The managers versus the consultants

Emili Grifell-Tatjé, C. A Knox Lovell

    Research output: Contribution to journalArticleResearchpeer-review

    13 Citations (Scopus)

    Abstract

    Since engineering information is rarely available, standard practice is to benchmark managerial performance against best observed practice. We exploit a rare opportunity to benchmark managerial performance against engineering standards. Our managerial performance describes the activities of Spanish electricity distributors, and our engineering standards are obtained from an engineering grid created by an international consultancy. We find the consultancy's network to be much less costly to operate. When we decompose the cost differential, we find that the superior network design, combined with lower input prices, accounts for more than all of the predicted cost savings. However we also find that the managers are more cost efficient than the consultancy, presumably because they exploit their incentive to be cost efficient under a revenue cap regulatory regime.
    Original languageEnglish
    Pages (from-to)119-138
    JournalScandinavian Journal of Economics
    Volume105
    DOIs
    Publication statusPublished - 9 Jun 2003

    Keywords

    • Benchmarking
    • Electricity distribution
    • Revenue cap regulation

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  • Cite this

    Grifell-Tatjé, E., & Lovell, C. A. K. (2003). The managers versus the consultants. Scandinavian Journal of Economics, 105, 119-138. https://doi.org/10.1111/1467-9442.00008