Management Capabilities and Performance of Firms in the Russian Federation

Using the management and operational practices survey in the Russian Federation, this paper finds that an average Russian manufacturing firm adopts 43 percent of the structured management practices (a score of 0.43), a value that is far from the fr...

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Main Authors:	Grover Goswami, Arti, Torre, Ivan
Format:	Working Paper
Language:	English
Published:	World Bank, Washington, DC 2019
Subjects:	MANAGEMENT FIRM PERFORMANCE PRODUCTIVITY COMPETITION
Online Access:	http://documents.worldbank.org/curated/en/954881567618753375/Management-Capabilities-and-Performance-of-Firms-in-the-Russian-Federation http://hdl.handle.net/10986/32349

id	okr-10986-32349
recordtype	oai_dc
spelling	okr-10986-323492022-09-20T00:14:04Z Management Capabilities and Performance of Firms in the Russian Federation Grover Goswami, Arti Torre, Ivan MANAGEMENT FIRM PERFORMANCE PRODUCTIVITY COMPETITION Using the management and operational practices survey in the Russian Federation, this paper finds that an average Russian manufacturing firm adopts 43 percent of the structured management practices (a score of 0.43), a value that is far from the frontier (for example, the United States scores 0.62). This average mask the wide heterogeneity in practices, where a large share of firms adopt few structured management practices and only 3.5 percent of them have a score over 0.75. Consistent with the findings in other countries, better managed firms in Russia show stronger firm performance, measured as gross revenue per employee, value added per employee, total factor productivity, and employment growth. Improving the management score from the 10th to the 90th percentile is associated with an increase in sales per worker by 87 percent, value added per worker by 30 percent, and total factor productivity by 13.5 percent. What drives better management capabilities? Russian firms are similar to those in other countries, such that exporters and firms with foreign linkages are better managed. Switching from operating purely in the domestic market to being globally linked is associated with a significant increase in management capabilities. However, unlike the results in other countries, management capabilities in Russia are not associated with firm age, implying that firms do not learn to be better managed over their life cycle. This result points to the possibility of inefficient allocation of resources, such that learning and selection mechanism does not weed out the badly managed firms, perhaps due to the lack of pro-competitive forces. 2019-09-05T15:43:12Z 2019-09-05T15:43:12Z 2019-09 Working Paper http://documents.worldbank.org/curated/en/954881567618753375/Management-Capabilities-and-Performance-of-Firms-in-the-Russian-Federation http://hdl.handle.net/10986/32349 English Policy Research Working Paper;No. 8996 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo World Bank World Bank, Washington, DC Publications & Research Publications & Research :: Policy Research Working Paper Europe and Central Asia Russian Federation
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English
topic	MANAGEMENT FIRM PERFORMANCE PRODUCTIVITY COMPETITION
spellingShingle	MANAGEMENT FIRM PERFORMANCE PRODUCTIVITY COMPETITION Grover Goswami, Arti Torre, Ivan Management Capabilities and Performance of Firms in the Russian Federation
geographic_facet	Europe and Central Asia Russian Federation
relation	Policy Research Working Paper;No. 8996
description	Using the management and operational practices survey in the Russian Federation, this paper finds that an average Russian manufacturing firm adopts 43 percent of the structured management practices (a score of 0.43), a value that is far from the frontier (for example, the United States scores 0.62). This average mask the wide heterogeneity in practices, where a large share of firms adopt few structured management practices and only 3.5 percent of them have a score over 0.75. Consistent with the findings in other countries, better managed firms in Russia show stronger firm performance, measured as gross revenue per employee, value added per employee, total factor productivity, and employment growth. Improving the management score from the 10th to the 90th percentile is associated with an increase in sales per worker by 87 percent, value added per worker by 30 percent, and total factor productivity by 13.5 percent. What drives better management capabilities? Russian firms are similar to those in other countries, such that exporters and firms with foreign linkages are better managed. Switching from operating purely in the domestic market to being globally linked is associated with a significant increase in management capabilities. However, unlike the results in other countries, management capabilities in Russia are not associated with firm age, implying that firms do not learn to be better managed over their life cycle. This result points to the possibility of inefficient allocation of resources, such that learning and selection mechanism does not weed out the badly managed firms, perhaps due to the lack of pro-competitive forces.
format	Working Paper
author	Grover Goswami, Arti Torre, Ivan
author_facet	Grover Goswami, Arti Torre, Ivan
author_sort	Grover Goswami, Arti
title	Management Capabilities and Performance of Firms in the Russian Federation
title_short	Management Capabilities and Performance of Firms in the Russian Federation
title_full	Management Capabilities and Performance of Firms in the Russian Federation
title_fullStr	Management Capabilities and Performance of Firms in the Russian Federation
title_full_unstemmed	Management Capabilities and Performance of Firms in the Russian Federation
title_sort	management capabilities and performance of firms in the russian federation
publisher	World Bank, Washington, DC
publishDate	2019
url	http://documents.worldbank.org/curated/en/954881567618753375/Management-Capabilities-and-Performance-of-Firms-in-the-Russian-Federation http://hdl.handle.net/10986/32349
_version_	1764476352754352128

Management Capabilities and Performance of Firms in the Russian Federation

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