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Download fileThe optimal use of management
journal contribution
posted on 2021-04-13, 12:54 authored by Robin Sickles, Kai Sun, Thomas TriebsThomas TriebsWe analyze the management input from the perspective of a shadow cost
minimizing firm. With the help of Bloom and Van Reenen (2007)’s management measure we estimate management’s shadow price, dual Morishima
elasticities of substitution, and relative price efficiencies vis-à-vis labor and
capital. We find that the shadow price of management is about 1.3 million
US dollars per survey scale point. Management is a weak dual complement
for labor but a strong dual complement for capital. Increases in management reduce the relative income share of labor but not capital. Most firms
use too little management relative to both labor and capital, but relative use
of management improves over time, with the combination of ownership and
control, and competition.
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