Americans Do I.T. Better: US Multinationals and the Productivity Miracle

By Nicholas Bloom, Raffaella Sadun, John Van Reenen. 2012

997 citations recorded by the source corpus.

The US has experienced a sustained increase in productivity growth since the mid-1990s, particularly in sectors that intensively use information technologies (IT). This has not occurred in Europe. If the US "productivity miracle" is due to a natural advantage of being located in the US then we would not expect to see any evidence of it for US establishments located abroad. This paper shows in fact that US multinationals operating in the UK do have higher productivity than non-US multinationals in the UK, and this is primarily due to the higher productivity of their IT. Furthermore, establishments that are taken over by US multinationals increase the productivity of their IT, whereas observationally identical establishments taken over by non-US multinationals do not. One explanation for these patterns is that US firms are organized in a way that allows them to use new technologies more efficiently. A model of endogenously chosen organizational form and IT is developed to explain these new micro and macro findings.

Subfields: Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/cf0befa49aa2b57836244fac92517442cc617016

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Citations in the corpus

The costs and benefits of leaving the EU: trade effects (2017, background): “Bloom et al. (2012) find that multinationals boost productivity in UK establishments through enhanced technologies and management practices.”
The evolution of inequality in productivity and wages: panel data evidence (2010, background): “Such data is available and is being constructed (Bloom et al., 2007).”
Time Use and Labor Productivity: The Returns to Sleep (2018, background): “Our study also contributes to the growing literature on how environmental forces influence worker productivity (Graff Zivin and Neidell, 2012) and to the broader productivity literature on factors like information technology (Bloom et al., 2012) and workplace practices (Black and Lynch, 2001).”
The impact of Brexit on foreign investment in the UK (2016, background): “Alfaro, L., A. Chanda, S. Kalemli-Ozcan and S. Sayek (2004) ‘FDI and Economic Growth: The Role of Local Financial Markets’, Journal of International Economics 64(1): 89-112.”
JEEA‐FBBVA LECTURE 2013: THE NEW EMPIRICAL ECONOMICS OF MANAGEMENT (2014, methodology): “Preliminary results from MOPs are contained in Bloom et al. (2012d).”
The Impact of Big Data on Firm Performance: An Empirical Investigation (2019, background): “…for firms to collect, store, and analyze data to help with their decision processes, leading to changes in organizational and management practices, and hence productivity growth (see e.g. Bresnahan, Brynjolfsson, Hitt (1994)), Tambe and Hitt (2012), Bloom et al. (2012), McElheran and Jin (2017)).”
Knowledge-Based Capital, Innovation and Resource Allocation (2013, background): “For example, raising managerial quality from the median level (roughly corresponding to New Zealand in Figure 4) to the high level in the United States could increase the average level of productivity in manufacturing by as much as 10% (Bloom et al., 2012a).”
Has the Internet Fostered Inclusive Innovation in the Developing World (2016, background): “However, complementary investments, including in improving management capacities, are often critical to maximise benefits from the Internet (Black and Lynch, 2001, 2004; Bloom et al., 2012; Bresnahan et al., 1996, 2002; Brynjolffson and Hitt, 2000).”
Why are some regions more innovative than others? The role of small firms in the presence of large labs (2014, background): “Similarly, local productivity shocks due to availability of information and communication technologies (Agrawal and Goldfarb, 2008; Bloom et al., 2012) may impact both the organization of R&D labor and innovation.”