Americans Do I.T. Better: US Multinationals and the Productivity Miracle

61 Pages Posted: 22 May 2008

See all articles by Nicholas Bloom

Nicholas Bloom

Stanford University - Department of Economics; National Bureau of Economic Research (NBER)

Raffaella Sadun

Harvard University - Strategy Unit; London School of Economics & Political Science (LSE) - Centre for Economic Performance (CEP); National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)

John Van Reenen

London School of Economics - Centre for Economic Performance (CEP); Stanford Graduate School of Business; Institute for Fiscal Studies (IFS); Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: May 2007

Abstract

The US has experienced a sustained increase in productivity growth since the mid-1990s, particularly in sectors that intensively use information technologies (IT). This has not occurred in Europe. If the US "productivity miracle" is due to a natural advantage of being located in the US then we would not expect to see any evidence of it for US establishments located abroad. This paper shows in fact that US multinationals operating in the UK do have higher productivity than non-US multinationals in the UK, and this is primarily due to the higher productivity of their IT. Furthermore, establishments that are taken over by US multinationals increase the productivity of their IT, whereas observationally identical establishments taken over by non-US multinationals do not. One explanation for these patterns is that US firms are organized in a way that allows them to use new technologies more efficiently. A model of endogenously chosen organizational form and IT is developed to explain these new micro and macro findings.

Keywords: information technology, multinationals, Productivity

JEL Classification: E22, O3, O47, O52

Suggested Citation

Bloom, Nicholas and Sadun, Raffaella and Van Reenen, John Michael, Americans Do I.T. Better: US Multinationals and the Productivity Miracle (May 2007). , Vol. , pp. -, 2007. Available at SSRN: https://ssrn.com/abstract=1136030

Nicholas Bloom (Contact Author)

Stanford University - Department of Economics ( email )

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Raffaella Sadun

Harvard University - Strategy Unit ( email )

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John Michael Van Reenen

London School of Economics - Centre for Economic Performance (CEP) ( email )

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