Management Practices and Productivity: the Case of Saudi Arabia

In my Economics honor’s thesis, I examine management practices in Saudi Arabia and see if and how they correlate with firm productivity. Recent evidence points to strong correlation between “good” management practices - defined as practices that emphasize goal targeting, performance monitoring, and human resource management - and firm performance. That is to say, firms that employ good management practices are more likely to be more productive than their industry counter-parts, performing better in terms of sales, output, and survival. However the evidence is centered around and limited to the industrial sector in developed countries. So, I extend the research to Saudi Arabia, a Middle Eastern developing country. Replicating the survey study outlined in Bloom and Van Reenen (2007), I observe 26 Saudi firms and look at how their management scores correlate with their labor productivity. While I do find a positive correlation between the variables, the results are not statistically significant. Nonetheless, the evidence points to consistency between my results and those in the current literature, thus making an
argument for the existence of universally “good” management practices.