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Management in production: from unobserved to observed

Author

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  • Thomas P. Triebs

    (Loughborough University)

  • Subal C. Kumbhakar

    (State University of New York)

Abstract

Are productivity estimates good proxies for unobserved management? And, does management affect production in a neutral and monotonic fashion as assumed by these proxies? We use Bloom and Van Reenen’s management data to show that two popular proxies, fixed effects and inefficiency scores, correlate with observed management practices. We find that the correlations are positive but weak. Also, management explains only a fraction of the proxies’ variances. The data rejects the assumptions of neutrality and monotonicity. Last, our results suggest that management has characteristics both of a technology and an input.

Suggested Citation

  • Thomas P. Triebs & Subal C. Kumbhakar, 2018. "Management in production: from unobserved to observed," Journal of Productivity Analysis, Springer, vol. 49(2), pages 111-121, June.
    • Handle: RePEc:kap:jproda:v:49:y:2018:i:2:d:10.1007_s11123-018-0526-x
    DOI: 10.1007/s11123-018-0526-x
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    Cited by:

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    6. Alecos Papadopoulos, 2021. "Measuring the effect of management on production: a two-tier stochastic frontier approach," Empirical Economics, Springer, vol. 60(6), pages 3011-3041, June.
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    More about this item

    Keywords

    Management practice; production functions; stochastic frontier analysis; semiparametric models;
    All these keywords.

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • C14 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Semiparametric and Nonparametric Methods: General
    • M11 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Production Management

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