Essays in the organisational economics of management
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socioeconomicRecord type:
paper
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Sch
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MeaWooHanQui
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This thesis comprises four chapters on the organisational economics of management.
The first chapter explores the use of rules by managers in making decisions. I develop a novel tool to measure the use of rules based on patterns in managerial decision-making, and implement this to survey senior Ethiopian human resource managers. I find that the use of rules is correlated in intuitive ways with a number of firm- and manager-level observable characteristics, validating the measurement approach. I find a robust, positive relationship between the use of formal (documented) rules and firm profitability, and that the use of such rules has substantial explanatory power for the differences in profitability across firms beyond observable characteristics and measures of management practices. However, I find the adoption of informal (undocumented but commonly understood) rules appears to come at the cost of reduced resilience to economic shocks – specifically to COVID-19.
The second chapter – co-authored with Girum Abebe, Marcel Fafchamps, Michael Koelle and Simon Quinn – describes a novel matching experiment to examine the supply and demand for managerial traits. First, using studio responses to hypothetical management scenarios, analysed with a Bayesian hierarchical model, we describe heterogeneity in management styles among Ethiopian young professionals. We find four distinct managerial styles, and show labour market exposure and socioeconomic background correlate strongly with these managerial styles. Second, we show these recordings to firm managers, and show that firms have a clear preference for rule-oriented (``authoritative'') managers who rely on formal policy and authority. Finally, leveraging a prior experiment, we show that these styles constitute a novel mechanism contributing to labour‑market exclusion among individuals from disadvantaged socioeconomic backgrounds, and show a one-month management placement can effectively mitigate this labour-market exclusion.
The third chapter – co-authored with Girum Abebe, Siân Brooke, Tom Gole and Simon Quinn – covers a novel field experiment in Ethiopia, randomly varying the design of the assessments of a business plan competition across assessors. Using this experiment, we investigate how organisational values and social image concerns affect inclusivity in decision-making. We find that the treatments have no average effect on the inclusion of female entrepreneurs, but that the treatments appear to align individual identity with organisational values, improving decision quality and agreement among managers. We develop a stylised theoretical model to interpret these results. The final chapter develops a mixed ordered logit mixture model to identify complementarities in management practices, leveraging data from the World Management Survey (WMS) to study what combinations of practices firms choose to employ. Using this method, I find significant variation across organisational structures and countries, and a clear structure in the combinations of practices that firms choose to employ.
The first chapter explores the use of rules by managers in making decisions. I develop a novel tool to measure the use of rules based on patterns in managerial decision-making, and implement this to survey senior Ethiopian human resource managers. I find that the use of rules is correlated in intuitive ways with a number of firm- and manager-level observable characteristics, validating the measurement approach. I find a robust, positive relationship between the use of formal (documented) rules and firm profitability, and that the use of such rules has substantial explanatory power for the differences in profitability across firms beyond observable characteristics and measures of management practices. However, I find the adoption of informal (undocumented but commonly understood) rules appears to come at the cost of reduced resilience to economic shocks – specifically to COVID-19.
The second chapter – co-authored with Girum Abebe, Marcel Fafchamps, Michael Koelle and Simon Quinn – describes a novel matching experiment to examine the supply and demand for managerial traits. First, using studio responses to hypothetical management scenarios, analysed with a Bayesian hierarchical model, we describe heterogeneity in management styles among Ethiopian young professionals. We find four distinct managerial styles, and show labour market exposure and socioeconomic background correlate strongly with these managerial styles. Second, we show these recordings to firm managers, and show that firms have a clear preference for rule-oriented (``authoritative'') managers who rely on formal policy and authority. Finally, leveraging a prior experiment, we show that these styles constitute a novel mechanism contributing to labour‑market exclusion among individuals from disadvantaged socioeconomic backgrounds, and show a one-month management placement can effectively mitigate this labour-market exclusion.
The third chapter – co-authored with Girum Abebe, Siân Brooke, Tom Gole and Simon Quinn – covers a novel field experiment in Ethiopia, randomly varying the design of the assessments of a business plan competition across assessors. Using this experiment, we investigate how organisational values and social image concerns affect inclusivity in decision-making. We find that the treatments have no average effect on the inclusion of female entrepreneurs, but that the treatments appear to align individual identity with organisational values, improving decision quality and agreement among managers. We develop a stylised theoretical model to interpret these results. The final chapter develops a mixed ordered logit mixture model to identify complementarities in management practices, leveraging data from the World Management Survey (WMS) to study what combinations of practices firms choose to employ. Using this method, I find significant variation across organisational structures and countries, and a clear structure in the combinations of practices that firms choose to employ.