Going Global Needs Improvement in Management Practices

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A recent study from Holger Görg and Aoife Hanley, both KCG Experts, analyses whether and how firms’ management practices are related to their global engagement. The analysis was based on a unique dataset “German Management and Organization Practices Survey (GMOP)”, which was carried out in 2015. Görg and Hanley (forthcoming) provides evidence showing that firms in Germany which turned to act globally via particularly exporting activities from 2008 to 2013 tend to have higher management scores, indicating more structured management practices. In line with existing literature, they argue that firms engaging in global economic activities need to improve their management practices to enhance their competitiveness and help them penetrate foreign markets.

While the analysis was carried out based on a firm-level dataset for Germany, the finding is expected to be of relevance for firms in emerging economies and/or developing countries as well. Joining global supply chains may provide local firms with new opportunities to gain better access to new markets. However, to really benefit from being well integrated into the world economy, it is worth paying more attention to how to introduce and implement more structured management practices to support local firms’ global engagement. Since firms in emerging economies and developing countries may rather lack such management knowledge and experience compared to their counterparts in advanced economies, how to equip them with such crucial instruments would be a key challenge that needs to be dealt with. Further research in this regard will be useful.

Reference: Görg H. and Hanley A. (forthcoming), Firms’ Global Engagement and Management Practices, Economics Letters. The working-paper version of the study is available here.