Profitability: Profitability is measured as operating profits (value added minus wages and salaries)
normalized by sales.
Exporters: In Figure 1, the share of firms that export in each decile is measured as the percentage of
firms that report exporting in each decile.
R&D expenditure per employee: R&D expenditure is converted into U.S. dollars using the average
exchange rate for 2014 (13.03056) and then divided by the number of employees.
Patents: In the case of patents, the question included in ENAPROCE 2015 only asks whether the
firm has any patents or not. Therefore, we used this dummy variable to calculate the share of firms in
each decile of management practices that have patents.
Number of employees: The number of employees consists of the total number of workers of the
firm, including those that do not receive a salary and those that work for the firm but do not have a
contract directly with the firm. This is a standard definition of employment in all the projects
conducted by INEGI (the Economic Census, other surveys, etc.)
B.3.2 Management score: The management score is calculated following Bloom et al. (2019). For each of the 16 questions, a
score of 1 is associated to the most structured management practices (the one that is more specific,
formal, frequent or explicit) and a score of 0 to the less structured practice, with all responses in
between receiving a fraction of the score depending on the order. For example, when there are four
possible responses for a question, the possible scores are 0, 1/3, 2/3 and 1. Once all responses are
scored, the overall management score for a firm is calculated as an unweighted average of the 16
questions. We also calculate the two sub-indexes that Bloom et al. (2019) present, which identify
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monitoring practices (i.e., data-driven performance monitoring) and human resources practices (i.e.
incentives and targets).
