Wired for Innovation: How Information Technology Is Reshaping the Economy

Wired for Innovation: How Information Technology Is Reshaping the Economy, MIT Press, 2010

16 Pages Posted: 26 Oct 2013

See all articles by Erik Brynjolfsson

Erik Brynjolfsson

National Bureau of Economic Research (NBER); Stanford

Adam Saunders

University of British Columbia (UBC) - Sauder School of Business

Date Written: 2010

Abstract

A wave of business innovation is driving the productivity resurgence in the U.S. economy. In Wired for Innovation, Erik Brynjolfsson and Adam Saunders describe how information technology directly or indirectly created this productivity explosion, reversing decades of slow growth. They argue that the companies with the highest level of returns to their technology investment are doing more than just buying technology; they are inventing new forms of organizational capital to become digital organizations. These innovations include a cluster of organizational and business-process changes, including broader sharing of information, decentralized decision-making, linking pay and promotions to performance, pruning of non-core products and processes, and greater investments in training and education.

Brynjolfsson and Saunders go on to examine the real sources of value in the emerging information economy, including intangible inputs and outputs that have defied traditional metrics. For instance, intangible organizational capital is not directly observable on a balance sheet yet amounts to trillions of dollars of value. Similarly, such nonmarket transactions of information goods as Google searches or views of Wikipedia articles are an increasingly large share of the economy yet virtually invisible in the GDP statistics.

Drawing on work done at the MIT Center for Digital Business and elsewhere, Brynjolfsson and Saunders explain how to better measure the value of technology in the economy. They treat technology as not just another type of ordinary capital investment by also focusing on complementary investments -- including process redesign, training, and strategic changes -- and ton he value of product quality, timeliness, variety, convenience, and new products.

Innovation continues through booms and busts. This book provides an essential guide for policy makers and economists who need to understand how information technology is transforming the economy and how it will create value in the coming decade.

Suggested Citation

Brynjolfsson, Erik and Saunders, Adam, Wired for Innovation: How Information Technology Is Reshaping the Economy (2010). Wired for Innovation: How Information Technology Is Reshaping the Economy, MIT Press, 2010, Available at SSRN: https://ssrn.com/abstract=2344976

Erik Brynjolfsson

National Bureau of Economic Research (NBER) ( email )

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

Stanford ( email )

366 Galvez St
Stanford, CA 94305
United States

HOME PAGE: http://brynjolfsson.com

Adam Saunders (Contact Author)

University of British Columbia (UBC) - Sauder School of Business ( email )

673 Henry Angus
2053 Main Mall
Vancouver, British Columbia V6T 1Z2
Canada
604-822-9956 (Phone)

HOME PAGE: http://www.sauder.ubc.ca/Faculty/People/Faculty_Members/Saunders_Adam

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