Management matters in retail

Released April 2010

The Working paper, Management matters in retail, shows that strength of management of Ontario’s and Canada’s retailers is important for our innovation and prosperity.

In its previous work, the Institute concluded that our manufacturing management was among the best in the world, but trailed the United States. In this latest research on the retail sector, the Institute finds that store-level management in Canada is as strong as that in the United States. New evidence also shows that better educated managers are important for effectiveness. In Canada and other countries, companies with university-educated managers tended to perform better. 

The research finds a strong connection between the quality of a retailer’s management and whether it competes only in the domestic market. Large-scale multi-national retailers are better managed than those that focus only on their home market. This holds true in Canada and other countries. The Institute concludes that firms that expand globally have dramatically better management, but acknowledges that determining a cause-and-effect relationship is harder. 

The Working Paper draws on research to show that the development of new management techniques, such as Just-In-Time logistics and Lean manufacturing and retailing, can lead to economy-wide growth in productivity and prosperity. 

The Working Paper calls on public policy to ensure that developing strong management is an important element of research and innovation strategies – recognizing that there is more to the success of these policies than a focus on research in the hard sciences. Included in this is the need for greater emphasis on business education and research at the post-secondary level. It also reiterates the importance of an environment that ensures our economy is open to international competition. It criticizes the recent federal budget for an unbalanced approach to its innovation agenda – stressing funding for hard science-based granting bodies versus social sciences and humanities.

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Topics: Business growth and innovation