The Price and Quantity of IT-Related Intangible Capital

The new business practices and information structures associated with information technology (IT) account for a significant fraction of the market value of modern firms. We use a new IT data series along with Hall’s Quantity Revelation Theorem to measure the amount of IT-related intangible capital (ITIC) in US firms. We find that the prices of ITIC have fluctuated due to dot-com boom and bust valuations. However, with the exception of a brief slowdown in 2001, ITIC quantities have been steadily increasing through 2005. In the average firm in 2005, IT-related intangible capital was about one quarter of the value of physical capital. We also estimate that IT-related intangible capital depreciates at a rate of about 6-8% a year, which is closer to the estimated depreciation rate for physical capital than for R&D capital. Implications for managers and policy makers are discussed

Changes in Persistence of Performance Over Time

One of the central puzzles of strategy is the persistence of performance. We revisit a research tradition that lays out trends in persistence of performance, to create shared facts for strategy scholars to explain. We extend the time series from prior studies and apply recent methods for measuring performance persistence. We show that persistence of performance is not stable. Notably, our measure shows a decrease in persistence from the beginning of the sample to roughly 2000, followed by a marked increase thereafter. Our evidence suggests that the post-2000 increase in persistence is at least partly attributable to increases in industry concentration associated with the greater importance of software across industries in the late 1990s

Boosting productivity in the services sector: 2nd interim report - competition and ICT topics

Contains questions, findings and recommendations important to raising services-sector productivity in New Zealand, focusing on the adoption of information and communications technology by service firms. Overview: This is the Productivity Commission’s 2nd interim report as part of its inquiry Boosting Productivity in the Services Sector. The report focuses on two topics that are significant to raising productivity in the services sector: stimulating a more competitive environment in the services sector; and the successful application of information and communications technology (ICT) by New Zealand service firms. The inquiry’s 1st interim report – released in July 2013 – focused on developing a better understanding of the services sector, its recent performance, and its role in the New Zealand economy. That report sets out the vital role that services play in the New Zealand economy. For example: services account for nearly three-quarters of GDP; and the competitiveness of exports depends critically on the performance of the services sector. This is because the services sector contributes more than half the country’s exports, primarily through embodiment in exported goods. Services-sector productivity, therefore, strongly affects the productivity of the economy as a whole and the wellbeing of New Zealanders. Yet the sector has underperformed relative to the best international performers. Productivity growth in the US services sector and that of some European countries has driven aggregate productivity growth in those countries. Most services industries in New Zealand have not experienced the same growth in productivity. Growth has been neither strong nor broad-based enough to achieve any significant productivity catch-up in the economy when compared with leading OECD countries. The productivity levels of most New Zealand services industries are below those in Australia and the United Kingdom