Management and Misallocation in Mexico

B. Firm characteristics
Size (number of employees)
117
185
13
21
50
125
260
3,707
Firm age
19.637
15.038
4.000
8.000
16.000
27.000
40.000
3,707
Exporter
0.345
0.476
0.000
0.000
0.000
1.000
1.000
3,707
Share of exports
0.130
0.276
0.000
0.000
0.000
0.058
0.595
3,707
FDI1*
0.159
0.366
0.000
0.000
0.000
0.000
1.000
3,707
FDI2*
0.145
0.353
0.000
0.000
0.000
0.000
1.000
3,707
Share of FDI
14.142
34.004
0.000
0.000
0.000
0.000
100.000
3,707
Share college degree
0.160
0.144
0.017
0.065
0.125
0.216
0.340
3,707
Share white collar
0.166
0.103
0.050
0.089
0.149
0.222
0.313
3,707
C. Other control variables
Drive time to border (hrs)
10.0
5.8
2.5
4.4
10.8
12.8
14.3
3,707
Population density (inhabitans/km
2
)
926.9
832.5
95.2
373.0
603.7
1,133.1
2,548.3
3,707
MA average household monthly per capita income (pesos)
2,912.6
874.3
2,141.8
2,367.4
2,847.0
3,347.0
3,558.8
3,707
Share of exports (NAICS 6-digits exports/sales)
0.183
0.160
0.007
0.066
0.144
0.256
0.415
3,707
A. Management
Management score
0.474
0.173
0.238
0.345
0.483
0.607
0.700
2,936
Data driven performance monitoring
0.515
0.187
0.250
0.389
0.528
0.667
0.750
2,936
Incentives and targets
0.441
0.223
0.135
0.260
0.445
0.608
0.742
2,936
B. Firm characteristics
Size (number of employees)
133
204
15
25
58
145
310
2,936
Firm age
22.269
14.523
7.000
11.000
19.000
30.000
42.000
2,936
Exporter
0.370
0.483
0.000
0.000
0.000
1.000
1.000
2,936
Share of exports
0.135
0.279
0.000
0.000
0.000
0.078
0.623
2,936
FDI1*
0.168
0.374
0.000
0.000
0.000
0.000
1.000
2,936
FDI2*
0.154
0.361
0.000
0.000
0.000
0.000
1.000
2,936
Share of FDI
15.214
35.172
0.000
0.000
0.000
0.000
100.000
2,936
Share college degree
0.165
0.153
0.023
0.067
0.128
0.214
0.342
2,936
Share white collar
0.167
0.126
0.043
0.080
0.140
0.219
0.326
2,936
C. Other control variables
Drive time to border (hrs)
9.9
5.8
2.5
4.4
10.7
12.8
14.3
2,936
Population density (inhabitans/km
2
)
918.7
821.8
95.2
373.0
603.7
1,133.1
2,548.3
2,936
MA average household monthly per capita income (pesos)
2,918.6
883.7
2,141.8
2,367.4
2,847.0
3,347.0
3,558.8
2,936
Share of exports (NAICS 6-digits exports/sales)
0.186
0.163
0.007
0.058
0.149
0.264
0.417
2,936
A. Management
Management score
0.446
0.172
0.214
0.317
0.447
0.577
0.674
10,175
Data driven performance monitoring
0.465
0.195
0.167
0.333
0.500
0.611
0.708
10,175
Incentives and targets
0.428
0.222
0.135
0.250
0.427
0.600
0.730
10,175
B. Firm characteristics
Size (number of employees)
68
147
12
15
25
53
120
10,175
Firm age
16.235
13.629
3.000
6.000
13.000
22.000
33.000
10,175
Exporter
0.061
0.240
0.000
0.000
0.000
0.000
0.000
10,175
Share of exports
0.015
0.094
0.000
0.000
0.000
0.000
0.000
10,175
FDI1*
0.041
0.198
0.000
0.000
0.000
0.000
0.000
10,175
FDI2*
0.034
0.180
0.000
0.000
0.000
0.000
0.000
10,175
Share of FDI
3.277
17.041
0.000
0.000
0.000
0.000
0.000
10,175
Share college degree
0.271
0.273
0.000
0.077
0.176
0.368
0.762
10,175
Share white collar
0.159
0.102
0.043
0.082
0.143
0.217
0.300
10,175
C. Other control variables
Drive time to border (hrs)
12.4
7.1
2.6
8.4
12.6
14.3
22.3
10,175
Population density (inhabitans/km
2
)
812.9
832.8
62.9
173.0
532.3
993.3
2,548.3
10,175
MA average household monthly per capita income (pesos)
3,174.8
1,226.5
2,229.5
2,525.4
2,921.7
3,357.7
4,314.1
10,175
Share of exports (NAICS 6-digits exports/sales)
0.014
0.026
0.000
0.000
0.002
0.020
0.041
10,175
Table A1. Descriptive Statistics by sector
Manufacturing
Services
2014
2017
2014

---

A. Management
Management score
0.443
0.173
0.208
0.314
0.446
0.577
0.669
7,509
Data driven performance monitoring
0.455
0.190
0.167
0.333
0.472
0.597
0.694
7,509
Incentives and targets
0.429
0.226
0.135
0.250
0.438
0.604
0.730
7,509
B. Firm characteristics
Size (number of employees)
68
136
12
16
28
60
131
7,509
Firm age
18.447
12.686
6.000
9.000
16.000
24.000
34.000
7,509
Exporter
0.064
0.244
0.000
0.000
0.000
0.000
0.000
7,509
Share of exports
0.013
0.086
0.000
0.000
0.000
0.000
0.000
7,509
FDI1*
0.039
0.193
0.000
0.000
0.000
0.000
0.000
7,509
FDI2*
0.032
0.177
0.000
0.000
0.000
0.000
0.000
7,509
Share of FDI
3.172
16.874
0.000
0.000
0.000
0.000
0.000
7,509
Share college degree
0.269
0.284
0.000
0.071
0.167
0.353
0.814
7,509
Share white collar
0.166
0.131
0.041
0.078
0.138
0.214
0.320
7,509
C. Other control variables
Drive time to border (hrs)
12.6
7.2
2.6
8.5
12.6
14.3
23.6
7,509
Population density (inhabitans/km
2
)
795.6
814.0
62.7
173.0
532.3
993.3
2,548.3
7,509
MA average household monthly per capita income (pesos)
3,132.0
1,160.5
2,229.5
2,525.4
2,910.1
3,352.3
4,130.4
7,509
Share of exports (NAICS 6-digits exports/sales)
0.014
0.027
0.000
0.000
0.002
0.020
0.041
7,509
2017
Notes: *FDI1 is defined as a firm with any participation of FDI and FDI2 indicates 50% or more FDI.

---

(1)
(2)
(3)
(5)
(6)
(7)
log(TFP)
1
log(TFP)
1
Management score
0.905***
0.322*** 0.0910**
0.433***
0.280***
0.0535
(0.0940)
(0.100)
(0.0457)
(0.0715)
(0.0692)
(0.0407)
log(capital/employee)
0.0851***
0.0451***
(0.0103)
(0.00545)
log(employees)
0.104***
0.0913***
(0.0177)
(0.0155)
0.400***
0.0330
(0.149)
(0.0642)
6-digits NAICS
No
Yes
Yes
No
Yes
Yes
Observations
3,808
3,808
3,808
7,286
7,286
7,286
Notes: Robust standard errors in parentheses; * Significant at the 10% level, ** 5% level, *** 1% level. TFP is constructed 
using a Törnqvist index approach (see Data Appendix, section B.3.1).
Table A2. Firm performance and management scores using data from 2014 Economic Census
Manufacturing
Services
log(Value Added per Employee)
log(Value Added per Employee)
Share of workers with a 
college degree

---

(1)
(2)
Management score
1.016***
0.315***
(0.0474)
(0.0461)
log(capital/employee)
0.124***
(0.00454)
log(employees)
0.139***
(0.0256)
Share white-collar workers
-0.334***
(0.0492)
0.232***
(0.0429)
88.7
21.8
6-digits NAICS
No
Yes
Time
Yes
Yes
Observations
11,655
11,655
Notes: Robust standard errors in parentheses clustered at the firm level; * Significant at the 
10% level, ** 5% level, *** 1% level. 
Table A3. Management Practices and Firm Performance in Microenterprises
% rise from 10
th
to 90
th
management 
percentile
Microenterprises (manufacturing and services)
log(Value Added per Employee)
Share of workers with a college degree

---

Dependent variable:
(1)
(2)
(3)
(4)
Manufacturing
Services
Manufacturing Services
Management
0.164***
0.092***
0.008
-0.047***
-0.025***
0.028
(0.0226)
(0.0156)
(0.0084)
(0.0054)
R
2
0.016
0.004
0.009
0.002
Observations
3307
8900
3,707
10,175
ln(VA/employee)*
0.038***
0.030***
0.142
-0.009***
-0.005***
0.026
(0.0039)
(0.0036)
(0.0015)
(0.0013)
R
2
0.032
0.015
0.014
0.003
Observations
3307
5137
3,707
5,878
Notes: Robust standard errors in parentheses. * Significant at the 10% level, ** 5% level, *** 1% level. 
*Annual exit rates are 2.38% for manufacturing and 3.87% for services.
*Results for Value-Added exclude those observations that have missing values for the management score.
*Employment growth is defined as following Davis & Haltiwanger (1992)
p-value 
difference
Panel (b)
*Exit is defined as those firms that closed pemanently as well as those that were not found. 1,226 firms (266 manufacturing and 960 
services firms) exited the market during this period. In growth regressions, firms that did not respond are set to be missing.
*Commerce is excluded in Value-Added regressions as merchandise for resales was not accounted for in the first wave of the survey. 
*Results are divided by three to calculate annual rates.
Table A4. Management Practices, Exit, and Employment growth
p-value 
difference
Employment growth (annualized)
Exit (annualized)
Panel (a)
2 ∗ 𝐿
𝑁+1
− 𝐿
𝑁
/ 𝐿
𝑁+1
+ 𝐿
𝑁