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American Economic Review: Vol. 102 No. 1 (February 2012)

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Americans Do IT Better: US Multinationals and the Productivity Miracle

Article Citation

Bloom, Nicholas, Raffaella Sadun, and John Van Reenen. 2012. "Americans Do IT Better: US Multinationals and the Productivity Miracle." American Economic Review, 102(1): 167-201.

DOI: 10.1257/aer.102.1.167

Abstract

US productivity growth accelerated after 1995 (unlike Europe's), particularly in sectors that intensively use information technologies (IT). Using two new micro panel datasets we show that US multinationals operating in Europe also experienced a "productivity miracle." US multinationals obtained higher productivity from IT than non-US multinationals, particularly in the same sectors responsible for the US productivity acceleration. Furthermore, establishments taken over by US multinationals (but not by non-US multinationals) increased the productivity of their IT. Combining pan-European firm-level IT data with our management practices survey, we find that the US IT related productivity advantage is primarily due to its tougher "people management" practices. (JEL D24, E23, F23, M10, M16, O30)

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Authors

Bloom, Nicholas (Stanford U and Centre for Economic Performance, London School of Economics)
Sadun, Raffaella (Harvard U and Centre for Economic Performance, London School of Economics)
Van Reenen, John (Centre for Economic Performance, London School of Economics)

JEL Classifications

D24: Production; Cost; Capital, Total Factor, and Multifactor Productivity; Capacity
E23: Macroeconomics: Production
F23: Multinational Firms; International Business
M10: Business Administration: General
M16: International Business Administration
O30: Technological Change; Research and Development; Intellectual Property Rights: General


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