Do Managers Matter? A Natural Experiment from 42 R&D Labs in India

We exploit plausibly exogenous variation in the staggered entry of new managers into India’s 42 public R&D labs between 1994 and 2006 to study how alignment between the CEO and middle-level managers a˙ect research productivity. We show that the introduction of new lab managers aligned with the national R&D reforms raised patenting and licensing revenues from multinationals by 58% and 75%, respectively, and scientist research productiv-ity, including a 15.6%, 22.7%, 12.7%, and 25.1% increase in h-indices, number of coauthors, publications, and citations per scientist. Using natural language processing (NLP) tech-niques on the set of research abstracts produced among these scientists, we also find that overall mood and sentiment increased by 9.4% following the first managerial change. A back-of-the-envelope calculation that suggests India could save on 9-24% of its R&D/subsidy expenditures if current lab managers could be replaced with new generation managers.