Management Practices Matter More Than You Think

Management consultants face perennial questions about what value they add to companies. But management practices go a long way toward explaining why some businesses perform better than others, an important new analysis shows. Perhaps management consultants are onto something after all.

Surprisingly large and growing differences across businesses in wages, productivity, capital returns and worker mobility may influence income inequality and even macroeconomic growth, many recent studies show. Now it seems management practices play a big role in explaining the variations across businesses, at least in manufacturing.