Firm Productivity and Learning in the Digital Economy: Evidence from Cloud Computing

James M. Brand, Mert Demirer, Connor Finucane and Avner Kreps

No 32938, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Computing technologies have become critical inputs to production in the modern firm. However, there is little large-scale evidence on how efficiently firms use these technologies. In this paper, we study firm productivity and learning in cloud computing by leveraging CPU utilization data from over one billion virtual machines used by nearly 100,000 firms. We find large and persistent heterogeneity in compute productivity both across and within firms, similar to canonical results in the literature. More productive firms respond better to demand fluctuations, show higher attentiveness to resource utilization, and use a wider variety of specialized machines. Notably, productivity is dynamic as firms learn to be more productive over time. New cloud adopters improve their productivity by 33% in their first year and reach the productivity level of experienced firms within four years. In our counterfactual calculations, we estimate that raising all firms to the 80th percentile of productivity would reduce aggregate electricity usage by 17%.

JEL-codes: D24 L86 (search for similar items in EconPapers)
Date: 2024-09
New Economics Papers: this item is included in nep-bec, nep-eff, nep-ict, nep-ipr, nep-sbm and nep-tid
Note: IO PR
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.nber.org/papers/w32938.pdf (application/pdf)
Access to the full text is generally limited to series subscribers, however if the top level domain of the client browser is in a developing country or transition economy free access is provided. More information about subscriptions and free access is available at http://www.nber.org/wwphelp.html. Free access is also available to older working papers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:nbr:nberwo:32938

Ordering information: This working paper can be ordered from
http://www.nber.org/papers/w32938
The price is Paper copy available by mail.

Access Statistics for this paper

More papers in NBER Working Papers from National Bureau of Economic Research, Inc National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.. Contact information at EDIRC.
Bibliographic data for series maintained by ().