Management practices and energy efficiency: Evidence from firms in China

Abstract

Do well-managed firms use energy less intensively in developing countries? Using data from the World Management Survey, we investigate whether there is any relation between firms’ management practices and energy efficiency within China. We find that firms that are competently managed use substantially less electricity: a one standard deviation improvement in management practices is associated with a 14.9% reduction in usage intensity. The management ‘premium’ is also significant after accounting for policy effects, with well-managed firms regulated under an energy policy reducing electricity intensity significantly more than the less-well managed firms. However, the general management-energy relationship is not significant for fossil fuels. Management quality is non-monotonically related to different quantiles of energy intensity usage. Overall, there is evidence of management benefits to energy efficiency, but these are mainly restricted to electricity utilization.