Standardized Management Scoring and Global Practice Stochastic Dominance
Comparing management effectiveness across nations historically suffered from severe measurement bias. Without double-blind scoring across distinct operational dimensions, researchers could not quantify how managerial practices directly impact national productivity gaps.
Picture this
Think of evaluating drivers in different countries by using the exact same standardized road test scored by hidden observers; this reveals that drivers in some countries consistently skip basic safety checks like adjusting mirrors and using turn signals.
What the evidence says
Developing nations (Brazil, China, India) exhibit significantly lower average management scores, with their entire distribution of management practices stochastically dominated by firms in rich countries.
- Who
- Medium and large manufacturing firms (100 to 5,000 employees) across the US, Japan, Western Europe, Brazil, China, and India.
- How
- Double-blind interview survey technique scoring three dimensions: monitoring practices, target-setting practices, and incentive practices.
What to do
Implement double-blind internal evaluations across plant monitoring, target-setting, and merit-based incentive systems to benchmark operations against global standards.
From the source
"They find that developing countries like Brazil, China and India have significantly lower average management scores than firms in the United States, Japan and Western Europe. In fact, the whole distribution of practices across firms in developing countries is typically stochastically dominated by the distribution in rich countries."
533 firm management AEA2010.pdf