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The optimal use of management

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posted on 2021-04-13, 12:54 authored by Robin Sickles, Kai Sun, Thomas TriebsThomas Triebs
We 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.

History

School

  • Business and Economics

Department

  • Economics

Published in

Economic Inquiry

Volume

59

Issue

3

Pages

1346-1363

Publisher

Wiley

Version

  • VoR (Version of Record)

Rights holder

© The authors

Publisher statement

This is an Open Access Article. It is published by Wiley under the Creative Commons Attribution-NonCommercial 4.0 International Licence (CC BY-NC). Full details of this licence are available at: https://creativecommons.org/licenses/by-nc/4.0/

Acceptance date

2020-11-10

Publication date

2021-03-18

Copyright date

2021

ISSN

0095-2583

eISSN

1465-7295

Language

  • en

Depositor

Dr Thomas Triebs Deposit date: 11 January 2021

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