Erik Brynjolfsson

Massachusetts Institute of Technology | MIT · MIT Sloan School of Management

We study the early adoption and diffusion of five artificial intelligence (AI)‐related technologies (automated‐guided vehicles, machine learning, machine vision, natural language processing, and voice recognition) as documented in the 2018 Annual Business Survey of 850,000 firms across the United States. We find that fewer than 6% of firms used any...

We use establishment-level data from the US Census Bureau's Annual Survey of Manufactures to study the characteristics and geographic locations of investments in robots. We find that the distribution of robots is highly skewed across locations. Some locations, which we call Robot Hubs, have far more robots than one would expect even after accountin...

The authors analyzed data from multiple large-scale randomized experiments on LinkedIn’s People You May Know algorithm, which recommends new connections to LinkedIn members, to test the extent to which weak ties increased job mobility in the world’s largest professional social network. The experiments randomly varied the prevalence of weak ties in...

Anecdotes abound suggesting that the use of predictive analytics boosts firm performance. However, large-scale representative data on this phenomenon have been lacking. Working with the Census Bureau, we surveyed over 30,000 American manufacturing establishments on their use of predictive analytics and detailed workplace characteristics. We find th...

Most of the empirical evidence on social advertising effectiveness focuses on a single product at a time. As a result, little is known about how the effectiveness of social advertising varies across product categories or product characteristics. We therefore collaborated with a large online social network to conduct a randomized field experiment me...

An overly simplistic reliance on the utility model risks blinding us to the real opportunities and challenges of cloud computing.

Management in America has become significantly more data-intensive, yet the economic, organizational, and strategic implications of this shift are poorly understood. Working with the U.S. Census Bureau, we developed measures of how manufacturing firms have used data to guide decision making over the past decade. In our large and representative samp...

Partnering with the US Census Bureau, we implement a new survey of "structured" management practices in two waves of 35,000 manufacturing plants in 2010 and 2015. We find an enormous dispersion of management practices across plants, with 40 percent of this variation across plants within the same firm. Management practices account for more than 20 p...

Many theories address how information technology (IT) affects the number of suppliers and supply chain governance. However, their predictions are at times contradictory and there is relatively little empirical evidence with which to evaluate them. We therefore develop an integrated, multiperiod model of the optimal number of suppliers that combines...

We provide a systematic empirical study of the diffusion and adoption patterns of data-driven decision making (DDD) in the U.S. Using data collected by the Census Bureau for a large representative sample of manufacturing plants, we find that DDD rates nearly tripled (11%-30%) between 2005 and 2010. This rapid diffusion, along with results from a co...

Manufacturing in America has become significantly more data-intensive. We investigate the adoption, performance effects and organizational complementarities of data-driven decision making (DDD) in the U.S. Using data collected by the Census Bureau for 2005 and 2010, we observe the extent to which manufacturing firms track and use data to guide deci...

Tenure decisions, key decisions in academic institutions, are primarily based on subjective assessments of candidates. Using a large-scale bibliometric database containing 198,310 papers published 1975-2012 in the field of operations research (OR), we propose prediction models of whether a scholar would perform well on a number of future success me...

The double whammy of job-displacing technological advance and wage-deflating globalization has demoted the American middle class, even as the rich get richer from access to global markets and from their slice of profits from managing massive global financial flows. The specter of growing inequality is haunting free-market capitalism as never before...

Historically, productivity, wages and employment have all risen together. But in the past 15 years, they have become decoupled: productivity is at record levels, yet median wages have stagnated and the employment/population ratio has fallen. There is no economic law that technological progress will help everyone, or even most people. In particular,...

How are scholars ranked for promotion, tenure and honors? How can we improve the quantitative tools available for decision makers when making such decisions? Can we predict the academic impact of scholars and papers at early stages using quantitative tools?Current academic decisions (hiring, tenure, prizes) are mostly very subjective. In the era of...

Large-scale data generated by crowds provide a myriad of opportunities for monitoring and modeling people's intentions, preferences, and opinions. A crucial step in analyzing such "Big Data" is identifying the relevant data items that should be provided as input to the modeling process. Interestingly, this important step has received limited attent...

Big Data generated by crowds provides a myriad of opportunities for monitoring and modeling people's intentions, preferences, and opinions. A crucial step in analyzing such “big data” is selecting the relevant part of the data that should be provided as input to the modeling process. In this paper, we offer a novel, structured, crowd-based method t...

Most data sources used in economics, whether from the government or businesses, are typically available only after a substantial lag, at a high level of aggregation, and for variables that were specified and collected in advance. This hampers the effectiveness of real-time predictions. We demonstrate how data from search engines like Google provide...

The Census Bureau recently conducted a survey of management practices in over 30,000 plants across the US, the first large-scale survey of management in America. Analyzing these data reveals several striking results. First, more structured management practices are tightly linked to better performance: establishments adopting more structured practic...

Our study is the first to quantify IT-related intangible assets from firm-level survey data. We replicate and extend the original Brynjolfsson, Hitt and Yang (2002) finding that $1 of computer hardware is correlated with more than $10 of market value, which suggests at least $9 of unmeasured IT-related intangible assets. We then account for the “ot...

How are scholars ranked for promotion, tenure and honors? How can we improve the quantitative tools available for decision makers when making such decisions? Can we predict the academic impact of scholars and papers at early stages using quantitative tools? Current academic decisions (hiring, tenure, prizes) are mostly very subjective. In the era o...

Big data, the authors write, is far more powerful than the analytics of the past. Executives can measure and therefore manage more precisely than ever before. They can make better predictions and smarter decisions. They can target more-effective interventions in areas that so far have been dominated by gut and intuition rather than by data and rigo...

Many theories address how IT affects the number of suppliers and supply chain governance. However, their predictions are at times contradictory and there is relatively little empirical evidence with which to evaluate them. We therefore develop an integrated, multi-period model of the optimal number of suppliers that combines search and coordination...

No abstract available.

Rapid advances in information technology computer hardware, software and networks are yielding applications that can do anything from answering game show questions to driving cars. But to gain true leverage from these ever-improving technologies, companies need new processes and business models. The authors observe that automated activities that on...

We analyze pricing strategies for digital information goods that are based on aggregation or disaggregation. Bundling, site licensing, and subscription pricing can be analyzed as strategies that aggregate consumer utility across different goods, different consumers, or different time periods, respectively. Using micropayments for rental of software...

We econometrically evaluate information worker productivity at a midsize executive recruiting firm and assess whether the knowledge that workers accessed through their electronic communication networks enabled them to multitask more productively. We estimate dynamic panel data models of multitasking, knowledge networks and productivity using severa...

Many markets have historically been dominated by a small number of best-selling products. The Pareto principle, also known as the 80/20 rule, describes this common pattern of sales concentration. However, information technology in general and Internet markets in particular have the potential to substantially increase the collective share of niche p...

We examine whether firms that emphasize decision making based on data and business analytics (“data driven decision making” or DDD) show higher performance. Using detailed survey data on the business practices and information technology investments of 179 large publicly traded firms, we find that firms that adopt DDD have output and productivity th...

Researchers have recently been able to understand organizations at an unprecedented level of detail using new digital records and electronic communication data. However, while digital communication is important in the modern workplace, face-to-face interaction still represents a large and important share of organizational communication, information...

We gather detailed data on organizational practices and information technology (IT) use at 253 firms to examine the hypothesis that external focus—the ability of a firm to detect and therefore respond to changes in its external operating environment—increases returns to IT, especially when combined with decentralized decision making. First, using s...

The Internet and related information technologies are transforming the distribution of product sales across products, and these effects are likely to grow in coming years. Both the Long Tail and the Superstar effect are manifestations of these changes, yet researchers lack consistent metrics or models for integrating and extending their insights an...

Revolutions in measurement inevitably revolutionize science and practice. Over 300 years ago, Anton van Leeuwenhoek developed a better microscope to verify thread counts on imported carpets. Using this new tool, he discovered microorganisms he called “animalcules” in drops of water and individual blood corpuscles in drops of blood. Biology and medi...

Internet consumers derive significant surplus from increased product variety, and in particular, the “Long Tail” of niche products that can be found on the Internet at retailers like Amazon.com. In this paper we analyze how the shape of Amazon’s sales distribution curve has changed from 2000 to 2008, and how this impacts the resulting consumer surp...

The Internet and related information technologies are transforming the distribution of product sales across products, and the effects are likely to grow in coming years. Both the Long Tail and the Superstar effect are manifestations of these changes, yet researchers lack consistent metrics or models for integrating and extending their insights and...

We test for three-way complementarities among information technology (IT), performance pay, and human resource (HR) analytics practices. We develop a principal–agent model examining how these practices work together as an incentive system that produces a larger productivity premium when the practices are implemented in concert rather than separatel...

Assessing the strengths, weaknesses, and general applicability of the computing-as-utility business model.

Starting in 1995, productivity growth took off in the U.S. economy. In Wired for Innovation, Erik Brynjolfsson and Adam Saunders describe how information technology directly or indirectly created the lion's share of this productivity surge, reversing decades of slow growth. They argue that the turnaround in productivity reflects the delayed effects...

Innovations can often be targeted to be more valuable for some consumers than others. This is especially true for digital information goods. We show that the traditional price system not only results in significant deadweight loss, but also provides incorrect incentives to the creators of these innovations. In contrast, we propose and analyze a pro...

A key question for Internet commerce is the nature of competition with traditional brick-and-mortar retailers. Although traditional retailers vastly outsell Internet retailers in most product categories, research on Internet retailing has largely neglected this fundamental dimension of competition. Is cross-channel competition significant, and, if...

We see the influence of the information age everywhere, except in the GDP statistics. More people than ever are using Wikipedia, Facebook, Craigslist, Pandora, Hulu and Google. Thousands of new information goods and services are introduced each year. Yet, according to the official GDP statistics, the information sector (software, publishing, motion...

"We use a controlled field experiment to investigate the dynamic effects of retail advertising. The experimental design overcomes limitations hindering previous investigations of this issue. Our study uncovers dynamic advertising effects that have not been considered in previous literature. We find that current advertising does affect future sales,...

Internet shopbots allow consumers to almost instantly compare prices and other characteristics from dozens of sellers via a single website. We estimate the magnitude of consumer search costs and benefits using data from a major shopbot for books. For the median consumer, the estimated benefit from simply scrolling down to search lower screens is $6...

This panel discusses the opportunities and challenges of applying cognitive neuroscience theories, methods, and tools to inform IS theories, methods, and data (termed "NeuroIS"). Given the ability of cognitive neuroscience to localize the functionality of brain areas that underlie higher-order human processes using functional neuroimaging tools, ma...

To make effective decisions, consumers, executives and policymakers must make predictions. However, most data sources, whether from the government or businesses, are available only after a substantial lag, at a high level of aggregation, and for a small set of variables that were defined in advance. This hampers real-time prediction. A critical adv...

CEO compensation has increased dramatically in the last few decades, drawing increasing scrutiny from policy-makers, researchers, and the broader public. We find that IT (information technology) intensity strongly predicts compensation of CEO and other top executives. Our examination of panel data from 2507 publicly traded firms over 15 years contr...

We find three-way complementarities among IT, performance pay, and monitoring practices. We model these practices as a tightly-knit incentive system that produces the largest productivity premium when implemented in concert. We assess our model by combining fine-grained data on Human Capital Management (HCM) software adoption with detailed survey d...

A tension exists between two well-established streams of literature on the performance of teams. One stream contends that teams with diverse backgrounds, social structures, knowledge, and experience function more effectively because they bring novel information to bear on problems that cannot be solved by groups of homogeneous individuals. In contr...

Investments in certain technologies do confer a competitive edge - one that has to be constantly renewed, as rivals don't merely match your moves but use technology to develop more potent ones and leapfrog over you. That's the conclusion of a comprehensive analysis that Harvard Business School professor McAfee and MIT professor Brynjolfsson conduct...

IntroductionDo Social Networks Matter?Knowledge Management ApplicationsFuture Research and TrendsReferences

Social network theories (e.g. Granovetter 1973, Burt 1992) and information richness theory (Daft & Lengel 1987) have both been used independently to understand knowledge transfer in information intensive work settings. Social network theories explain how network structures covary with the diffusion and distribution of information, but largely ignor...

We combine detailed survey data on firms’ organizational practices with information technology (IT) investment measures to test the hypothesis that in addition to decentralization, external focus is another important determinant of returns to IT investment. We argue that IT-intensive firms characterized by decentralization are able to more effectiv...

We examine what drives the diffusion of different types of information through email networks and the effects of these diffusion patterns on the productivity and performance of information workers. In particular, we ask: What predicts the likelihood of an individual becoming aware of a strategic piece of information, or becoming aware of it sooner?...

How are our societies being transformed by internet and digital economics? This book provides an accessible introduction to the economics of the internet and a comprehensive account of the mechanisms of the digital economy. Leading scholars examine the original economic and business models being developed as a result of the internet system, and exp...

Over the past dozen years or so, the widespread adoption of the Internet has ushered in truly dramatic changes to many aspects of business. Given the Web's enormous and growing influence, its more important than ever to stay attuned to its continuing evolution. In this special report, noted experts explore a wide range of topics pivotal to the Web'...

In the mid-1990s, productivity growth accelerated sharply in the U.S. economy. In this paper, we identify several other changes that have occurred during the same time and argue that they are consistent with an increased use of information technology (IT) in general and enterprise IT in particular. Case studies and econometric evidence demonstrate...

We examine the diffusion of different types of information through email networks and the effects of these diffusion patterns on the performance of information workers. In particular, we ask: What predicts the likelihood of individuals becoming aware of a new piece of information, and how quickly they obtain it? Do different types of information ex...

We study the causal effects of digitizing work on information workers' time-use and performance at a large insurance firm. We make causal inferences and obtain unbiased estimates by exploiting a quasi-experiment: the phased introduction of Electronic Document Management (EDM) across multiple offices at different dates. We apply a difference-in-diff...

This paper calculates indices of central bank autonomy (CBA) for 163 central banks as of end-2003, and comparable indices for a subgroup of 68 central banks as of the end of the 1980s. The results confirm strong improvements in both economic and political CBA over the past couple of decades, although more progress is needed to boost political auton...

Dozens of markets of all types are in the early stages of a revolution as the Internet and related technologies vastly expand the variety of products that can be produced, promoted and purchased. Although this revolution is based on a simple set of economic and technological drivers, the authors argue that its implications are far-reaching for mana...

While it is now well established that IT intensive firms are more productive, a critical question remains: Does IT cause productivity or are productive firms simply willing to spend more on IT? We address this question by examining the productivity and performance effects of enterprise systems investments in a uniquely detailed and comprehensive da...

Information technology can link geographically separated people and help them locate interesting or useful resources. These attributes have the potential to bridge gaps and unite communities. Paradoxically, they also have the potential to fragment interaction and divide groups. Advances in technology can make it easier for people to spend more time...

Price dispersion among commodity goods is typically attributed to consumer search costs. We explore the magnitude of consumer search costs using a data set obtained from a major Internet shopbot. For the median consumer, the benefits to searching lower screens are $2.24 while the cost of an exhaustive search of the offers is a maximum of $2.03. Int...

We explore the effect of computerization on productivity and output growth using data from 527 large U.S. firms over 1987-1994. We find that computerization makes a contribution to measured productivity and output growth in the short term (using 1-year differences) that is consistent with normal returns to computer investments. However, the product...

W e present a framework and empirical estimates that quantify the economic impact of increased product variety made available through electronic markets. While efficiency gains from increased competition significantly enhance consumer surplus, for instance, by leading to lower average selling prices, our present research shows that increased produc...

We present a framework and empirical estimates that quantify the economic impact of increased product variety made available through electronic markets. While efficiency gains from increased competition significantly enhance consumer surplus, for instance, by leading to lower average selling prices, our present research shows that increased product...

Thesis (Ph. D.)--Massachusetts Institute of Technology, Sloan School of Management, 1991.

"This paper supercedes an earlier version, WP#2518-93 published in December 1992 under the title "Ownership principles for distributed database design."

Includes bibliographical references. Marshall Van Alstyne, Erik Brynjolfsson, Stuart E. Madnick.

We investigate the hypothesis that the combination of three related innovations—1) information technology (IT), 2) complementary workplace reorganization, and 3) new products and services—constitute a significant skill-biased technical change affecting labor demand in the United States. Using detailed firm-level data, we find evidence of complement...