Differences In Average Per Capita Income Between Workers Of The Same Industry In Different Countries

In various works and real-life cases, economists found that productivity level differs across firms and countries. Syverson(2004) investigated that factor productivity varies not only in differentiated goods but also inhomogeneous ones between firms that produce at one industry. From country level, Hall and Jones (1999) have found differences in average per capita income between workers of the same industry but in different countries. Abramovitz (1956) called such countries’ difference as “measure of ignorance”So what factors exactly create these divergences? The major hypothesis of the paper is that differences among firms and countries depend on various management practices. These differences were shown through TV shows, business schools, and policymakers actions. While economists didn’t give much attention to these issues, it is interesting to understand ceteris paribus, variations in production level from the perspective of management styles among businesses. There were made 10 conclusions connected to the data results during the examination of hypothesis: starting from different styles of management in organizations to different types of organizations management leading and processing.

Data for these 10 outcomes was collected under special “interview-based evaluation tool” that scores management contribution from 1 to 5 in monitoring the firm, finding right targets and people incentives categories. Samples were taken in the area of medium size firms (from 100 to 5000 people). Specially educated MBA students interviewed organizations for listed categories. To minimize biases, the double-blind technique was used to prevent study from biases: managers didn’t know that they were scored and interviewers didn’t know about businesses’ performance. Also, various strategies were used for a high response from managers and persistency from interviewers’ side. All data were approximately made at one point in time. The main result showed that the US has the highest scores in management practices on average and lowest scores were counted for Southern Europe – Greece, Portugal, and Brazil together with China. However, if we look at the data from separation overall results into monitoring, incentives and targets results: countries that mostly pay attention to create incentives for workers are US, India, China; for monitoring and targeting groups Sweden and Germany showed highest scores. Under these results, management can be improved by a promotion of management quality and reallocation of management styles across firms.

The main point here is that with better management scores companies across the world have the highest performance. Another conclusion that can be done is that with higher scores firms’ sizes should be bigger and facilities for workers better. Another question that arises on that point of research is what exactly causes such differences? Investigation of N. Bloom and J. Van Reen (2010) showed that there could be plenty explanations for received information: product market competition, labour market regulation, types of ownership, multinationals and exporters’ performance, human capital and part of contingent uncontrollable management. Moreover, the researchers mention that these differences should take further research attention with respect to links to managerial theories with field experiments and panel data. This paper helped to find out that part of the production level differences can be explained by management practices, whether they are the best or worst.