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Wired for Innovation: How Information Technology is Reshaping the Economy

Author

Listed:
  • Erik Brynjolfsson

    () (MIT Sloan School of Management)

  • Adam Saunders

    () (MIT Sloan School of Management)

Abstract

Starting in 1995, productivity growth took off in the U.S. economy. In Wired for Innovation, Erik Brynjolfsson and Adam Saunders describe how information technology directly or indirectly created the lion's share of this productivity surge, reversing decades of slow growth. They argue that the turnaround in productivity reflects the delayed effects of the massive investments in business processes accompanying the large technology investments since the late 1990s. Companies with the highest level of returns to their technology investment did more than just buy technology: they invested in organizational capital to become digital organizations. Brynjolfsson and Saunders examine the real sources of value in the emerging information economy, including intangible inputs and outputs that have defied traditional metrics. For instance, intangible organizational capital is not directly observable on a balance sheet but amounts to trillions of dollars of value. Similarly, such nonmarket transactions of information goods as Google searches or Wikipedia edits are an increasingly large share of the economy yet virtually invisible in the GDP statistics. The authors, drawing on work done at MIT and elsewhere, show how to better measure the value of technology in the economy. They describe new methods that don't treat technology as just another type of ordinary capital investment but also measure complementary investments—including training and consulting—and the value of product quality, timeliness, variety, convenience, and new products. Innovation continues through booms and busts; this book provides a crucial guide for policy makers and economists who need to understand how information technology is transforming the economy and where it will create value in the coming decade.

Suggested Citation

  • Erik Brynjolfsson & Adam Saunders, 2009. "Wired for Innovation: How Information Technology is Reshaping the Economy," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262013665, January.
  • Handle: RePEc:mtp:titles:0262013665
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    Cited by:

    1. Carol A. Corrado & Charles R. Hulten, 2014. "Innovation Accounting," NBER Chapters,in: Measuring Economic Sustainability and Progress, pages 595-628 National Bureau of Economic Research, Inc.
    2. Gabriel J. Costello & Brian Donnellan, 2016. "IT-Enabled R&D for Business Value in a Global Framework," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 7(3), pages 782-796, September.
    3. Strauss, Hubert & Samkharadze, Besik, 2011. "ICT capital and productivity growth," EIB Papers 6/2011, European Investment Bank, Economics Department.
    4. Shah, Naimatullah & Irani, Zahir & Sharif, Amir M., 2017. "Big data in an HR context: Exploring organizational change readiness, employee attitudes and behaviors," Journal of Business Research, Elsevier, vol. 70(C), pages 366-378.
    5. Che, Natasha Xingyuan, 2009. "Sectoral Structural Change in a Knowledge Economy," MPRA Paper 19839, University Library of Munich, Germany.
    6. Dale W. Jorgenson & Mun S. Ho & Jon D. Samuels, 2012. "Information Technology and US Productivity Growth: Evidence from a Prototype Industry Production Account," Chapters,in: Industrial Productivity in Europe, chapter 2 Edward Elgar Publishing.
    7. Hätönen, Jussi, 2011. "The economic impact of fixed and mobile high-speed networks," EIB Papers 7/2011, European Investment Bank, Economics Department.
    8. Greenstein, Shane & Nagle, Frank, 2014. "Digital dark matter and the economic contribution of Apache," Research Policy, Elsevier, vol. 43(4), pages 623-631.
    9. Brynjolfsson, Erik, 2011. "ICT, innovation and the e-economy," EIB Papers 8/2011, European Investment Bank, Economics Department.
    10. Thomas Niebel & Marianne Saam, 2016. "ICT and Growth: The Role of Rates of Return and Capital Prices," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 62(2), pages 283-310, June.
    11. Dushnitsky, Gary & Klueter, Thomas, 2017. "Which industries are served by online marketplaces for technology?," Research Policy, Elsevier, vol. 46(3), pages 651-666.
    12. Francesco Venturini & Ana Rincon-Aznar & Dr Michela Vecchi, 2013. "ICT as a general purpose technology: spillovers, absorptive capacity and productivity performance," National Institute of Economic and Social Research (NIESR) Discussion Papers 416, National Institute of Economic and Social Research.
    13. Kibae Kim, 2015. "Evolution of the Global Knowledge Network: Network Analysis of Information and Communication Technologies’ Patents," TEMEP Discussion Papers 2015124, Seoul National University; Technology Management, Economics, and Policy Program (TEMEP), revised Jul 2016.
    14. Van Reenen, John, 2011. "Wage inequality, technology and trade: 21st century evidence," Labour Economics, Elsevier, vol. 18(6), pages 730-741.

    More about this item

    Keywords

    information technology; productivity; innovation; information economy;

    JEL classification:

    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights

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