The investigation of productivity improvement method in manufacturing firms consists of two major aspects. The scientific approach is concerned with the development of a methodology for productivity improvement appropriate to the situation of manufacturing firms in Ethiopia. Two models, a productivity factor model and a productivity measurement model have been developed for use with productivity improvement method. Second, it is supported by practice-oriented work in the manufacturing firms, consisting of data acquisition activities in general, and of case studies in selected firms in order to assemble, analyze and evaluate specific data on productivity problems, and to test the results obtained. The productivity improvement method (PIM) is developed by considering both the theoretical and empirical study results. The PIM consists of four phases and nine steps having a number of major tasks. The tools, formats, and templates used in the productivity improvement method (PIM) have been designed so that they can be applied without detailed knowledge of the complex mechanisms of the productivity problems in manufacturing firms.