The Drivers of Managerial Practices: Firm and Country Characteristics Explaining Managerial Performance

Abstract

A large body of researches in recent years resulted in the growth of knowledge about better or worse management practices. However, comparative research using firm-level data has been limited by the different styles on management and by the unavailability of homogeneous data sources, especially in former transition and Asian countries. This study fills this gap, by using the firm-level survey by EBRD and World Bank (BEEPS V-MENA ES, 2012-2014) and by looking at the determinants of a Management quality score (MQS) for more than 17.000 firms in 36 countries of Central Asia, Eastern Europe and Northern Africa. We find that both country and firm characteristics matter for managerial skills but the ladder weight differently. In fact, the country-grouping changes, accelerates or dampens the impact of firms’ characteristics on management performance and identifies the channels conducive of better managerial practices. Competition, education, and technology are important channels for the high-income countries only, whereas global value chain participation and ownership are significant channels for the low-income countries only. In particular, GVC participation enhances significantly managerial practices of firms in low-income countries especially for the lower quartile firms. Hence, this study provides empirical support for interplay between country and firm characteristics in transitional and emerging markets. In addition, it provides support for an enhanced connection between business environment reforms devoted to managerial upgrading and industrial policy devoted to enhancing best-performing firms’ characteristics. As such, it suggests that only their complementary and targeted use can support management and business practices upgrading.