monitoring, where Russian firms particularly lag behind other countries, are the ones more closely associated with firm performance. Finally, the link of management practices in affecting firm performance is particularly heightened for the globally linked firms.

The paper beyond this point is organized as follows: Section 2 introduces the methodology of the management survey and some descriptive results. Section 3 presents the methodology for computing management scores, and the main descriptive results on the relationship between various firm characteristics such as size, age with the observed management scores. This section also explores the drivers of better management practices. Section 4 presents a simple regression framework for assessing the link of management practices with firm performance. Section 5 concludes with policy discussion.

# **Section 2: The Management Survey**

# _2.1 Why do we need a management survey?_

Although managerial and organizational practices have been conceived to be critical in affecting firm outcomes on business performance, these practices are not well measured in administrative data on firms or in commercial data on companies’ accounts. Earlier studies have used information on publicly traded firms to link managerial style of senior managers and company performance (e.g. Bertrand and Schoar 2003), these data are rather limited to a country such as the US. Furthermore, evidence suggests that a company is far more than simply the identity of its most senior employee (Bender et al, 2015). Critically, this type of data on its own does not tell much about how firms are managed or organized. Therefore, over the last decade Bloom and co-authors have attempted to fill this gap in data by collecting comprehensive information on management practices (see Bloom et al. 2014).

Bloom et al. (2016) propose the following three broad management and organizational capabilities to be important for firm productivity: (i) performance monitoring: collecting and analyzing information on daily activities of the firm for continuous improvement, (ii) target setting: using and stretching short and long run targets, tracking outcomes, and taking appropriate action, and (iii) performance incentives: rewarding high-performing employees, and retraining or moving underperformers and careful hiring. To collect information on these practices, two alternative strategies could be deployed: (i) Open-ended questions (e.g. world management survey, WMS)<sup>9</sup> and (ii) Closed-ended questions (e.g. Management and Organizational Practices Surveys, MOPS).<sup>10</sup>

# _2.2 Sample and MOPS survey process in Russia_

To collect data on managerial practices, we follow the MOPS framework which is comprised of 36 multiple choice questions about the establishment. The survey is split in three broad sections: management practices (16 questions), organization (13 questions) and background characteristics (7 questions). In response to a request from the Ministry of Economic Development, we modified the instrument to include questions that can help understand the reasons why Russian firms do not adopt structured management practices. The survey was conducted through telephonic interviews of company managers, who are senior

> 9 Designing these surveys takes some expertise in terms of selecting questions and response grids and hence intense training and monitoring of the interview team. The full questionnaire is available on <u>www.worldmanagementsurvey.com.</u> 10 The full questionnaire is available on http://bhs.econ.census.gov/bhs/mops/form.html

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