ABSTRACT This paper calculates indices of central bank autonomy (CBA) for 163 central banks as of end-2003, and comparable indices for a subgroup of 68 central banks as of the end of the 1980s. The results confirm strong improvements in both economic and political CBA over the past couple of decades, although more progress is needed to boost political autonomy of the central banks in emerging market and developing countries. Our analysis confirms that greater CBA has on average helped to maintain low inflation levels. The paper identifies four broad principles of CBA that have been shared by the majority of countries. Significant differences exist in the area of banking supervision where many central banks have retained a key role. Finally, we discuss the sequencing of reforms to separate the conduct of monetary and fiscal policies. IMF Staff Papers (2009) 56, 263–296. doi:10.1057/imfsp.2008.25; published online 23 September 2008
- SourceAvailable from: minneapolisfed.org[Show abstract] [Hide abstract]
ABSTRACT: This paper evaluates the argument that differences in physical and intangible capital can account for the large international income differences that characterize the world economy today. The finding is that they cannot. Savings rate differences are of minor importance. What is all-important is total factor productivity (TFP). In addition, the paper presents industry evidence that TFPs differ across countries and time for reasons other than differences in the publicly available stock of technical knowledge. These findings lead the author to conclude a theory of TFP is needed. This theory must account for differences in TFP that arise for reasons other than growth in the stock of technical knowledge. Copyright 1998 by Economics Department of the University of Pennsylvania and the Osaka University Institute of Social and Economic Research Association.International Economic Review 02/1998; 39(3):525-51. · 1.56 Impact Factor
- [Show abstract] [Hide abstract]
ABSTRACT: This study explores the effects of a participative technique, quality circles (QCs), on several employee attitudes and performance. This study explores the effects of a participative technique, quality circles (QCs), on several employee attitudes and performance. The sample included 36 studies with 42 independent samples. Mean effect sizes were small for employee attitudes and moderate The sample included 36 studies with 42 independent samples. Mean effect sizes were small for employee attitudes and moderate for job performance suggesting QCs affected job performance to a greater degree than employee attitudes. For organizations for job performance suggesting QCs affected job performance to a greater degree than employee attitudes. For organizations involved in quality management these results seem to suggest that quality interventions have a stronger impact on job performance involved in quality management these results seem to suggest that quality interventions have a stronger impact on job performance than on employee attitudes. The study conclusions provide a positive outlook on the effects of total quality management interventions than on employee attitudes. The study conclusions provide a positive outlook on the effects of total quality management interventions on productivity. on productivity.Journal of Business and Psychology 11/2007; 22(2):145-153. · 1.25 Impact Factor
- [Show abstract] [Hide abstract]
ABSTRACT: Total Quality Management (TQM) is arguably one of the most pervasive management strategies of the last several decades. Given the ubiquitous nature of TQM, many attempts have been made to ascertain the impact that this strategy has had on subsequent financial performance. Key studies in the TQM–Financial Performance research stream are reviewed, including the most recent, which have generally brought increased rigor with each new project. Since the particular research stream now includes hundreds of studies, only the most relevant and important are reviewed. This review will proceed in the following order: anecdotal research, practitioner-sponsored, empirical research, individual TQM dimensions and financial performance, and the entire TQM construct and financial performance. A brief review of the major methodological limitations inherent in these studies and how future research can address them concludes this review.Total Quality Management. 06/2007; 18(4):403-412.
Michelle Alexopoulos and Trevor Tombe
University of Toronto
New indications of managerial innovations are created and then used to show that
changes in organizational technologies are an important source of economic
growth. Specifically, the analysis demonstrates that, first, in response to a positive
managerial technology shock, output, productivity and hours significantly increase
in the short run, second, these types of innovations are as important as non-
managerial ones in explaining movements in these variables at business cycle
frequencies, and, third, product and process innovations promote the development
of new managerial techniques.
Keywords: Business Cycles; Productivity; Management techniques; Technical Change
JEL: E3, M1, M5, O3, O4
By its very nature, total factor productivity (TFP) is, despite our best efforts, still a “black box,”
within which most economists would identify anything that enhances producers’ ability to transform
inputs into outputs and should, therefore, be regarded as technological advancement. It is, therefore,
perfectly reasonable to argue that TFP is influenced by both tangible technologies associated with
new machines and products as well as intangible technologies linked to changes in management
techniques and production processes. There is an extensive literature that attempts to uncover the role
that process and product technologies play in economic fluctuations and growth.1 However, far less
research has been devoted to quantifying their impact – even though there is abundant
microeconomic evidence to support the view that changes in corporate work rules, team structures,
communication channels, morale, and managerial leadership significantly affects firm level
While managerial/organizational technologies possess many of the same properties as process
and product technologies, quantifying their effects on aggregate output and productivity have proven
difficult because no adequate measure of managerial innovation exists. In particular, traditional
indicators of technical change, based on Research and Development Expenditures (R&D) or Patent
Applications, do not generally capture new managerial techniques.3 Therefore, in this paper, new
measures of organizational innovations are presented (based on new titles published in the field as
recorded by the Library of Congress) and then used to demonstrate that advances in these intangible
technologies have been an important contributor to aggregate output and productivity growth.
Specifically, we use our new indicators to help answer a series of important and interesting
questions: What role do managerial technology shocks play in cyclical fluctuations; What impact
does this type of technological change have on employment, and productivity; and What relationship
exists between managerial innovations and advances in product/process innovations? The answers
1 See e.g., the review articles in Spiezia and Vivarelli (2002) and Chennells and Van Reenen (2002) and cites within.
2 For example, papers such as Bloom and VanReenen (2007), Cosh, Fu and Hughs (2005), Bertrand and Schoar (2003),
and Bartelsman and Dom (2000) provide evidence that skills of managers play a role in explaining productivity
differences across firms.
3 See e.g., the discussions in Dutton, Thomas and Butler (1984) and the OECD’s Oslo Manual (2005).
implied by our analysis can be summarized as follows. First, we find that managerial technologies do
make an important contribution to aggregate fluctuations in output and total factor productivity.
Second, GDP, labor and TFP all significantly increase in the short-run following a positive
organizational technology shock. However, the impact on labor is relatively modest - a finding
consistent with many microeconomic studies that explore the impact of process related technical
change on employment.4 Third, managerial innovations may be as important as new product/process
technologies for productivity growth although the timing of their impacts differ - unanticipated
changes in managerial technologies have a faster impact on the economy than traditional technology
shocks. Finally, consistent with the Chandler’s (1977) research, it appears that product/process
innovations cause some innovations in management.
Overall, our work contributes to a variety of research areas including those that deal with the
links between management and productivity, management fads and fashions, microeconomic studies
of the impact of new processes on employment and productivity, business cycles, and finally,
measuring innovative activity. In the next section, we tie our work to the relevant literature, in
section 3 the new indicators are discussed, in section 4 results, based on a series of vector
autoregressions (VARs), are presented to uncover the relationship between the book-based indicators
and GDP, productivity and inputs, and section 5 concludes.
2. Review of Relevant literature
To highlight this paper’s contributions, it is useful to review some of the findings from related
literature in the fields of industrial organization, management and business cycle research. The first
line of research focuses on the empirical relationship between management and productivity. In
absence of available aggregate measures of managerial innovation, much of this work has taken the
form of case studies. These focus on quantifying the productivity enhancing effects of adopting
specific management techniques, such as total quality management, quality circles, or business
process reengineering, among many others.5 To take one example, Easton and Jarrell (1998), in a
difference-in-difference framework, investigate the response of firm-level financial performance
4 See for example Van Reenan (1997), Blanchflower, Millward, and Oswald (1991); and Harrison et al. (2008).
5 See e.g., Easton and Jarrell (1998), Wayhan and Balderson (2007), Pereira and Osburn (2007), White et al. (1999), and
Burns and Wholey (1993).
measures (income-per-worker, inventory levels, stock returns, etc.). They find TQM adoption is
associated with significant improvements along these important dimensions, with over $3,000 in
additional income-per-worker from basic TQM adoption. However, as the results presented in
Wayhan and Balderson’s (2007) review show, these findings fail to garner unanimous support. Thus,
while in depth studies may help determine which innovations are likely to benefit some firms, it is
virtually impossible to infer from such studies the overall impact of managerial innovations on
economy wide productivity and growth.
The second line of inquiry – seen in the management literature – uses journal articles on various
management techniques to pick up ‘fads and fashions’ (See Perkmann, 2006; Abrahamson and
Fairchild, 1999; Abrahamson, 1997, 1996, and 1991). Unlike the approach emphasized below, these
patterns are based on keyword searches, and, hence, focus only on a couple of the most popular tools.
Figure 1 depicts article counts for three popular ones covered in this literature: quality circles (QC);
total quality management (TQM); and, business process reengineering (BPR). Based on these
patterns, the authors argue that companies adopt new management styles when they first appear only
to abandon them as soon as the next craze comes along. The traditional interpretation of such time
series is as follows: QCs, first popularized in the US in the late 1970s, began its wide-scale adoption
around 1980, hit the peak of its popularity in year 1983, and subsequently yielded the floor to TQM.
The authors of such studies argue that companies move from fad to fad with no real productivity gain
as the managers attempt to ensure their methods are “at the frontier”. Since many of these
innovations are likely to yield gains only after a period of learning and/or gradual structural
integration, this behavior leads myopic decision makers to abandon ship too quickly to reap the
While the fad and fashion literature makes strong predictions concerning the negative (or at least
non-positive) relationship between new management tools and aggregate productivity, none of the
papers in the area formally test the theory. As such, it is equally possible to take a more optimistic
view of the patterns that would lead to the opposite conclusion. Instead of arguing that firms
completely abandon existing procedures for the next fad or fashion, one could theorize that, since
one size does not fit all, new ones need to be tailored by managers to their specific organization.
Productivity gains could occur over time by utilizing aspects of new techniques that work well and
abandoning those parts that do not. This process of refinement would cause management styles to
evolve over time in a beneficial and productivity enhancing way. Moreover, Figure 1 is consistent
with this view if the publications essentially spread the news and educate the management about the
new innovations in the field. Accordingly, once managers have been informed about the new
methods and trained to use them, there is little additional information left to convey and publications
on the subject fall off. Of course, this view does not imply that firms have stopped adopting or using
the technique – it only implies that the required information is already accessible in past
publications.6 Indeed, the results we present in section 4 provide support for this latter interpretation
and suggest that overall these innovations are productivity enhancing.
In a third area, researchers explore whether process and product innovations have differential
affects on growth and employment.7 It is often argued that product innovations have a large positive
impact on both labor inputs and output since they often create new goods and/or services which are
not simply substitutes for existing ones. Process innovations, on the other hand, are often thought to
be labor saving (e.g., machines being utilized to reduce labor input on the factory floor). It follows
that, unless price reductions sufficient to stimulate a strong increase in demand flow from the new
methods, while output and productivity may rise, employment may be negatively impacted. These
hypothesized outcomes appear to be born out in the data. Numerous studies find evidence that
product innovations are expansionary.8 However, Doms, Dunne and Roberts (1995), Blanchflower
and Burgess (1999), and Ross and Zimmerman (1993) demonstrate process innovations’ employment
impacts are less clear.-cut with the first two studies uncovering a positive relationship between
innovations and employment, and the latter a negative one. Since, as the OECD’s Oslo Manual
points out, organizational innovations (which would include the managerial ones we focus on here)
are similar in many respects to process innovations, the results of these studies are consistent with
the employment responses to managerial innovations identified using our indicators presented below.
6 To illustrate this point clearly, consider publications on a widely used product, such as penicillin. While first available
in the civilian market in 1945, it is still widely used today. However, recent (non-historical) articles on penicillin
primarily deal with new issues pertaining to drug resistance - not how penicillin can be used to treat traditional bacterial
infections since this is already well understood.
7 See review articles: Spiezia and Vivarelli (2002) and Chennells and Van Reenen (2002) and cites within.
8 See, e.g., Harrison et al (2008), Entorf and Pohlmeier (1991), König, Licht and Buscher (1995), VanReenen (1997),
Greenan and Guellec (2000), Smolny (1998 and 2002), and Garcia, Jaumandreu and Rodriguez (2004)