Good managers, not machines, drive productivity growth – John Van Reenen

MIT Sloan Professor John Van Reenen

From Bloomberg View

When people discuss what drives long-run productivity, they usually focus on technical change. But productivity is about more than robots, new drugs and self-driving vehicles. First, if you break down the sources of productivity across nations and firms there is a large residual left over (rather inelegantly named “Total Factor Productivity” or TFP for short). And observable measures of technology can only account for a small fraction of this dark matter.

On top of this, a huge number of statistical analyses and case studies of the impact of new technologies on firm performance have shown that there is a massive variation in its impact. What’s much more important than the amount spent on fancy tech is the way managerial practices are used in the firms that implement the changes.

Although there is a tradition in economics starting with the 19th-century American economist Francis Walker on the importance of management for productivity, it has been largely subterranean. Management is very hard to measure in a robust way, so economists have been happy to delegate this task to others in the case study literature in business schools.

Managers are more frequently the butt of jokes from TV shows like “The Office” to “Horrible Bosses,” than seen as drivers of growth. But maybe things are now changing.

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Trump’s immigration ban is terrible for entrepreneurs–Samia Bahsoun

Samia Bahsoun, EMBA ’17

From TechCrunch

Donald Trump’s executive orders targeting Muslims, immigrants and refugees are moves that pander to the dangerous forces of racism and xenophobia.

These bans will worsen a worldwide humanitarian crisis, isolate us from our friends and allies, and make us even more vulnerable to terror attacks. Moreover, if these foolish actions are enforced, it will result in dire consequences for the economic well-being of our country. Immigrants of all races, creeds and national origins form a vital part of America’s economy as workers, job creators, and entrepreneurs.

I’m an immigrant of Lebanese Muslim descent. I’m also a telecom infrastructure expert, entrepreneur, and the founder and CEO of Capwave Technologies, based out of Asbury Park, New Jersey. Before launching Capwave, I helped restructure and launch several telecom startups and served as a strategic adviser to Fortune 500 companies. I hold a graduate degree in electrical engineering, and am currently enrolled in MIT’s Executive MBA program.

As an immigrant and successful small business owner, I’m living the American dream.

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What Trump should do now that Andy Puzder withdrew his nomination for Secretary of Labor–Thomas Kochan

MIT Sloan Professor Thomas Kochan

MIT Sloan Professor Thomas Kochan

From Fortune

Now that President Trump’s pick for Secretary of Labor, CKE Restaurants CEO Andy Puzder, has withdrawn his nomination for U.S. Secretary of Labor, America will avoid, at least for the moment, a highly divisive debate over the future of U.S. employment and labor policy. This gives President Trump an opportunity to reconsider the type of person he wants to carry out his agenda.

Will Trump choose someone who respects the mission of the Labor Department, which is: “To foster, promote, and develop the welfare of the wage earners, job seekers, and retirees of the United States; improve working conditions; advance opportunities for profitable employment; and assure work-related benefits and rights.”

Or, will he choose another candidate who will implement an agenda that weakens employment standards and enforcement; thwart efforts of women and men who are organizing to support low-wage workers, and deepen the divide between business and labor? If this is the direction of whoever gets confirmed Secretary of Labor, we will be revisiting last century’s labor battles and further divide the nation. Read More »

The store as a showroom: having your cake and eating it too – Elaine Chen

MIT Sloan Senior Lecturer Elaine Chen

From The Huffington Post

In 2005, I was shopping for an acoustic piano. Back then, piano shopping worked like this: Go to a showroom. Play every instrument. Pick one, and negotiate a price. Have it shipped to your house. Everyone understood that a piano store does not maintain much inventory on site.

Apparel shopping was completely different. Shoppers went to the store, tried things on, then paid and left with their purchase in a shopping bag.

The changing face of apparel retail

Fast forward to 2016. Piano shopping is still much the same, but apparel shopping has changed. While store sales still account for a majority of retail revenues, online sales for apparel has been growing explosively.

Nielsen found that in 2015, almost half of U.S. shoppers (41%) had bought clothes online in the last six months, and roughly 12% had made a mobile apparel purchase. Citing Morgan Stanley, Business Insider reported that Amazon has a 7% share of the apparel retail market, and will comprise a 19% of the market share by 2020. Another article cites a Cowen & Co. report which predicted that Amazon will overtake Macy’s by 2017.

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Good gig? New employment proposals for contract workers could make it better — Thomas A. Kochan

MIT Sloan Professor Thomas Kochan

MIT Sloan Professor Thomas Kochan

From WBUR Cognoscenti

Last week, Sen. Elizabeth Warren unveiled a comprehensive set of proposals to provide basic employment policy protections and income security benefits to those working in the so-called “gig” economy and others in subcontracted or franchised arrangements. Whether one agrees with her specific ideas or not, the nation owes her a debt of gratitude for putting these issues front and square on the table for a discussion that is long overdue.

The gig economy, best embodied by Uber, Lyft and Task Rabbit, may account for less than 1 percent of the workforce, but it has sparked a debate over what to do about all those who make their living outside of standard employment relationships.

Standard employment relationships are ones in which there is a clearly defined and identifiable employer that is responsible for complying with the range of employment laws put on the books since the New Deal: unemployment insurance, Social Security, minimum wage and overtime rules, and the right to unionize and gain access to collective bargaining. To be clear, the vast majority of American workers, about 85 percent to be exact, still work in this type of employment relationship.

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