What Causes the Differences in Management Practices between US and UK? An Application of Decomposition Analysis on Firms across Countries

Abstract

The aim of this study is to examine what makes the differences of management practices between the United States and the United Kingdom using decomposition analysis. First, this study analyzes the determinants of management practices, and does the empirical research. Determinants of management practices are concluding product market competition, ownership, firm age, human resources (education, working hours, and payment). Essentially we argue that the differences (if any) between US and UK’s management practices can be expanded by product market competition and education. The results demonstrate that education (managers’ degree and employees’ degree) is positively correlated with management practice gap, but the impact of competition on management practices gap is negative. In particular, employees’ degree variables explained approximately 70% of the management gap.