IDEAS home Printed from
   My bibliography  Save this paper

Does Information Technology Lead to Smaller Firms?


  • Erik J. Brynjolfsson
  • Thomas Malone
  • Vijay Gurbaxani
  • Ajit Kambil


Among the many recent changes in the organization of work in the United States, the decline in the average size of firms, as measured by employment, has been particularly well-documented. The primary goal of this paper is to assess the hypothesis that the rapid growth of information technology is at least partially responsible for this shift to smaller firms. We use industry-level data on information technology capital and four measures of firm size, including employees per firm, from different sources to examine this hypothesis. We find broad evidence that investment in information technology is significantly associated with subsequent decreases in the average size of firms. We also find that the effects of information technology on organizations are most pronounced after a lag of two to three years.

Suggested Citation

  • Erik J. Brynjolfsson & Thomas Malone & Vijay Gurbaxani & Ajit Kambil, 1991. "Does Information Technology Lead to Smaller Firms?," Working Paper Series 123, MIT Center for Coordination Science.
  • Handle: RePEc:wop:mitccs:123

    Download full text from publisher

    File URL:
    Download Restriction: no

    Other versions of this item:

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wop:mitccs:123. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Thomas Krichel). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.