A significant body of research assumes that modern management practices are less relevant for smaller firms, especially in developing countries. We analyze the relationship between structured management practices and firm performance using World Bank Enterprise Survey (WBES) data covering 94 countries. The positive relationship between structured management practices and firm sales, often documented for larger firms in developed countries, is also present for smaller firms in developing economies. This association is stronger for smaller firms. This points to a resolution to a persistent question in the economics of management literature: if modern management techniques are so good, why don’t more firms use them? Our findings suggest the answer is not low marginal benefits; the marginal benefits are highest among smaller firms. Instead, barriers to adoption such as implementation and regulatory costs may be more relevant, consistent with prior work by Bloom (American Economic Review 109:1648–1683, 2019).
Gutiérrez-Ramírez et al. (Tue,) studied this question.