Managers at UK manufacturers lag behind their European and American rivals despite a quarter of a century of steps to raise performance levels, a new survey has claimed.
In a survey of management practices in more than 700 manufacturing firms in France, Germany, the UK and the US, the Centre for Economic Performance at the London School of Economics found British firms are the worst managed.
American firms are on average the best managed according to the study, followed by German, French and then British concerns.
Even US multinational subsidiaries based in Europe are better managed than either domestic firms or other non- US multinational subsidiaries.
The CEP said superior US management performance seems to be driven by more product market competition, higher levels of worker and management skills, and lower levels of labour regulation.
The differences in management practices between the UK and the US can explain 10-15 per cent of the productivity gap between the two countries, it added.
Across firms, the CEP found a huge range of practices, with some UK companies using world-class management while others are the worst in the sample.
It said well-managed firms do perform significantly better, with higher level s of productivity, profitability, growth rates and market values.
Meanwhile, a firm's age also seemed to have an impact with very old firms having the lowest average scores for quality of management practices, particularly in uncompetitive industries where competition does not weed out underperformers.
Prof John Van Reenen, one of the report's authors, said: "One of the main reasons is that our managers tend to be less skilled than their rivals in the US, France and Germany.
"In America more workers and their bosses go through college degrees, and more managers have MBAs than in the UK.
"Meanwhile, the Europeans have a better system with apprentices than Britain, where there are often basic problems like being able to read and write."
Prof Van Reenen said competition was also vital because it weeded out underperforming firms.
He said: "Competition is much tougher in the US, and this has the Darwinian effect of driving failing companies out from the market place.
"France and Germany are less competitive and more regulated than Britain, but are still ahead of us."
Prof Van Reenen, who is director at the CEP, said Britain had made improvements in recent years with output per worker now comparable with France and Germany.
He said: "But they work a lot fewer hours than people in Britain. While output per worker is comparable, output per hour is much less in Britain than in the France and Germany.
"Governments can do more to allow competition to be strong and allow new firms to enter and exit the market.
"They also need to address the skills of the workforce. But companies can do more themselves for example with things like promotion.
"A lot of firms tend to promote on tenure, rather than the performance of the individual and on merit."