Distinct Effects of Information Technology and Communication Technology on Firm Organization, The

Innovation and Economic Growth

Article Snapshot


Nicholas Bloom, Luis Garicano, Rafaella Sadun and John Van Reenen


Toulouse Network for Information Technology annual meeting, September 2008; NBER Working Paper #14975, 2009


This paper looks at how different technologies affect firms and workers differently.

Policy Relevance

Different types of hardware and software have very different effects on workers’ autonomy and wages.

Main Points

  • Most studies of computing, telephony, and other information and communications technology hardware and software lump all the technology together.

  • These technologies differ in important ways.
    • Communications technology like data networks and corporate intranets lets managers control dispersed workers more easily.
    • Information technologies like Enterprise Resource Planning “empower” workers and local managers, letting them learn more quickly and cheaply how to do things by themselves.
    • Some types of hardware support both.

  • Our survey data from Europe and the United States shows that better communications technology leads to more centralization and less worker autonomy. Better information technology means more autonomy for workers.

  • The data supports our theory across several key economic sectors such as banking, retail and manufacturing.

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