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Big Data Investment, Skills, and Firm Value

Management Science, Forthcoming

37 Pages Posted: 17 Jul 2013 Last revised: 7 Jan 2014

Prasanna Tambe

New York University (NYU) - Leonard N. Stern School of Business; New York University (NYU) - Department of Information, Operations, and Management Sciences

Date Written: January 4, 2014

Abstract

This paper considers how labor market factors have shaped early returns to investment in big data technologies. It tests the hypothesis that returns to early investments in Hadoop — a key big data infrastructure technology — have been concentrated in select labor markets due to the importance of aggregate corporate investment levels within a labor market for producing a supply of complementary technical skills during the early stages of technology diffusion. The analysis uses a new data source — the LinkedIn skills database — enabling direct measurement of firms’ investments into emerging technical skills such as Hadoop, Map/Reduce, and Apache Pig. Productivity estimates indicate that from 2006 to 2011, firms’ Hadoop investments were associated with 3% faster productivity growth, but only for firms a) with significant existing data assets and b) in labor networks characterized by significant aggregate Hadoop investment. Evidence for the importance of labor market concentration disappears for investments in mature data technologies, such as SQL-based databases, for which the skills are diffused and readily available through universities and other channels. These findings underscore the importance of geography, corporate investment, and channels for technical skill acquisition for explaining differences in productivity growth rates across labor markets during the spread of new IT innovations.

Keywords: big data, IT value, skills, IT spillovers, Hadoop, IT labor

Suggested Citation

Tambe, Prasanna, Big Data Investment, Skills, and Firm Value (January 4, 2014). Management Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2294077 or http://dx.doi.org/10.2139/ssrn.2294077

Prasanna Tambe (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

44 West 4th Street
New York, NY NY 10012
United States

New York University (NYU) - Department of Information, Operations, and Management Sciences ( email )

44 West Fourth Street
New York, NY 10012
United States

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