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Journal article
Americans do IT better: US multinationals and the productivity miracle
Nicholas Bloom, Raffaella Sadun and John Van Reenen
February 2012

American Economic Review 102(1), 2012
DOI: 10.1257/aer.102.1.167

JEL Classification: D24;E23;F23;M10;M16;O30

Tags: production; cost; capital; total factor; and multifactor productivity; capacity; macroeconomics: production; multinational firms; international business; business administration; international business administration; technological change; research and development; intellectual property rights

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.

DOI: 10.1257/aer.102.1.167