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Anatomy of Technology in the Firm

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  • Xavier Cirera
  • Diego A. Comin
  • Marcio Cruz
  • Kyung Min Lee

Abstract

We collect detailed data on the technologies used in a comprehensive set of business functions in a representative sample of firms in Vietnam, Senegal, and the Brazilian state of Ceará, and construct measures of technology sophistication at the business function and firm levels. There is a large variance of sophistication across firms, but we find that the variance of technology sophistication across the business functions of a firm (within-firm variance) is 2.8 times larger. We develop a model of technology adoption with heterogeneity in adoption costs across business functions and with non-homothetic production that induces heterogeneity in the marginal value of technology sophistication across functions. The model predicts a stable cross-firm relationship between sophistication in the business function and firm-level technology that we call the technology curve. We find that the slopes of technology curves differ greatly across business functions and that curves account for one third of within-firm variance in sophistication. A development accounting exercise shows that cross-firm variation in sophistication measures accounts for thirty percent of cross-firm differences in productivity.

Suggested Citation

  • Xavier Cirera & Diego A. Comin & Marcio Cruz & Kyung Min Lee, 2020. "Anatomy of Technology in the Firm," NBER Working Papers 28080, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:28080
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    Cited by:

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    2. Ahmed Waqar Qasim, 2023. "Firms and Technology Adoption: The Role of Political Institutions and Market Size (Article)," The Pakistan Development Review, Pakistan Institute of Development Economics, vol. 62(1), pages 61-85.
    3. Cirera,Xavier & Vargas Da Cruz,Marcio Jose & Grover,Arti Goswami & Iacovone,Leonardo & Medvedev,Denis & Pereira Lopez,Mariana De La Paz & Reyes,Santiago, 2021. "Firm Recovery during COVID-19 : Six Stylized Facts," Policy Research Working Paper Series 9810, The World Bank.
    4. Cirera,Xavier & Comin,Diego Adolfo & Vargas Da Cruz,Marcio Jose & Lee,Kyungmin, 2021. "Firm-Level Adoption of Technologies in Senegal," Policy Research Working Paper Series 9657, The World Bank.

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    More about this item

    JEL classification:

    • D2 - Microeconomics - - Production and Organizations
    • E23 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Production
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O40 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - General

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