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ICT, innovation and the e-economy

Author

Listed:
  • Erik Brynjolfsson

    (Massachusetts Institute of Technology (MIT))

Abstract

The revival in US productivity growth since the mid-1990s is linked to a surge in investment in information and communication technologies (ICT). Against the backdrop of a weakening link between productivity and traditional innovation inputs (e.g. R&D expenditure), digitization has spurred productivity through innovations in management techniques, business models, work processes and human resource practices. More fundamentally, digitization is changing the way innovation itself is done, opening the prospect of a long-term increase in the overall rate of innovation. Over time, this will dwarf the benefits from any particular innovation. Digitization is transforming innovation in four ways: 1) improved real-time measurement of business activities; 2) faster and cheaper business experimentation; 3) more widespread and easier sharing of ideas; and 4) the ability to replicate innovations more quickly and more accurately. This mutually reinforcing sequence amounts to a new kind of R&D, with far-reaching implications for public policy.

Suggested Citation

  • Erik Brynjolfsson, 2011. "ICT, innovation and the e-economy," EIB Papers 8/2011, European Investment Bank, Economics Department.
    • Handle: RePEc:ris:eibpap:2011_008
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    2. Agarwal, Renu & Mittal, Neeraj & Patterson, Eric & Giorcelli, Michela, 2021. "Evolution of the Indian LPG industry: Exploring conditions for public sector business model innovation," Research Policy, Elsevier, vol. 50(4).
    3. Yanyan Li & Ziyue Zhu & Shanxing Gao, 2025. "Research on the Impact of Regional Digitalization on Innovation Performance and Its Boundary Conditions: An Empirical Study Based on Chinese Provincial Panel Data," SAGE Open, , vol. 15(2), pages 21582440241, April.
    4. Mercedes Teruel & Alex Coad & Clemens Domnick & Florian Flachenecker & Peter Harasztosi & Mario Lorenzo Janiri & Rozalia Pal, 2022. "The birth of new HGEs: internationalization through new digital technologies," The Journal of Technology Transfer, Springer, vol. 47(3), pages 804-845, June.
    5. Nambisan, Satish & Wright, Mike & Feldman, Maryann, 2019. "The digital transformation of innovation and entrepreneurship: Progress, challenges and key themes," Research Policy, Elsevier, vol. 48(8), pages 1-1.
    6. Bauer, Johannes M., 2014. "Platforms, systems competition, and innovation: Reassessing the foundations of communications policy," Telecommunications Policy, Elsevier, vol. 38(8), pages 662-673.
    7. Makó, Csaba & Illéssy, Miklós & Pap, József, 2020. "Munkavégzés a platformalapú gazdaságban. A foglalkoztatás egy lehetséges modellje? [Work on the digital platform economy. Towards a new employment model for the future?]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(11), pages 1112-1129.
    8. Hyytinen, Ari & Maliranta, Mika, 2013. "Firm lifecycles and evolution of industry productivity," Research Policy, Elsevier, vol. 42(5), pages 1080-1098.
    9. Torres, Carla Cecilia, 2021. "Adaptation and Validation of Technostress Creators and Technostress Inhibitors Inventories in a Spanish-Speaking Latin American Country," Technology in Society, Elsevier, vol. 66(C).
    10. Konstantins Benkovskis & Styliani Christodoulopoulou & Olegs Tkacevs, 2025. "Adaption of Digital Technologies: the Case of Latvian Firms," Discussion Papers 2025/01, Latvijas Banka.
    11. Lu, Danning & Hui, Eddie Chi Man & Shen, Jianfu & Shi, Jianxun, 2024. "Digital industry agglomeration and urban innovation: Evidence from China," Economic Analysis and Policy, Elsevier, vol. 84(C), pages 1998-2025.
    12. Bauer, Johannes M. & Knieps, Günter, 2018. "Complementary innovation and network neutrality," Telecommunications Policy, Elsevier, vol. 42(2), pages 172-183.
    13. Teruel Carrizosa, Mercedes & Coad, Alexander & Domnick, Clemens & Flachenecker, Florian & Harasztosi, Péter & Janiri, Mario Lorenzo & Pál, Rozália, 2021. "The birth of new high growth enterprises: Internationalisation through new digital technologies," EIB Working Papers 2021/02, European Investment Bank (EIB).
    14. Bauer, Johannes M. & Bohlin, Erik, 2022. "Regulation and innovation in 5G markets," Telecommunications Policy, Elsevier, vol. 46(4).
    15. Bauer, Johannes M., 2022. "Toward new guardrails for the information society," Telecommunications Policy, Elsevier, vol. 46(5).
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    17. Dan Andrews & Chiara Criscuolo, 2013. "Knowledge-Based Capital, Innovation and Resource Allocation," OECD Economics Department Working Papers 1046, OECD Publishing.

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    More about this item

    Keywords

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    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D

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