How Management Practices Differ in the EU-27

Overview & Synopsis

This Brief uses data from the World Bank Enterprise Surveys (WBES) in 27 European Union countries (the EU-27) to gain insights into the adoption of management practices in the region's private sector. A recent, abundant literature studies the connections between firm-level productivity and the strategies owners and managers implement to achieve their organizational and financial goals. These strategies can be summarized by a consolidated index comprising three main categories: monitoring, target setting, and creating incentives. This Brief first analyzes the distribution of the management practices index across EU countries, identifying substantial dispersion within and across countries. Then, the Brief investigates firm-level characteristics associated with the index. Larger firm size, top management external to the family owning the firm, and higher education of the top manager emerge as the most important factors. Finally, the Brief provides evidence of the positive and robust correlation between productivity and the management practices index.