Firm Productivity and Learning with Digital Technologies: 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: Digital technologies have transformed firm production across all sectors. In this paper, we document new facts about firms’ productivity with emerging technologies by studying how efficiently they use cloud computing. Leveraging high-frequency CPU utilization data from nearly 100,000 firms, we find large and persistent dispersion in firms’ cloud productivity. Productivity, however, is highly dynamic in this setting: firms improve their cloud productivity by 33% in the first year after adoption, and reach a stable level only after four years, indicating a long adjustment period to learn the technology. While faster learning among initially less efficient firms reduces productivity dispersion by 60% over time, substantial heterogeneity remains even after 10 years. Finally, productivity improvements occur primarily within individual divisions of a firm, with minimal knowledge transfer across divisions.

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
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