in Brazilian municipalities. Secondly, we employ an event study to document how different municipalities responded to the funding change and explore the characteristics that may help explain the heterogeneity in resource usage as well as student outcomes. We propose that management practices across different school systems explains part of the superior/inferior ability of school systems to effectively use and distribute the increase in resources they experienced after the funding formula change.

SLUMBERING PAPERS/PROJECTS

Developing management: an expanded evaluation tool for developing countries (RISE Working Paper 7) [project website] [slides]
with R. Lemos

Coverage: World Bank blog

There is striking evidence showing a large tail of badly managed schools and hospitals in developing countries across several management areas such as operations management, performance monitoring, target setting and people management. But where exactly, along the process of setting their management structures, are these organizations failing? This paper presents new evidence from an expanded survey tool based on the World Management Survey instrument. We collect detailed data using face-to-face interviews in settings where weak management practices prevail and observe more variation in the left tail of the distribution. Using this data, we explore three main “activities” within each management area: (1) process implementation, (2) process usage, (3) process monitoring efficiency and frequency. We have collected data with schools in India and Mexico and are working with teams surveying schools in Colombia and hospitals in China and India.