81297 enGender Impact: The World Bank’s Gender Impact Evaluation Database Does Management Matter? Evidence from India Author(s) Nicholas Bloom, Benn Eifert, Aprajit Mahajan, David McKenzie, John Roberts Contact dmckenzie@worldbank.org Country India Organizing Theme Economic Opportunities and Access to Assets Status Completed Intervention Category Business Training Sector Finance and Private Sector Development A long-standing question is whether differences in management practices across firms can explain differences in productivity, especially in developing countries where these spreads appear particularly large. To investigate this, we ran a management field experiment on large Indian textile firms. We provided free consulting on management practices to randomly chosen treatment plants and compared their performance to a set of control plants. We find that adopting these management practices raised productivity by 17% in the Abstract first year through improved quality and efficiency and reduced inventory, and within three years led to the opening of more production plants. Why had the firms not adopted these profitable practices previously? Our results suggest that informational barriers were the primary factor explaining this lack of adoption. Also, because reallocation across firms appeared to be constrained by limits on managerial time, competition had not forced badly managed firms to exit. Gender Connection Gender Informed Analysis Gender Outcomes Productivity of male family members IE Design Randomized Control Trial The experiment took large, multiplant Indian textile firms and randomly allocated their plants to treatment and control groups. Treatment plants received five months of extensive management consulting from a large consulting firm. The consulting firm diagnosed Intervention opportunities for improvement in a set of 38 operational management practices during the first month, followed by four months of intensive support for the implementation of these recommendations. The control plants only received one month of diagnostic consulting. The first round of the intervention started in September 2008, the second in April 2009 Intervention Period and in July 2009 the diagnostics of control plants were carried out. The sample was comprised of 17 firms with 28 plants between them. At first 4 plants were Sample population chosen to be part of the treatment group, then a year later 7 additional plants were randomly chosen. The treatment group received diagnostics and consulting, the control group just received Comparison conditions diagnostics Unit of analysis Firm level Last updated: 14 August 2013 1 enGender Impact: The World Bank’s Gender Impact Evaluation Database Evaluation Period April 2008 - 2011 The intervention led to significant improvements in quality, inventory and output. Within the first year, productivity increased by 17%, and annual profitability increased by over $300,000. Better managed rims also grew faster. Treated firms spread these best practices to other firms with the same owner. Competitive pressures were heavily restricted by Results tariffs, lack of external finance and limited managerial time. Managerial time was constrained by the number of male family members, Non-family members were not trusted with any decision making power, and firms could not expand beyond the size that could be managed by close (male) family members. The sample size from the experiment is vey small. There is a potential conflict of interest because the consulting firms also measured the results. Positive results of treated firms may Primary study limitations be due to the Hawthorne Effect, where observed groups improve outcomes as the result of observation, not necessarily as a result of the intervention. Alfred Sloan Foundation, Freeman Spogli Institute, the International Initiative, the Graduate School of Business at Stanford, the International Growth Centre, the Institute Funding Source for Research in the Social Sciences, the Kauffman Foundation, the Murthy Family, the Knowledge for Change Trust Fund, the National Science Foundation, the Toulouse Network for Information Technology, the World Bank. Bloom, N., Eifert, B., Mahajan, A., McKenzie, D., & Roberts, J. (2013). Does management Reference(s) matter? Evidence from India. The Quarterly Journal of Economics, 128(1), 1-51. Link to Studies http://qje.oxfordjournals.org/content/128/1/1.short Microdata Last updated: 14 August 2013 2