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This study examines the impact of management practices on business labour productivity, taking into account the externalities of intangible capital endowment of the country in which the firms are located. Management practices are also analysed to see which are more likely to explain productivity differences between firms. For this purpose, a sample of European firms from France, Germany, Greece, Portugal, Spain and the United Kingdom is used. Data of management practices comes from the World Management Survey. The main empirical results show that management practices have a strong positive and economically significant impact on the labour productivity of firms. Differences in the labour productivity of firms and therefore, of countries can be explained, in part, by differences in the score given for their management practices and by differences in local intangible capital endowment. Finally, incentives management and target setting prove to be the most relevant management practices in improving firms' labour productivity. [ABSTRACT FROM AUTHOR]

The importance of intangible capital as a driver of productivity growth is recognised at both macroeconomic and microeconomic levels. However, in general, there is a lack of strong empirical evidence in the relevant literature on the connection between micro and macro approaches. This study integrates both perspectives to analyse how internal and external intangible capital influence the productivity of companies and, therefore, economic growth. A model is estimated in which the total factor productivity of companies is explained through their internal and external intangible capital. To this end, regional characteristics are considered in terms of technological endowment, human capital, and entrepreneurial capital. In addition, other agglomeration economies such as regional specialisation and regional productive diversity are also considered. In the empirical application, a panel of companies from the seventeen Spanish regions over the period 2006–2015 is used. The findings suggest that there is a positive effect of intangible capital on companies' productivity and evidence of a spillover effect as a result of local intensities of intangibles. [ABSTRACT FROM AUTHOR]