The Impact of Management Practices and Organizational Structure on Firm Performance

A Cross Country Empirical Analysis

Diploma Thesis , 2007 , 109 Pages , Grade: 1,3

Business economics - Industrial Management

“The most significant factor in America, leading to high production at low cost, is efficient management.” This quotation is not from a longitudinal, empirical study, but it is stated by the British Productivity Council in the context of the Marshal Plan - the Anglo - American productivity mission in 1951. Hence, one question might be: Is there indeed a strong link between management practices and firm performance? A further question might be: How American management practices rank compared with European or Asian management practices? And what role plays organizational structure on firm performance? Are there interacted effects between management practices and organizational structure? Insights into the impact of management practices and organizational structure on firm performance are mainly based on theories.
Consequently, there is a strong need to measure management practices and organizational structure across countries and cultures to verify theoretical hypotheses with empirical data. This paper sheds some empirical light on these topics as well as on the distribution of management practices and organizational structures across countries and industries.
This book is based on a unique data set with more than 3500 management interviews to document and analyze the influence of management practices and organizational structure on firm performance (Bloom 2010). Furthermore, the role and impact of organizational change is obtained and compared to a strand of literature.
This book relates to a number of strands in the literature. It builds on and extends the paper of Nick Bloom and John van Reenen (2007) “Measuring and explaining management practices across countries and industries.” Furthermore, this paper is related to the paper of Marianne Bertrand and Antoinette Schoar (2003), “Managing with style: the effect of managers on firm policies“ in which the effect of individual managers on firm performance is analyzed. This paper also builds on major organizational theories from Chandler, Lawrence and Lorsch and Picot.
The empirical data has been obtained in a London School of Economics, McKinsey & Company and Stanford University joint project. The author of the book was part of a team of 35 international MBA, Ph.D students and professionals from top business schools around the world and conducted 201 management interviews himself.

Inhaltsverzeichnis (Table of Contents)

• 1. Introduction.
• 1.1. Rationale and Motivation
• 1.2. Project and Layout.
• 2. Literature Review of Empirical Literature and Theoretical Discussion
• 2.1. Management Practices and Firm Performance
• 2.2. Organizational Structure and Firm Performance
• 2.2.1. Difficulties.
• 2.2.2. Empirical Literature.........
• 2.2.3. Theoretical Discussion: Contingency Theory and Trade Off Decentralization..
• 2.3. Organizational Structure, Management Practices and Firm Performance.......
• 2.3.1. Difficulties.
• 2.3.2. Empirical Literature.......
• 2.3.3. Hypothesis based on Principal Agent Theory.......
• 2.3.4. Hypotheses based on Change Management Literature
• 3. Data Collection and Method
• 3.1. Measuring Management Practices.
• 3.2. Measuring Organizational Structure.
• 3.2.1. Overview
• 3.2.2. Plant Autonomy..
• 3.2.3. Worker Autonomy..
• 3.2.4. Span of Control .....
• 3.2.5. Number of Hierarchical Levels and Number of Levels Changed in the Last Three Years
• 3.2.6. Firm Slope and Plant Slope.
• 3.3. Measuring Firm Performance
• 3.4. Measuring Competition
• 3.5. The Interview Process: Obtaining the Truth
• 3.6. Noise in the Signal
• 3.6.1. Control Variables....
• 3.6.2. Second Interviews.......
• 4. Data Description...
• 4.1. Sample Description and Criteria.
• 4.2. Country Comparisons
• 4.2.1. Management Practices...
• 4.2.2. Organizational Structures.
• 4.3. Industry Comparisons
• 4.4. Explanations and the Role of Regulation
• 5. Summary of Hypotheses and Econometric Modeling
• 6. Results.....
• 6.1. The Impact of Management Practices on Firm Performance..\n
• 6.1.1. Hypothesis 1.
• 6.1.2. Discussion and Managerial Implication
• 6.2. The Impact of Organizational Structure on Firm Performance .\n
• 6.2.1. Hypotheses 2-5
• 6.2.2. Discussion and Managerial Implication......
• 6.3. The Impact of Management Practices and Organizational Structure on Firm Performance
• 6.3.1. Hypotheses 6-9
• 6.3.2. Discussion and Managerial Implication......
• 7. Conclusion
• 7.1. Limitations
• 7.2. Contribution and Future Research

Zielsetzung und Themenschwerpunkte (Objectives and Key Themes)

This study aims to analyze the impact of management practices and organizational structure on firm performance across different countries. The research investigates the relationship between these factors and the performance of firms within a cross-national framework.

• The influence of management practices on firm performance.
• The impact of organizational structure on firm performance.
• The combined effect of management practices and organizational structure on firm performance.
• The role of national context and regulations in shaping the relationship between management practices, organizational structure, and firm performance.
• The implications of the findings for management practices and organizational design.

Zusammenfassung der Kapitel (Chapter Summaries)

• Chapter 1: Introduction. This chapter sets the stage for the research by providing the rationale and motivation for the study. It outlines the project's goals and the overall layout of the paper.
• Chapter 2: Literature Review of Empirical Literature and Theoretical Discussion. This chapter presents a comprehensive review of existing empirical literature and theoretical frameworks related to the study's key themes. It discusses the relationship between management practices and firm performance, organizational structure and firm performance, and the combined impact of both factors on firm performance.
• Chapter 3: Data Collection and Method. This chapter describes the methodology used for data collection and analysis. It details the process of measuring management practices, organizational structure, firm performance, and competition. It also discusses the control variables and the interview process employed to ensure data accuracy.
• Chapter 4: Data Description. This chapter presents a detailed description of the sample data, including characteristics of the firms studied and comparisons across countries and industries. It also highlights potential explanations and the role of regulation in shaping the data patterns.
• Chapter 5: Summary of Hypotheses and Econometric Modeling. This chapter outlines the key hypotheses developed based on the literature review and the theoretical framework. It also describes the econometric models used to test these hypotheses.
• Chapter 6: Results. This chapter presents the results of the empirical analysis. It examines the impact of management practices, organizational structure, and their combination on firm performance. The chapter discusses the findings for each hypothesis and its managerial implications.

Schlüsselwörter (Keywords)

The primary keywords and focus topics of this study are: management practices, organizational structure, firm performance, cross-country analysis, empirical research, contingency theory, principal-agent theory, change management, national context, regulations.

• College: LMU Munich (Information, Organisation und Management / und CDTM)
• Grade: 1,3
• Author: Stefan Jelinek (Author)
• Publication Year: 2007
• Pages: 109
• Catalog Number: V163137
• ISBN (eBook): 9783640779130
• ISBN (Book): 9783640778638
• Language: English
• Tags: Management, Organizational Structure, Firm Performance