The Impact of Management Practices and Organizational Structure on Firm Performance

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Diploma Thesis from the year 2007 in the subject Business economics - Industrial Management, grade: 1, 3, LMU Munich (Information, Organisation und Management / und CDTM), language: English, abstract: "The most significant factor in America, leading to high production at low cost, is efficient management." This quotation is not from a longitudinal, empirical study, but it is stated by the British Productivity Council in the context of the Marshal Plan - the Anglo - American productivity mission in 1951. Hence, one question might be: Is there indeed a strong link between management practices and firm performance? Further questions might be: How American management practices rank compared with European or Asian management practices? What role plays organizational structure? Are there interacted effects between management practices and organizational structure? Insights into the impact of management practices and organizational structure on firm performance are mainly based on theories. Consequently, there is a strong motivation to measure management practices and organizational structure across countries and cultures to verify theoretical hypotheses with empirical data. This paper sheds some empirical light on these topics as well as on the distribution of management practices and organizational structures across countries and industries. This paper brings a unique data set with more than 3500 management interviews to document and analyze the influence of management practices and organizational structure on firm performance (Bloom 2010). Furthermore, the role and impact of organizational change can be obtained and compared to a strand of literature. This paper relates to a number of strands in the literature. It builds on and extends the paper of Nick Bloom and John van Reenen (2007) "Measuring and explaining management practices across countries and industries." Furthermore, this paper is related to the paper of Marianne Bertrand and Antoinette Schoar (2003), "Managing with style: the effect of managers on firm policies" in which the effect of individual managers on firm performance is analyzed. This paper also builds on major organizational theories from Chandler, Lawrence and Lorsch and Picot. The data has been obtained in a McKinsey & Company, London School of Economics and Stanford University joint project. The author of the paper was part of a team of 35 international MBA, Ph.D students and professionals from top business schools around the world.