Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/181313 
Year of Publication: 
2018
Series/Report no.: 
CESifo Working Paper No. 7113
Publisher: 
Center for Economic Studies and ifo Institute (CESifo), Munich
Abstract: 
We present a heterogeneous-firm model in which management ability increases both pro- duction efficiency and product quality. Combining six micro-datasets on management prac- tices, production and trade in Chinese and American firms, we find broad support for the model’s predictions. First, better managed firms are more likely to export, sell more products to more destination countries, and earn higher export revenues and profits. Second, better managed exporters have higher prices, higher quality, and lower quality-adjusted prices. Finally, they also use a wider range of inputs, higher quality and more expensive inputs, and imported inputs from more advanced countries. The structural estimates indicate that management is important for improving production efficiency and product quality in both countries, but it matters more in China than in the US, especially for product quality. Panel analysis for the US and a randomized control trial in India suggest that management exerts causal effects on product quality, production efficiency, and exports. Poor management practices may thus hinder trade and growth, especially in developing countries.
Subjects: 
management
exports
product quality
productivity
JEL: 
F10
F14
F23
L20
O19
O32
Document Type: 
Working Paper
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