Wages, Productivity and Corporate Management

This paper investigates the effect of corporate management quality, measured complexly, on the productivity and wages of industrial firms. The results indicate that companies which are better managed offer superior remuneration to their employees, perhaps as a mechanism for retaining talent, or to boost, or at least reward, greater commitment to the company’s objectives; this in itself being essentially an expression of good quality management. In Spain, there is a sizeable deficit, in terms of corporate management quality, especially among SMEs, which results in significantly lower levels of productivity relative to their counterparts in larger European countries. Reducing this deficit should be an urgent priority, not just for companies themselves, but also for business organisations and particularly industrial policymakers. Workers and trade unions can contribute to this goal, which will yield benefits, not just for themselves, but for society as a whole.