Author(s)
Source
CEPR Discussion Paper No. DP6291, 2007
Summary
This paper looks at how information technology has increased productivity of firms based in the United States.
Policy Relevance
People-management skills can partly determine how much firms will gain from adopting new information technologies.
Main Points
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Throughout the decade after 1995, productivity in the United States increased as information technology investment increased. During this same time, productivity in Europe did not increase.
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However, the productivity of U.S. multinationals in Europe did increase. And European firms take over by U.S. multinationals enjoyed productivity gains after they were taken over. Similar firms taken over by non-U.S. multinationals did not.
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The study compares firms in the United States and the United Kingdom. Different types of retail and wholesale firms are considered.
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U.S. firms tend to invest more in capital stock per worker than U.K. firms or non-U.S. multinationals.
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The advantage that firms based in the United States enjoy is mainly due to people management practices related to hiring, rewards, promotions, and firing. These practices are linked to the ability to use new information technology effectively.