Talents from Abroad. Foreign Managers and Productivity in the United Kingdom.

Exadactylos, Dimitrios and Riccaboni, Massimo and Rungi, Armando Talents from Abroad. Foreign Managers and Productivity in the United Kingdom. EIC working paper series #1/2019 ISSN 2279-6894.

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Abstract

In this paper, we test the contribution of foreign management on firms’ competitiveness. We use a novel dataset on the careers of 165,084 managers employed by 13,106 companies in the United Kingdom in the period 2009-2017. We find that a domestic manufacturing firm becomes on average between 9% and 12% more productive after hiring at least one foreign manager. Interestingly, productivity gains by domestic firms after recruiting foreign managers are similar in magnitude to gains after foreign acquisitions as from previous literature. Eventually, we do not find significant gains by foreign-owned firms hiring foreign managers. Our identification strategy combines difference-in-difference and matching techniques to challenge reverse causality. We proxy firms’ competitiveness either by total factor productivity or by technical efficiency derived from stochastic frontier analyses. Eventually, we argue that limits to the circulation of talents, as for example in case of a Brexit event, may hamper the allocation of labor productive resources.

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