The Management and Expectations Survey is the largest survey of UK management capabilities, executed by the Office for National Statistics (ONS) in collaboration with the Economic Statistics Centre of Excellence (ESCoE). Conducted in 2017 and 2020, the survey revealed the substantial heterogeneity of management capabilities across UK businesses and their strong correlation with performance measures such as turnover, profitability and productivity. One unique element of the MES is that it collects business managers’ forecasts both about GDP growth and their own sales growth, showing that better-managed firms can make more accurate forecasts, both about micro and macro conditions.
UK TEAM
RESEARCH
Do well managed firms make better forecasts?
We link a new UK management survey covering 8,000 firms to panel data on productivity in manufacturing and services. There is a large variation in management practices, which are highly correlated with productivity, profitability and size. Uniquely, the survey collects firms’ micro forecasts of their own sales and also macro forecasts of GDP. We find that better managed firms make more accurate micro and macro forecasts, even after controlling for their size, age, industry and many other factors. We also show better managed firms appear aware that their forecasts are more accurate, with lower subjective uncertainty around central values. These stylized facts suggest that one reason for the superior performance of better managed firms is that they knowingly make more accurate forecasts, enabling them to make superior operational and strategic choices.