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Journal article

Does management matter? Evidence from India


A long-standing question is whether differences in management practices across firms can explain differences in productivity, especially in developing countries where these spreads appear particularly large. To investigate this, we ran a management field experiment on large Indian textile firms. We provided free consulting on management practices to randomly chosen treatment plants and compared their performance to a set of control plants. We find that adopting these management practices raised productivity by 17% in the first year through improved quality and efficiency and reduced inventory, and within three years led to the opening of more production plants. Why had the firms not adopted these profitable practices previously? Our results suggest that informational barriers were the primary factor explaining this lack of adoption. Also, because reallocation across firms appeared to be constrained by limits on managerial time, competition had not forced badly managed firms to exit.


Nicholas Bloom, Benn Eifert, Aprajit Mahajan, David McKenzie and John Roberts

1 February 2013


The Quarterly Journal of Economics 128(1) , pp.1-51, 2013


DOI: 10.1093/qje/qjs044

https://academic.oup.com/qje/article/128/1/1/1838606

This Journal article is published under the centre's Growth programme.

This publication comes under the following theme: Management practices and productivity