Impact case study database

The WMS has generated robust, large-scale data about management practices across firms, industries, and countries. Those data have supported the first empirical analyses of the relationship between differences in management practices and the marked heterogeneity of firm productivity. Insights of the body of work by Van Reenen and colleagues have important implications both for policymakers and for private and public sector organisations. Impacts described here relate particularly to the very significant contribution of the research to debate about the so-called UK “productivity puzzle” and its subsequent influence on the Industrial Strategy, which focuses on the promotion of better management practices through initiatives like the Business Basic Programme. Associated impacts are described on efforts to increase UK productivity through new, business-led initiatives.

Underpinning debate on the UK “productivity puzzle”: the research has played a central role in shaping policy narrative about the UK “productivity puzzle”, and in establishing management practices as a key focus for policy improvement. The sharp slowdown in productivity growth in the UK since the Great Recession has been the subject of growing policy debate in recent years. Van Reenen’s research is central to the now commonly-accepted policy narrative that has emerged to identify causes and solutions to this puzzle. Its influence is evident in speeches, reports and policy documents, including a 2017 speech by Andy Haldane, Chief Economist of the Bank of England (BoE) [A]. Haldane affirms in a testimonial that work led by Van Reenen has informed understanding in the BoE, including of structural constraints on the supply side of the economy. Of particular note is the fact that: “ Van Reenen’s work on the World Management Survey was the first credible attempt to measure and quantify core management practices in a consistent way across industries and countries. The data clearly shows that there is a management problem in the UK, in the sense that on average firms lag behind productivity leaders” [B]. Use of the research in both mainstream media and business blog discussions further demonstrates its centrality to debate on the “productivity paradox” [C].

Establishing management practices as a key focus of policy and practice: beyond improving understanding of the link between management practices and productivity, the research has made clear that at least some of the structural catalysts for poor management practices can - and should - be influenced by policy interventions. Several major policy initiatives reflect and respond to this, including the Business Productivity Review conducted in 2018-19 by the Department for Business, Energy & Industrial Strategy (BEIS). This establishes management quality as a key policy focus to address low productivity in the UK, in line with recommendations made by Van Reenen and Bloom on the basis of WMS data [D]. The Productivity Review highlights the importance of “ enabling businesses to understand their performance” ( [E], p. 22), since many managers misperceive their own abilities; again, this echoes findings reported in [2]. The research has also had important framing impacts on the UK Industrial Strategy, including by demonstrating the need for improvement in UK management practices and by providing a new and consistent way to measure and quantify these. Its significance in this context is confirmed by Haldane: “ on the Industrial Strategy Council (that I Chair), perhaps the key issue is why UK productivity is low and what can be done to raise it, in order to boost living standards. The work of Professor John Van Reenen and his former students such as Nick Bloom and Raffaella Sadun has been critical here’ [B].

As well as government policy interventions, the research recommends that industry bodies and firms themselves focus on improving management practices to enhance productivity. These messages have been widely embraced in both the private and the public sectors. Recent publications by the Confederation of British Industry (CBI), for example, identify management skills as a key area for improvement for British businesses [F]. According to CBI Chief Economist, Rain Newton-Smith: “ Van Reenen’s work on measuring and understanding the drivers of management practices is essential reading for us […] We have used this work in many of our initiatives […] and more recently in our work on regional growth as well as the diffusion of innovation” [G].

Impacts on the diffusion of management best practices: the focus on management quality informed by Van Reenen’s work has informed the creation of business- and government-led initiatives aimed at increasing the diffusion of best practices to boost firm-level productivity. These include a series of measures announced in the Industrial Strategy in 2017, including the launch of the Business Basic Programme (BBP) and support for the Be The Business (BTB) initiative [H].

The BBP was launched in 2018 to test innovative ways of encouraging small and medium enterprises (SMEs) to adopt existing technologies and management practices to improve their productivity. The programme provides grants to businesses, academia, trade bodies, and other parties to support the development of ideas and design (proof of concept stage) and the delivery of impact evaluations (trial stage). Its first two funding rounds in June 2018 and January 2019 awarded GBP4 million to 26 evaluation projects focused on technology and management best practices adoption [I]. The first funded projects will report impact in 2021 (the original timeline was adapted to account for delays due to the COVID-19 crisis.)

BTB launched in 2017; it supports businesses to improve their management practices by providing access to interactive digital benchmarking tools, peer-to-peer mentoring and structured executive leadership and management training. It was created following the publication of a 2015 review by the Productivity Commission, which notes that: “ the WMS has finally allowed for robust analysis of the links between management practice and business performance” and concludes that “ making up the management practice gap would go some way to making up the productivity gap” [J]. The report further argues that “ getting objective benchmarks against which to compare business practice and performance is critical to driving improvement”, relying on “ evidence from the WMS [showing] that managers’ intuitive evaluations of their own business practice are often wide of the mark” [J]. BTB has recently extended its support to business through the publication of online advice and guidance helping SMEs adapt their business practices, prepare for recovery, and build resilience in the context of the COVID-19 crisis.

International impacts: although this case study focuses on domestic impacts, the WMS and associated research has also had significant impacts on international policy and industry understanding. These are observed in a 2017 World Bank report, which notes that: “ the WMS initiated by Bloom and Van Reenen…has permitted a quantum leap in the comparative quantitative analysis of management practices and their implications for productivity and innovation” [K]. The international use of WMS data is further corroborated by Haldane, who writes: “ I am particularly pleased that in his most recent work [Van Reenen] has forged partnerships with statistical agencies around the world (such as our own ONS). This will help management data become part of the data infrastructure that we can use as policymakers to inform policy decisions” [B].

By raising awareness of the role of management practices on firm productivity and growth worldwide, the research has influenced the operations and policies of businesses, governments, and development institutions. WMS data has enabled a host of countries to benchmark the quality of their management practices, including by helping them diagnose weak practices. Industrial policy documents in Australia [L], France [M], and New Zealand [N], for example, have used the data as a diagnostic tool to identify weaknesses in domestic firms’ practices. They cite [1], [2], and [5] to highlight the role of good management in supporting productivity and competitiveness. The WMS methodology has also been used in impact evaluations measuring the effects of improved management practices on firm productivity, notably in India and Kenya. Findings from these evaluations were used by firms offering consulting services and management training. These include businesses such as Accenture and industry bodies such as the African Management Institute, which describes the work by Van Reenen and his co-authors as “ crucial to our practice in making managerial interventions” [O]. In addition, since 2014 WMS results have been referenced in key documents associated with 15 operations projects financed by the World Bank, representing USD2.6 billion in direct International Development Association/International Bank for Reconstruction and Development lending.

These impacts represent significant contributions to understanding of the importance of management practices to performance. The work has underpinned the development of both policy and industry interventions to improve management practices, to enhance productivity, and thereby contribute to improvements in people’s quality of life.