The effects of new technologies on productivity: An intrafirm diffusion-based assessment

Abstract

This paper studies the impact of new technologies on productivity from the perspective of the technological diffusion literature. We argue that several stylised facts about the intrafirm diffusion process are not taken into account in most current research, which results in potentially erroneous conclusions. We critically assess different approaches that have been taken when studying the effects of technology adoption on productivity, and relate them to the main findings of the literature on technology diffusion with the aim of identifying the advantages of an intrafirm diffusion approach. We then conduct an empirical analysis on a sample that describes the diffusion of an innovation – the Automated Teller Machine – among Spanish savings banks from 1986 to 2004 in both its extensive (interfirm) and intensive (intrafirm) dimensions. Our results show that only the consideration of the intrafirm diffusion process is able to account for the contribution of the technology to productivity.