Technology →
- 06 Jan 2014
- Research & Ideas
Technology Re-Emergence: Creating New Value for Old Innovations
Every once in a while, an old technology rises from the ashes and finds new life. Ryan Raffaelli explains how the Swiss watch industry saved itself by reinventing its identity. Closed for comment; 0 Comments.
- 05 Dec 2013
- Working Paper Summaries
Heterogeneous Technology Diffusion and Ricardian Trade Patterns
The principle of Ricardian technology differences as a source of trade is well established in the theory of international economics. This theory argues that countries can focus on producing products in which they have comparative productivity advantages; subsequent exchanges afford higher standards of living in all countries than are possible without trade. While a key theory, economists have struggled to quantify the empirical importance of comparative technology advantages and their link to trade. This is especially difficult given the high degree to which technology states of countries and industries can be correlated with other traits about countries that could also promote trade. This study contributes to scholarship on Ricardian advantages through the development of a substantially larger dataset than previously utilized and the study of changes in technology/trade over time. Even more important, the study provides a tool for isolating relative technology growth in exporting countries across industries. The foundation for this identification is the modeling of Ricardian advantages through differences across countries and their industries in terms of their access to the U.S. technology frontier. The differences arise due to historical migration patterns (e.g., Chinese migration to San Francisco versus Hispanic migration to Miami). The study analyzes how technologies flow differentially to countries and industries based upon the historical settlement patterns of migrants from countries and the spatial development of new technologies in the United States (i.e., which technologies flourished in San Francisco versus Miami). The study finds that these differential technology flows are powerful enough to influence world trade patterns, and in the process, they provide new identification to an age-old theory. Key concepts include: A core principle in international economics concerns trade among countries due to technology differences. While often this theory constitutes the first chapter in trade textbooks, empirical measurement of these relationships has been challenging. The empirical work in the study finds that comparative advantages are an important determinant of trade. Moreover, Ricardian differences are relevant for explaining changes in trade patterns over time. The study documents for emerging economies an economic consequence of emigration to frontier economies like the United States. Technology transfer from overseas migrants is strong enough to meaningfully promote exports from the home country. Beyond quantifying the link between technology and trade for manufacturing, this paper also contributes to research on the benefits and costs of emigration to the United States for the migrants' home countries (i.e., the "brain drain" or "brain gain" debate). Closed for comment; 0 Comments.
- 18 Nov 2013
- Op-Ed
Twitter IPO: Overvalued or the Start of Something Big?
Although it has yet to make a dime, share buyers valued Twitter's IPO at $25 billion. Asks professor Chet Huber, what do they see? Open for comment; 0 Comments.
- 22 Aug 2013
- Working Paper Summaries
From Green Users to Green Voters
Does the diffusion of technology affect voting patterns? Technology is usually not aligned with a specific ideology or political party. Indeed, to the extent that technology raises living standards, all parties tend to favor technology diffusion. However, in some cases, voters may associate a political party with a specific technology. Green parties, for example, advocate for the diffusion of green energy technologies and pursue policies that foster the diffusion of green energies. This paper finds a significant effect of photovoltaic (PV) adoption on the increase in the share of votes for Germany's Green Party. In particular, the increase in the diffusion rate of PV systems between 1998 and 2009 led to an increase in the fraction of green votes of 1 percent, which represents 25 percent of the actual increase in the voting rate experienced by the Green Party between 1998 and 2009. Key concepts include: This study uncovered the impact that the diffusion of PV systems has on the votes obtained by Germany's Green Party. Individuals that use green technologies are more likely to become Green Party voters. Approximately a quarter of the increase in the share of votes experienced by the Green Party between 1998 and 2009 is driven by the diffusion of PV systems. In contrast, there were no such effects from the diffusion of industrial PV systems and eolic systems. This contrast confirms the importance of voters' direct involvement with the adoption and/or operation of the technology for this to affect their voting patterns. Closed for comment; 0 Comments.
- 24 Jun 2013
- Research & Ideas
Is Your iPhone Turning You Into a Wimp?
The body posture inherent in operating everyday gadgets affects not only your back, but your behavior. According to a new study by Maarten Bos and Amy Cuddy, operating a relatively large device inspires more assertive behavior than working on a small one. Closed for comment; 0 Comments.
- 21 May 2013
- Working Paper Summaries
If Technology Has Arrived Everywhere, Why Has Income Diverged?
To respond to the question posed in the title of their paper, the authors explore one potential driver—the dynamics of technology adoption. Using a stylized model of adoption that accounts for individual technologies, the authors identify two margins of adoption: adoption lags and penetration rates. Analyzing a panel of adoption lags and penetration rates for 25 technologies and 132 countries, they show that adoption lags have converged across countries over the last 200 years, while penetration rates have diverged. Feeding these patterns into the aggregate representation of their model economy, they next evaluate the effects of cross-country evolution of adoption patterns on the cross-country evolution of income growth. The paper's main finding is that the evolution of adoption patterns accounts for the vast majority of cross-country evolution of income growth for many country groupings. Therefore, adoption dynamics are at the core of cross-country differences in per-capita income over the last 200 years, a phenomenon known as the Great Divergence. Key concepts include: This paper explores whether the dynamics of technology can help us account for the cross-country evolution of productivity and income growth over the last 200 years. Findings show that there has been convergence in adoption lags between rich and poor countries, while there has been divergence in penetration rates. Closed for comment; 0 Comments.
- 29 Apr 2013
- Working Paper Summaries
Exclusive Preferential Placement as Search Diversion: Evidence from Flight Search
Measuring the net effect of search diversion is important for understanding the extent to which search engines and other intermediaries may act to influence consumer behavior. This paper makes two contributions. First, the authors develop a theoretical model to establish conditions when a search engine chooses to divert search to a less relevant service. Results indicate that search engines have a larger incentive to divert search when they are able to alter the consumers' perceptions of the difference between non-paid and paid placements, and when search engines place a large weight on revenue. These results are consistent with instances where some search engines have labeled paid links with confusing euphemisms or not at all, and where some search engines have mixed paid and non-paid links in the same area of the screen. Second, the authors measure the impact of a diversion mechanism where a search engine exclusively awards a non-paid preferred placement slot to its own service. Specifically, they examine Google's preferred placement of Flight Search. Analysis indicates that there was an 85 percent increase in click-through rates for paid advertising and a 65 percent decrease in click-through rates for non-paid algorithmic search traffic to competing online travel agencies. Both changes are statistically significant, providing evidence of Google's ability to influence how consumers choose services after they search. Key concepts include: There are significant cost increases for Internet startups that obtain large quantities of incoming traffic from search engines. These increases in costs could deter entry into thriving online industries. Search diversion particularly harms the sites that provide services most relevant to users' search queries. Closed for comment; 0 Comments.
- 10 Apr 2013
- Research & Ideas
Learning Curve: Making the Most of Outsourcing
Companies that view outsourcing as an easy way to offload commodity work are missing powerful improvements to be gained by working closely with service providers, says Professor Robert S. Huckman. Open for comment; 0 Comments.
- 02 Apr 2013
- Working Paper Summaries
Monitoring and the Portability of Soft Information
This study examines the "portability" of soft information within a decentralized financial institution. Using a unique dataset on loans from a large credit union and employees' notes summarizing their interactions with borrowers, the authors provide new insights on the portability of soft information within organizations, focusing in particular on an internal monitoring system used at this field site which, in effect, acts as a central repository of soft information gathered in the course of interactions between employees and customers. Contrary to the prevailing view that soft information lacks portability, results provide evidence that the "stock" of soft information accumulated in this system has persistent effects on the lending decisions of employees. Overall, findings indicate that the centralization of soft information acquired in past borrower-employee interactions can enable organizations to separate this informational asset from individual employees to facilitate future loan decisions. These results suggest that centralized information technology can alleviate the well-documented barriers of transmitting soft information consistent with economic theories on the role of centralization of information as a complement to decentralized decision-making. Key concepts include: Portability of information means the extent to which it can be stored for, communicated to, and used over time and by employees other than those that originally acquired or produced the information. Internal centralized information systems can facilitate the transmission of soft information across employees in different branches. Findings complement the literature on the role of information systems as a means of improving information processing and coordinating decentralized decision-making within financial institutions. Closed for comment; 0 Comments.
- 28 Feb 2013
- Working Paper Summaries
Do Display Ads Influence Search? Attribution and Dynamics in Online Advertising
The introduction of online metrics such as click through rate (CTR) and cost per acquisition (CPA) by Google and other online advertisers has made it easy for marketing managers to justify their online ad spending in comparison to the budgets used for television and other media. However, these metrics suffer from two fundamental problems: (a) they do not account for attribution, since they give credit to the last click and ignore the impact of other ad formats that may have helped a consumer move down the conversion funnel, and (b) they ignore the dynamics, since they only account for the immediate impact of ads. As firms spend more of their ad dollars on online search and display, managers and researchers alike recognize a need for more careful attribution adjustment that takes into account the journey consumers follow before conversion as well as account for the impact of ads over time. In this paper, the authors use time series models to infer the interaction between search and display ads and also capture their impact over time. Examining data from a bank that used online advertising to acquire new customers for its checking account, the authors found that display ads have a significant impact on search applications, as well as clicks. The majority of this spillover was not instant, but took effect only after two weeks. On the other hand, search advertising did not lead to an increase in display applications. However, search ads showed significant dynamic effects on search applications that made them very cost effective in the long run. Key concepts include: Classic metrics used in practice are highly biased since they do not account for the effects documented in this study. As a result, firms may be making suboptimal budget allocation decisions. Managers should carefully consider the interaction and dynamic effects of search and display advertising. In the study, revised measures of ad effectiveness lead to a very different budget allocation than the one used currently by the firm. Even though the proposed allocation gives credit to display due to its effect on search applications, the search ad budget should be increased by 36% from its current level due to its strong dynamic effects. The display ad budget should be decreased by 31%. Closed for comment; 0 Comments.
- 11 Jan 2013
- Working Paper Summaries
The Spatial Diffusion of Technology
Technology disparities are critical for explaining cross-country differences in per capita income. Despite being non-rival in nature and involving no direct transport costs, technology diffuses slowly both across and within countries. Even when a technology has arrived in a country, it takes years and even decades before it has diffused to the point of having a significant impact on productivity. Why does technology diffuse slowly? How do we explain cross-country differences in its speed of diffusion? In this paper, the authors study the diffusion over time and space of 20 major technologies in 161 countries over the last 140 years. The spatial effects they identify for technologies vanish over time. For most technologies, this implies that the effect of geography is initially strong, decays over time, and eventually disappears. This is the first paper to document these patterns in adoption rates for a large number of technologies and countries. Estimates provided of structural parameters can be used to inform spatial theories of growth. Key concepts include: This paper uses a new data set of direct measures of technology to study technology diffusion across time and space. Technology diffuses slower to locations that are farther away from adoption leaders. Interactions are more frequent for more recent technologies. Understanding technology diffusion over space is crucial to understand the speed of technology diffusion. Evidence on the significance of the spatial and temporal links in technology adoption could prove helpful to stimulate future research in these areas. Closed for comment; 0 Comments.
- 03 Jan 2013
- Working Paper Summaries
The Value of Advice: Evidence from Mobile Phone-Based Agricultural Extension
This paper evaluates a new service that provides mobile-phone based agricultural consulting to poor farmers in India. For decades, the Government of India, like most governments in the developing world, has operated a system of agricultural extension, intended to spread information on new agricultural practices and technologies through a large work force of public extension agents. Evidence of the efficacy of these extension services, however, is limited. This paper describes a randomized field experiment examining the potential for an alternate route to improving agricultural management. Specifically, the authors evaluate Avaaj Otalo (AO), a mobile phone-based technology that allows farmers to call a hotline, ask questions, and receive responses from agricultural scientists and local extension workers. Findings show that AO had a range of important, positive effects on farmer behavior. This paper may be the first rigorous evaluation of mobile phone-based extension and, more generally, the first evaluation of a demand-driven extension service delivered by any means. Key concepts include: Farmers with access to the service were more likely to switch to a pesticide that is both more effective against pests, and dramatically less toxic to humans. Farmers receiving advice were also quicker to adopt high-value cash crops, planting more cumin and demonstrating more knowledge about it. The paper presents the first rigorous evidence that a low-cost agricultural extension service (costing as little as $.60 per farmer per month) can change behavior. There is a "digital divide" in India. There are systematic differences in adoption and use of the service, even among a relatively homogeneous group of farmers, and even for a technology that was specifically designed to be accessible to an illiterate population. Surveying by mobile phones can be conducted effectively and cheaply in a developing country context. There is considerable demand among farmers for high quality agricultural information. The information and communications technology (ICT) delivered timely, relevant, and actionable information and advice to farmers at dramatically lower cost than any traditional service. The ICT significantly changed farmers' sources of information for sowing and input-related decisions-in particular, farmers relied less on commissions-motivated agricultural input dealers for pesticide advice. Closed for comment; 0 Comments.
- 10 Dec 2012
- Research & Ideas
Why We Blab Our Intimate Secrets on Facebook
Leslie K. John and colleagues set out to discover the reason behind a common discrepancy: While many of us purport to be concerned about Internet privacy, we seem to have no worries about sharing our most intimate details on Facebook. Closed for comment; 0 Comments.
- 26 Nov 2012
- Research & Ideas
New Winners and Losers in the Internet Economy
In a stressed US economy, employment in the Internet ecosystem is growing at an impressive rate, with small companies especially benefiting, according to a new study by Professor John A. Deighton and research associate Leora D. Kornfeld. Open for comment; 0 Comments.
- 25 Oct 2012
- Research & Ideas
10 Reasons Customers Might Resist Windows 8
Has Microsoft become too innovative? Professor Rosabeth Moss Kanter, a leader in the field of change management, discusses reasons that people might not rush to embrace Windows 8. Closed for comment; 0 Comments.
- 15 Oct 2012
- Research & Ideas
Why Business IT Innovation is so Difficult
If done right, IT has the potential to completely transform business by flattening hierarchies, shrinking supply chains, and speeding communications, says professor Kristina Steffenson McElheran. Why, then, do so many companies get it wrong? Closed for comment; 0 Comments.
- 31 Jul 2012
- Working Paper Summaries
Investment Incentives in Proprietary and Open-Source Two-Sided Platforms
While proprietary and open-source software have coexisted since the early days of the computing industry, competition between these two modes of development has intensified dramatically following the surge of the Internet in the mid-1990s. This paper provides a first step to better understand incentives to invest in proprietary and open platforms. Specifically, the authors examine a model of a proprietary and an open-source two-sided platform to study equilibrium investment in platform quality. Their analysis provides answers to three important questions: (1) How are the incentives to invest in platform quality affected by the degree of platform openness? (2) Which of these two modes of governance leads to investment closer to the social optimum? And (3), how are incentives to invest in platform quality moderated by competition between proprietary and open two-sided platforms? Comparing monopoly platforms reveals that for a given level of user and developer adoption, investment incentives are stronger in proprietary platforms. However, open platforms may receive larger investment because they may benefit from wider adoption, which raises the returns to quality investment. The authors also find that proprietary platforms may benefit from higher investment in competing open platforms when developers multi-home, a result that helps explain why a proprietary platform such as Microsoft has chosen to contribute to the development of Linux. Key concepts include: Through access prices, a monopolistic proprietary platform can ensure that a particular level of investment in platform quality takes place regardless of how much users pay for applications. Quality investment in open platforms may be larger than for proprietary platforms, due to larger user and developer entry. Therefore, open platforms may lead to investments in platform quality closer to social efficiency. When developers multi-home, the proprietary platform may benefit from higher quality investment in a competing open-source platform. This result explains why proprietary firms may choose to contribute to the development of competing open-source platforms. Closed for comment; 0 Comments.
- 30 Jul 2012
- Research & Ideas
How Technology Adoption Affects Global Economies
In a series of research papers, Associate Professor Diego A. Comin and colleagues investigated the relationship between technology adoption and per capita income. They found that the rate at which nations adopted new tools hundreds of years ago strongly affects whether those nations are rich or poor today. Closed for comment; 0 Comments.
- 21 Jun 2012
- Working Paper Summaries
Information Technology and Boundary of the Firm: Evidence from Plant-Level Data
It has long been believed that information technology (IT) has the potential to shift the boundaries surrounding where production takes place. Specifically, networked IT investments are supposed to reduce costs of monitoring behavior of internal and external partners, thereby improving incentives and reducing the risk of opportunistic behavior. Networked IT can also reduce costs of coordinating economic activity within and between firms. This study, by Chris Forman and Kristina McElheran, explores how IT investments influence vertical integration in supply chain relationships. Key concepts include: The adoption of supplier-focused IT has an economically and statistically significant negative impact on the percentage of downstream within-firm transfers. Somewhat surprisingly, adoption of customer-focused IT has no significant effect on the percentage of downstream transfers. Adoption of supplier-focused IT has the largest impact on within-firm transfers when adopted in conjunction with customer-focused IT. Closed for comment; 0 Comments.
Mechanisms of Technology Re-Emergence and Identity Change in a Mature Field: Swiss Watchmaking, 1970-2008
According to most theories of technological change, old technologies tend to disappear when newer ones arrive. As this paper argues, however, market demand for old technologies may wane only to emerge again at a later point in time, as seems to be the case for products like Swiss watches, fountain pens, streetcars, independent bookstores, and vinyl records, which have all begun to claim significant market interest again. Looking specifically at watchmaking, the author examines dynamics of technology re-emergence and the mechanisms whereby this re-emergence occurs in mature industries and fields. Swiss watchmakers had dominated their industry and the mechanical watch movement for nearly two centuries, but their reign ended abruptly in the mid-1970s at the onset of the "Quartz Revolution" (also known as the "Quartz Crisis"). By 1983, two-thirds of all watch industry jobs in Switzerland were gone. More recently, however, as the field has moved toward a focus on luxury, a "re-coupling" of product, organizational, and community identity has allowed master craftsmen to continue building their works of art. The study makes three main contributions: 1) It highlights the importance of studying technology-in-practice as a lens on viewing organizational and institutional change. 2) It extends the theorization of identity to products, organizations, and communities and embeds these within cycles of technology change. 3) It suggests the importance of understanding field-level change as tentative and time-bound: This perspective may allow deeper insights into the mechanisms that propel emergence, and even re-emergence, of seemingly "dead" technologies and industries. (Read an interview with Ryan Raffaelli about his research.) Key concepts include: The value of some products may go beyond pure functionality to embrace non-functional aspects that can influence consumer buying behaviors. Introducing a new technology is not always the only way to get ahead of the curve when older technologies or industries appear to be reaching the end of their life. Industries that successfully re-emerge are able to redefine their competitive set - the group of organizations upon which they want to compete and the value proposition that they send to the consumer. There is significant interplay among community, organization, and product identities. Swiss watches—as well as fountain pens, streetcars, independent bookstores and vinyl records—are all examples of technologies once considered dead that have rematerialized to claim significant market interest. For Swiss watchmakers, "who we are" (as a community) and "what we do" (as watch producers) were mutually constitutive and may have been a potent force in the processes that sought re-coupling in the face of the de-coupling precipitated by technological change. Although new or discontinuous technologies tend to displace older ones, legacy technologies can re-emerge, coexist with, and even come to dominate newer technologies. Core to this process is the creation—and recreation—of product, organization, and community identities that resonate with the re-emergence of markets for legacy technologies. Substantial economic change may not be contained only within organizational or industry boundaries, but also extend outward to include broader forces related to field-level change. Closed for comment; 0 Comments.