Does management matter? Evidence from India

A long standing question in social science is whether management matters. To investigate this we run a field experiment on 28 plants in large Indian textile firms to evaluate the causal impact of modernizing management practices. We do this by providing free management consulting to a set of randomly chosen treatment plants, and compare their performance to a set of control plants. We find that improving management practices had three main effects. First, it led to significantly higher efficiency and quality, and lower inventory levels. These changes increased productivity by 10.5 % and profitability by 16.8 % on average. Second, it increased the decentralization of decision making, as better production…

• NS
  National Science Foundation
• EM
  Ewing Marion Kauffman Foundation
• AP
  Alfred P. Sloan Foundation
• WB
  World Bank Group
• EB
  European Bank for Reconstruction and Development
• HB
  Harvard Business School
• LS
  London School of Economics and Political Science
• IG
  International Growth Centre

  Award: WC2A 2AE
• KL
  KU Leuven
• SI
  Stanford Institute for Research in the Social Sciences
• EA
  Economic and Social Research Council