Back Office Matters: Managerial Quality in Retail | Research Seminar with Achyuta Adhvaryu

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Abstract | Using administrative data from a multi-billion dollar retail firm in Colombia, we study whether and how managers drive productivity, leveraging a policy of managerial rotation across stores for identification. A good manager increases store sales by 12%, nearly 100 times the average managerial wage, within a year of arrival at a previously poorly performing store. Good managers move personnel into operational (non-customer-facing) roles, increasing relative attention to back office matters with no change in overall headcount. Both inventories and stock-outs decline, suggesting better inventory management. The revenue yield of price adjustments also increases while the number of total adjustments remains constant. These improvements reverse soon after the departure of a good manager, suggesting limited organizational learning. Taken together, we find that the quality rather than the quantity of action explains managerial success in retail.

Achyuta Adhvaryu is the Tata Chancellor’s Professor of Economics at the School of Global Policy and Strategy and the inaugural director of the 21st Century India Center. He is also the co-founder of Good Business Lab, a global nonprofit dedicated to improving the well-being of low-income workers. Adhvaryu’s research portfolio spans the fields of development economics, organizational economics, labor economics and health economics. He has a Ph.D. in economics from Yale University, and prior to joining UC San Diego he held faculty appointments at the University of Michigan and Yale.