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Can US management stay ahead of China, India?

There are a few things that US firms can do to stay competitive: monitor management, set targets, and develop strong incentives for employees to perform well

John Maltabes, research engineer at Hewlett-Packard, picks a roll of thin flexible electronic display that will be placed into a etch machine at Hewlett- Packard Laboratories in Palo Alto, Calif., March 15, 2011. Even though the US has world-class firms, like Hewlett-Packard and General Electric, overall management in the US is worse than in India and China, write guest bloggers Nicholas Bloom and Rebecca Homkes.

Tony Avelar / Staff / File

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Two decades ago, Japan was the world economy's new kid on the block. America's growth was stagnating while Japan's was accelerating. Many American politicians and citizens feared that US global dominance was fading – a fear Hollywood echoed with the 1993 film "Rising Sun," in which Sean Connery and Wesley Snipes battled corrupt Japanese corporations.

That economic miracle was built on strong management. Japan developed and perfected the lean management system, powering its corporations toward global supremacy. The US eventually copied and further innovated these management practices, and the Japanese advantage melted away.

Today's new kids on the block, China and India, are powered by something quite different: a vast supply of cheap labor that has supercharged growth in low-wage manufacturing and services. But this cheap labor is running out as eventually all underemployed farmers move to the city. In China's Pearl Delta manufacturing heartland, wages now are reportedly rising at 20 percent per year. So what will happen next: Will China and India's growth slow, or will they copy Japan to get a second wind? The quality of their management practices will play a key role.

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