Organizational and Economic Obstacles to Automation: A Cautionary Tale from AT&T in the Twentieth Century

James Feigenbaum and Daniel Gross

No 29580, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: AT&T was the largest U.S. firm for most of the 20th century. Telephone operators once comprised over 50% of its workforce, but in the late 1910s it initiated a decades-long process of automating telephone operation with mechanical call switching—a technology invented in the 1880s. We study what drove AT&T to do so, and why it took nearly a century. Interdependencies between call switching and nearly every other activity in AT&T's business presented obstacles to change: telephone operators were the fulcrum of a complex production system which had developed around them, and automation only began after the firm and new technology were adapted to work together. Even then, automatic switching was only profitable in larger markets—hence diffusion expanded when the technology improved or service areas grew. The example suggests even narrowly-defined tasks can be difficult to automate if they interact with many others.

JEL-codes: J23 L11 L23 M11 M15 M54 N32 O33 (search for similar items in EconPapers)
Date: 2021-12
New Economics Papers: this item is included in nep-com, nep-his, nep-ind, nep-lma and nep-tid
Note: DAE IO LS PR
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Journal Article: Organizational and Economic Obstacles to Automation: A Cautionary Tale from AT&T in the Twentieth Century (2024)
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