How Does the Market Value Organizational Management Practices of Japanese Firms? Using interview survey data

Author Name KAWAKAMI Atsushi  (Teikyo University) /ASABA Shigeru  (Waseda University)
Creation Date/NO. August 2014 14-E-050
Research Project Study on Intangible Assets in Japan
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This paper examines the extent to which a firm's management practices are valued in the marketplace using the interview survey data which are comparable with that in Bloom and Van Reenen (2007). Kawakami and Asaba (2013) use the same interview data and find that among various management practices, human resources management has a significantly positive impact on Tobin's q, while some of the organizational management variables have a significantly negative impact. The latter result is contrary to Bloom and Van Reenen (2007; 2010; 2012). This paper tries to examine the relationship in more detail between organizational management practice and Tobin's q. We use the raw answers for calculating the organizational management score instead of the organizational management score itself. The detailed analysis suggests three characteristics of management practices: (i) Information sharing and coordination within a unit or a team increases the firm value, while disclosure of information and coordination across units decreases the value; (ii) The impact of quick decision making on a firm's market value varies depending upon the contexts; (iii) Speedy decision making increases the value in the case of new business development, while consultation with the people concerned increases a firm's market value in the case of closing an existing business.