Essays on the Management and Organizational Practices Survey

Abstract

This dissertation examines the role that management practices play in plant performance and addresses the many challenges that accompany efforts to measure accurately the adoption of management practices.

I first provide background on a recent Census Bureau survey, the Management and Organizational Practices Survey (MOPS), which measures management and organizational practices at manufacturing plants in the United States. Economists have long hypothesized that management is an important component of firm success, but until recently, the study of management was confined to hypotheses, anecdotes, and case studies. Building upon the work of Bloom and Van Reenen (2007), the Census Bureau conducted the first-ever large-scale survey of management practices in the United States, the MOPS, for 2010. The Census Bureau conducted a second, enhanced version of the MOPS for 2015.

Next, I use data from the MOPS 2010 to examine changes in establishment-level management practices at approximately 12,000 continuing establishments between 2005 and 2010. I find that within-establishment changes in productivity are correlated primarily with practices related to performance incentives, particularly performance bonus practices. I present evidence that plants use performance bonuses as a channel of wage adjustment during the Great Recession, which explains most of the within-plant correlation between structured management practices and productivity. That is, negative demand shocks during the Great Recession negatively affect both measured productivity and the availability of bonuses and manufacturing plants. There is limited evidence that changes in bonus practices for reasons other than demand shocks have an impact on plant outcomes over the period from 2005 to 2010.

Finally, I present further background on the cognitive testing practices that the Census Bureau used to develop the MOPS. Because management is an intangible input into plant production functions, it is not as easily measured as conventional inputs such as labor or capital. Pretesting was essential to ensure that quality data was collected. The results of the pretesting process provide insight into how respondents interpret the MOPS questionnaire, including the questions related to bonus practices, which in turn influences the interpretation of the results presented in the preceding chapter.