The Management of Organisations as a Target for Productivity Gains in Australia: Intellectual Assets

Discussion around total factor productivity gains for the Australian Economy often focuses on infrastructure bottlenecks, technology adoption, competition and labour market flexibility. Although a potential area for gains, management is typically omitted from the public policy debate because it is considered too hard to quantify and as a result there is no concrete case for improvement. In this paper we describe our approach to measuring management as a productivity driver in service firms, developed as part of a study commissioned by the Australian Commonwealth Government. Management, as measured by internal stocks of intellectual assets are significantly related with higher productivity: our analysis predicts that a low performing firm could realise an increase in productivity of up to 13.3% if it were to improve its intellectual asset. However, after controlling for intellectual assets competition and ownership structure are not significant determinants of firm level productivity. We also discuss policy initiatives available to policy makers.