Modern Management: Good for the Environment or just Hot Air?
We use an innovative methodology to measure management practices in over 300 manufacturing firms in the UK. We then match this management data to production and energy usage information for establishments owned by these firms. We find that establishments in better managed firms are significantly less energy intensive. They use less energy per unit of output, and also in relation to other factor inputs. This is quantitatively substantial: going from the 25th to the 75th percentile of management practices is associated with a 17.4% reduction in energy intensity. This negative relationship is robust to a variety of controls for industry, location, technology and other factor inputs. Better managed firms are also significantly more productive. One interpretation of these results is that well managed firms are adopting modern lean manufacturing practices, which allows them to increase productivity by using energy more efficiently. This suggests that improving the management practices of manufacturing firms may help to reduce greenhouse gas emissions.
We would like to thank the Anglo-German Foundation, the Economic and Social Research Council and the Advanced Institute for Management Research for financial support, Albert Bollard, Max Floetotto and John Van Reenen for helpful comments, and Pedro Castro, Rebecca Homkes, Stephen Dorgan and John Dowdy for their help with the development of the survey. The views expressed herein are those of the author(s) and do not necessarily reflect the views of the National Bureau of Economic Research.
Nicholas Bloom & Christos Genakos & Ralf Martin & Raffaella Sadun, 2010. "Modern Management: Good for the Environment or Just Hot Air?," Economic Journal, Royal Economic Society, vol. 120(544), pages 551-572, 05. citation courtesy of