Management Practices and Allocation of Employment: Evidence from Finnish Manufacturing

Abstract We analyse variation in the management practices across countries and across regions within a country. For cross-country comparisons we use the Finnish Management and Organizational Practices Survey (FMOP) to calculate a management score for Finnish manufacturing that is compared to corresponding measures obtained from similar data in the US and Germany. Scores measured by unweighted averages of the establishments in these countries show that Finland is only slightly behind the US and on par with those of Germany. With the FMOP data, we then perform an Olley-Pakes decomposition of the management score using a moment-based estimation procedure. Our decomposition shows no statistically significant differences in the unweighted average scores between Finnish regions, but reveal some significant differences in the employment weighted averages (i.e. aggregate scores) that can be attributed to the differences in the allocation of the labour force between establishments within regions.