This paper examines the long-run causal effects of management and technology on firm performance. Management and technology transferred from US firms to Italian firms through the United States Technical Assistance and Productivity Program (1952–1958). For each firm participated in the Productivity Program, managers and engineers were sent to US firms to study management and technology and thus management and technology transferred from US firms to Italian firms. The author collected and digitized balance sheets from five years before to fifteen years after the Productivity Program and linked them to firms’ application records. Using these data, the author compared the performance of firms that applied for and eventually received the management or the technology transfer (treated firms) with that of firms applying for the same transfer, but not receiving it due to the budget cut (comparison firms). Then she found that “performance of Italian firms that sent their managers to the United States increased for at least fifteen years after the program; performance of companies that received new machines increased, but flattened out over time; management and new machines were complementary” (Giorcelli, 2019, p.121).
This paper used data in 1950s and examined the effects by a special program. This inspires me to think about examining this effect by using the recent data in China. Since China has a five-years plan named ‘Promote the development plan for SMEs (2016-2020)’. In this plan, China has increased fiscal investments to improve the management and technology in firms. We can use the amount of investments the firm gets to measure the increasement of management and technology of firms. And use the variables from the paper like ‘Plants per firm’, ‘Employees per firm’, ‘Current assets’ and so on to measure the firm performance. Also, China has increased its R&D investments by 12% to 20% annually for each of the past 20 years. R&D investments is aimed to encourage firms to do technology innovation, so we could also include R&D investments as a measure of technology into the research.
So I would like to extend the paper by raising a question: what does government investment on management and technology influence firm performance in China? To solve this question, I’ll use the data described above and modify the paper’s model by changing the measurement of management and technology.
Reference:
Giorcelli, Michela. 2019. "The Long-Term Effects of Management and Technology Transfers." American Economic Review, 109 (1): 121-52.
This paper examines the long-run causal effects of management and technology on firm performance. Management and technology transferred from US firms to Italian firms through the United States Technical Assistance and Productivity Program (1952–1958). For each firm participated in the Productivity Program, managers and engineers were sent to US firms to study management and technology and thus management and technology transferred from US firms to Italian firms. The author collected and digitized balance sheets from five years before to fifteen years after the Productivity Program and linked them to firms’ application records. Using these data, the author compared the performance of firms that applied for and eventually received the management or the technology transfer (treated firms) with that of firms applying for the same transfer, but not receiving it due to the budget cut (comparison firms). Then she found that “performance of Italian firms that sent their managers to the United States increased for at least fifteen years after the program; performance of companies that received new machines increased, but flattened out over time; management and new machines were complementary” (Giorcelli, 2019, p.121).
This paper used data in 1950s and examined the effects by a special program. This inspires me to think about examining this effect by using the recent data in China. Since China has a five-years plan named ‘Promote the development plan for SMEs (2016-2020)’. In this plan, China has increased fiscal investments to improve the management and technology in firms. We can use the amount of investments the firm gets to measure the increasement of management and technology of firms. And use the variables from the paper like ‘Plants per firm’, ‘Employees per firm’, ‘Current assets’ and so on to measure the firm performance. Also, China has increased its R&D investments by 12% to 20% annually for each of the past 20 years. R&D investments is aimed to encourage firms to do technology innovation, so we could also include R&D investments as a measure of technology into the research.
So I would like to extend the paper by raising a question: what does government investment on management and technology influence firm performance in China? To solve this question, I’ll use the data described above and modify the paper’s model by changing the measurement of management and technology.
Reference: Giorcelli, Michela. 2019. "The Long-Term Effects of Management and Technology Transfers." American Economic Review, 109 (1): 121-52.