Determinants of Management Practices

This study examined the determinants of management practices by using an interview survey on organizational and human resource management of Japanese firms. We found that the management practices at foreign-owned firms tend to be of high quality. This suggests that promoting foreign direct investment in Japan helps Japanese firms improve management quality. In addition, management quality tends to be higher commensurate with higher competition, larger firm size, and higher growth rate. Meanwhile, older firms and firms managed by the founder of the firm tend to be managed poorly on average. Moreover, behind the score of management practice, a factor analysis found three latent factors: change, monitoring, and evaluation. Examining the determinants of each latent factor, we found different determinants among the three factors. This finding suggests that we need to promote different determinants depending on which practices we aim to improve. Examining the determinants of management practices leads to an understanding of why management practices are different among firms, industries, and countries and, moreover, it contributes to exploring the essential question of why performance differences among firms persist. Therefore, it is expected that the survey on management practices used in this study will be conducted continuously in the future with a view toward contributing to internationally comparative studies on management practices and performance.