Research Seminar by Dr. Samarth Gupta on “What Do Good Managers Do? Evidence from an Insurance Firm in India”
June 14 @ 3:45 pm - 5:00 pm
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Managers differ in productivity but what do good managers do? In this paper, I find substantial performance differences across manager-led teams in an insurance firm in India from 2012-15, even after controlling for tenure, team size, gender, and location of the manager. To find what good managers do, I regress outcomes of managerial tasks in 2013-15 on team output per worker in 2012. I find that the output of new recruits of a manager and the output per worker in 2012 of the manager’s team are positively correlated. When agents move across teams, quasi-randomly, I find no change in the output of these workers except for those agents who move to the top 10% of the managers. Thus, for 90% of the managers, skill differential appears to be the selection of agents, whereas the top 10% also contribute to an agent’s output. To explore implications of differences in selection, I develop a model where managers are heterogeneous in assessing a candidate’s productivity for the job as an agent. The model provides the implications on variation in exit propensity, team size evolution, and team output evolution. Empirical results confirm all the implications. The paper demonstrates how skill differential across managers, apart from differences in management practice and incentives, may drive productivity variation.
About the Speaker:
Dr. Samarth Gupta is an Associate Fellow at NCAER, Delhi and he obtained his Ph.D. in Economics from Boston University in May 2018. Prior to this, he obtained his MA from Delhi School of Economics. His research interests include personnel economics, organizational economics, development economics and political economy. In his work, he has explored the reasons for dispersion in managerial productivity in a large non-banking financial sector firm. He has also worked on a theoretical model to understand the effects of internet-based media on political outcomes.