BREVIS Reporte de Economía y Negocios en América Latina
Year II, Issue. 8 | April 24, 2017
Dr. Alberto Ortiz and Dr. Jorge Mendoza Professors of Economics EGADE Business School del Tecnológico de Monterrey aortizb@itesm.mx | jorge.mendoza@itesm.mx
TO INCREASE PRODUCTIVITY, IMPROVE THE QUALITY OF MANAGEMENT PRACTICES
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country’s production is determined by production factors—capital and work—and how efficiently these factors are used. This efficiency, or total productivity of the factors, is determined by the level of technological knowhow and the workings of the institutions that allow capital and work to be used to their highest potential. In Mexico, several studies over the last three decades have shown that productivity has fallen behind, and an accumulation of production factors has led to sustained low growth. According to the McKinsey Global Institute, low productivity performance in Mexico is the result of the mediocre performance in the traditional sector made up of small and informal businesses that have increased their employment levels, counteracting the productive dynamism of the modern sector. McKinsey believes that it is essential to increase the productivity of businesses in the traditional sector and to create opportunities so that the most-successful organizations in this sector can become formal, modern businesses, by creating an environment that fosters entrepreneurship, growth, and innovation, while at the same time discouraging informal employment and simplifying business formalization. It also proposes fostering production and full-time employment growth in the modern sector and suggests a need for significant improvements in education, infrastructure, and company access to capital, as well as reducing energy costs. The structural reforms approved by the
Mexican Congress seek to create conditions that encourage the accumulation of factors and an increase in productivity, but according to recent studies, these efforts would probably work better with improved efficiency in business management. Slightly more than ten years ago, a group of scholars led by Nicholas Bloom from Stanford University and John van Reenen from the London School of Economics launched an empirical research project on the links between productivity and business-management practices. This group has developed research instruments and has collected and analyzed information on the adoption and use of different management practices in businesses in different economies around the world, to study the pertinence of a new hypothesis, that the quality of business-management practices can account for differences in productivity and general economic performance. The four main areas of business management that these studies have assessed are: (1) operations management, The quality including managerial techniques used in the of the transformation of input into goods and sermanagement vices; (2) monitoring of organizational performance, meaning how well performance practices monitoring systems inform management accounts for about day-to-day operations; (3) establidifferences in shing goals, which shows how the strategy is linked to operations, and (4) talent manaproductivity gement, which shows how the employees and general are managed and encouraged.
economic performance”
If in Mexico we would like to learn about the links between our managerial practices and our productivity, we need to diagnose their current state, with measurements that we don’t have today. Therefore, we propose creating these measurements to: (i) identify the types of practices used by the different businesses in Mexico, (ii) understand their causes and enabling factors, and (iii) measure the impact of these practices on the organizations’ productivity and economic performance. ❚
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