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Computing Productivity: Firm-Level Evidence


Erik Brynjolfsson


Massachusetts Institute of Technology (MIT) - Sloan School of Management; National Bureau of Economic Research (NBER)

Lorin M. Hitt


University of Pennsylvania - Operations & Information Management Department

June 2003

MIT Sloan Working Paper No. 4210-01

Abstract:     
We explore the effect of computerization on productivity and output growth using data from 527 large US firms over 1987-1994. We find that computerization makes a contribution to measured productivity and output growth in the short term (using one year differences) that is consistent with normal returns to computer investments. However, the productivity and output contributions associated with computerization are up to five times greater over long periods (using five to seven year differences). The results suggest that the observed contribution of computerization is accompanied by relatively large and time-consuming investments in complementary inputs, such as organizational capital, that may be omitted in conventional calculations of productivity. The large long-run contribution of computers and their associated complements that we uncover may partially explain the subsequent investment surge in computers in the late 1990s.

Number of Pages in PDF File: 43

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Date posted: October 8, 2003  

Suggested Citation

Brynjolfsson, Erik and Hitt, Lorin M., Computing Productivity: Firm-Level Evidence (June 2003). MIT Sloan Working Paper No. 4210-01. Available at SSRN: http://ssrn.com/abstract=290325 or http://dx.doi.org/10.2139/ssrn.290325

Contact Information

Erik Brynjolfsson (Contact Author)
Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )
E53-313
Cambridge, MA 02142
United States
617-253-4319 (Phone)
HOME PAGE: http://digital.mit.edu/erik
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Lorin M. Hitt
University of Pennsylvania - Operations & Information Management Department ( email )
571 Jon M. Huntsman Hall
Philadelphia, PA 19104
United States
215-898-7730 (Phone)
509-267-9192 (Fax)

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