The Long-Term Effects of Management and Technology Transfers

This paper examines the long-run causal effects of management on firm performance. Under the Productivity Program (1952–1958), the US organized management-training trips for Italian managers to U.S. firms and granted technologically advanced machines to Italian companies. I exploit an unexpected budget cut that reduced the number of participating firms and find that, compared to businesses excluded by the budget cut: performance of Italian firms that sent their managers to the US increased for at least fifteen years after the program; performance of companies that received new machines increased, but flattened out over time; management and new machines were complementary.