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The Long-Term Effects of Management and Technology Transfer: Evidence from the US Productivity Program

Feb 2016
Working Paper
16-010
By  Michela Giorcelli

This paper uses a unique historical episode to assess the long-run effects of management and technology transfer on firm performance. During the 1950s, as part of the Marshall Plan, the US administration sponsored management-training trips for European managers to US firms and granted state-of-the-art machines to European firms. I use newly-assembled data on the population of Italian firms eligible to participate in this program, tracked over a twenty-year period. By exploiting an unexpected cut in the US budget, I compare firms that eventually participated in the program with firms that were initially eligible to participate, but were excluded after the budget cut. I find that management transfer significantly increased Italian firms’ survivorship, sales, employment and productivity. These positive effects persisted for at least fifteen years after the program, a finding that can be explained by the increased investment rates, capital-to-labor ratio, more educated managers’ hires, and employees training expenditures in such firms. Companies that received new machines also improved their performance, but the effects were short-lived.

Publication Keywords: 
Productivity
management practices
technology transfer
firm survival