Business management factors and performance across countries

Summary:

This paper presents an analysis of business management performance across countries based on a standard application of multivariate statistical analysis techniques to thirteen indicators of management performance from the World Competitiveness Report (IMD). The paper assumes that business management skills is a key factor for the development of entrepreneurship and for business success in a country, and a key variable for enterprise policy formulation. In supporting the development of managerial skills enterprise policy makers contribute to increasing the human capital stock of a country, reinforce its innovation capabilities and enhance knowledge diffusion, therefore positively contributing to competitiveness and economic growth. It is assumed that managerial skills are revealed by the performance of countries as measured by a series of indicators.

The paper intends to identify and analyse latent factors, which underlie business managers’ performance at country level. The 47 countries in the sample are the EU15 member states, the rest of OECD countries, and a number of countries from Asia, Latin America and Africa. Principal Components Analysis (PCA) has been used for identifying the underlying factors of business management performance, and calculating synthetic indicators. An explanation of country performance in terms of the level of education and economic freedom is tested. Cluster analysis is used for creating homogeneous groups of countries. Two main clusters, which are further sub-divided into four and six sub-clusters are formed, and interpreted in terms of the business management performance factors identified.