The Diffusion of Disruptive Technologies

Artificial Intelligence, Innovation and Economic Growth and Networks, the Internet, and Cloud Computing

Article Snapshot

Author(s)

Nicholas Bloom, Tarek A. Hassan, Aakash Kalyani, Josh Lerner and Ahmed Tahoun

Source

Harvard Business School Working Paper No. 21-144, June 2021.

Summary

A few urban areas generate most disruptive technologies such as cloud computing. Opportunities associated with these technologies spread slowly across regions, firms, industries, and occupations.

Policy Relevance

Pioneering regions enjoy lasting benefits from their role in innovation.

Main Points

  • In this study, job postings, earnings conference calls, and patents awarded from 1976 to 2016 were used to track the diffusion of 29 disruptive technologies from their point of origin.
     
  • Technological advances that have most disrupted businesses in the past two decades often involve applications of machine learning, mobile devices, and cloud computing.
     
  • Disruptive technologies typically emerge from a handful of urban areas ("pioneer locations").
     
    • 23 of 50 states host at least one pioneer location.
       
    • Silicon Valley hosts about 40 percent of pioneer locations.
       
    • Areas near a research university or with more educated workforce are most likely to become pioneer locations.
       
  • As technologies mature, they spread geographically; technologies also diffuse across industries, occupations, and firms.
     
  • At first, job postings related to disruptive technologies focus on high-skilled workers; over time, the skill level and earnings associated with jobs in the disruptive sector decline.
     
  • Low-skilled jobs associated with a technology diffuse faster geographically than high-skilled jobs, and these low-skilled jobs are almost fully dispersed geographically within twenty years.
     
  • Disruptive technologies generate lasting benefits for their pioneer locations; high-skilled job postings take almost 40 years to fully disperse from their point of origin.
     
  • The benefits of disruptive technologies diffuse more rapidly across locations and firms than across industries and occupations.
     
  • Detroit-based car manufacturers shifted job postings related to self-driving cars away from their traditional hub in Detroit to Silicon Valley; this type of shift helps explain why pioneer locations enjoy long-lived benefits from disruptive technologies.
     

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