Leadership

Modern Management: Good For The Environment Or Just Hot Air?

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Executive Summary

The authors use an innovative methodology to measure management practices in over 300 manufacturing firms in the UK. They then match this management data to production and energy usage information for establishments owned by these firms. They find that establishments in better managed firms are significantly less energy intensive. They use less energy per unit of output, and also in relation to other factor inputs. This is quantitatively substantial: going from the 25th to the 75th percentile of management practices is associated with a 17.4% reduction in energy intensity. This negative relationship is robust to a variety of controls for industry, location, technology and other factor inputs.

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