Given the positive association of foreign exposure with management score in a cross-section (Table 3), we are encouraged to analyze this relationship over time using the recall information for 2012. Focusing first on exports, we classify firms into three groups: those that did not export in 2012 and 2017 ( _never exporters_ ), those firms that did not export in 2012 but did so in 2017 ( _became exporters_ ), and those firms that exported in both years ( _always exporters_ ).<sup>27</sup> We can also do an analogous classification for suppliers of foreign firms: those that did not supply to a foreign firm in 2012 and 2017 _(never suppliers_ ), those firms that did not supply to a foreign firm in 2012 but did so in 2017 ( _became suppliers_ ), and those firms that did it in both years ( _always suppliers_ ). The left panel of Figure 4 compares those groups whose foreign exposure didn’t change: in 2017, those that always exported had a significantly higher management score than those that never did, and similarly those that were always suppliers to foreign firms with the respect to those that never did. The right panel compares the management scores in 2012 and 2017 for those firms that changed their foreign exposure, and it is evident that firms that switched to becoming exporters or suppliers to foreign firms witnessed a significant increase in management capabilities – particularly the ones that became exporters.<sup>28</sup> It is worth noting that, although our evidence is limited to a simple positive association between exporting status and management practices, Tanaka (2019) has provided causal evidence showing that in Myanmar export activities drive better management practices.<sup>29</sup>

**_Figure 4: Management capabilities improve with global linkages_**

<!-- Start of picture text --> Management score by foreign exposure Change in foreign exposure<br>Exporter status Supplier of foreign firm<br>Became exporter Became supplier<br>Never exporter Never supplier<br>2012 2017<br>Always exporter Always supplier<br>.7<br>.7 .7<br>.6<br>.6 .6<br>.5<br>.5 .5<br>.4<br>.4 .4<br>.3 .3 .3<br>Management score<br>Management score, 2017 .2 Management score, 2017 .2 .2<br>.1 .1 .1<br>0 0 0<br><!-- End of picture text --> Note: the left panel plots the average management score in 2017 of firms in four groups: “never exporters” (didn’t export in either 2012 or 2017) or “never suppliers” (didn’t supply a foreign firm in either 2012 or 2017) and “always exporters” (exported in both 2012 and 2017) or “always suppliers” (supplied a foreign firm in both 2012 and 2017). The right panel plots the average management score of firms in 2012 and 2017 for two groups: “became exporters” (didn’t export in 2012 but did so in 2017, “became suppliers” (didn’t supply a foreign firm in 2012 but did so in 2017).

# _3.6 Who informs firms of better management practices? And why is it that some firms do not adopt structured practices?_

> 27 There are very few firms that became non-exporters - 15 of 978 firms in total; 13 of 578 firms if we restrict the respondent’s tenure to 6 years or more, and we drop these firms from this analysis.

> 28 A pseudo-panel fixed effect regression shows that this effect is statistically significant; becoming an exporter is associated with an increase in management score of 0.04 (Annex Table A.4, column 2).

> 29 Tanaka uses the episode of rapid trade opening in Myanmar during the early 2010s and finds that exporting causes an improvement in management practices as well as in working conditions.

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