Leadership and Productivity: A Study of U.S. Automobile Assembly Plants

Abstract

We examine the effect of plant managers on productivity using unique matched manager-plant panel data on U.S. auto-assembly plants during 1993–2007. Our econometric approach is two-pronged. Our first approach relies on using the panel nature of our data to measure variation in productivity due to managerial influence. We estimate the interquartile range of the effect of individual plant managers on average hours-per-vehicle to be about 30%. Further, we find that plant managers’ experience with the models that are in production ameliorates the negative impact of new model introductions on productivity. We also observe evidence that managers’ plant-specific tenure has a positive impact on productivity. In our second approach, we use high-frequency time-series data, along with structural-break tests and machine-learning methodologies, to predict variation in production using plant-manager switches. We find that a plant manager’s identity is predictive of changes in both the mean and variance of production, further highlighting their channels of managerial influence. These findings are robust to narrowing the sample to focus on retirements as an exogenous source of managerial switches. This paper was accepted by Serguei Netessine, operations management.

Interfirm knowledge sharing for energy efficiency

“…We also constructed control variables specific to managers who oversee energy management, since the characteristics of managers may affect operational performance (Giardili et al., 2022). Manager Change is a dummy variable equal to 1 if a new energy manager is appointed in the reporting year; otherwise, it is equal to 0.…”

“…There is the possibility of knowledge spillover within a conglomerate (Rawley et al, 2018), which we controlled through the variable Group Firm; it is equal to 1 if a plant belongs to a conglomerate with multiple plants and is equal to 0 otherwise. 14 We also constructed control variables specific to managers who oversee energy management, since the characteristics of managers may affect operational performance (Giardili et al, 2022). Manager Change is a dummy variable equal to 1 if a new energy manager is appointed in the reporting year; otherwise, it is equal to 0.…”

Heroes or Villains? Recasting Middle Management Roles, Processes, and Behaviours

“…One recent large‐scale study attributes 10 per cent of the productivity gains at the Italian Social Security Agency to managers (Fenizia, 2022). Giardili et al (2023) have estimated that middle managers explain about 30 per cent of productivity in their recent study of US automobile assembly plants. Such gains cannot be traced to mere coordination or to manufacturing.…”

“…The debate on the merits of middle management is so fundamental that it is echoed across several academic lines of inquiry, such as strategic management (Tarakci et al, 2018), organizational behaviour (Greer et al, 2018; Raes et al, 2011), entrepreneurship (Grimpe et al, 2019), organization theory (Rouleau, 2005; Rouleau and Balogun, 2011), marketing (Heyden et al, 2020), and operations management (Giardili et al, 2023). Since widespread interest and the importance of middle management have so richly reverberated across these theoretical perspectives, disciplines and methodological traditions, this introduction represents a timely reference point for integrating, reviving, and guiding the next wave of this debate.…”

The Productivity Puzzle, Management Practices and Leadership

“…In a recent paper, Roberts and Shaw (2022) review how managers' value has been accounted for in organizational and personnel economics, which seem to be reluctant to take findings that are obtained using "noneconomic methods" into account. Noticing that managerial value has been commonly demonstrated by manager fixed-effects while managerial characteristics receive less attention (e.g., Baltrunaite, Bovini, & Mocetti, 2023;Bertrand & Schoar, 2003;Giardili, Ramdas & Williams, 2022;Lazear et al, 2015;Metcalfe et al, 2023), they emphasize that what managers do to contribute value to firms deserves further attention. This value-added approach in economics that reduces managers' role in firm heterogeneity to manager fixed-effects, which are explained by their human capital or very broadly inferred managerial style, has an important limitation (Garretsen, Stoker, & Weber, 2020;Zehnder, Herz, & Bonardi, 2017).…”