Scale without mass
Subtitle: business process replication and industry dynamics
By: Erik Brynjolfsson, Andrew McAfee, Michael Sorell, Feng Zhu
Contributors: McAfee, Andrew; Sorell, Michael R.; Zhu, Feng; Harvard Business School
Edition: Rev.
Series: Working paper / Harvard Business School -- 07-016; Working paper (Harvard Business School) -- 07-016
Publisher: Harvard Business School
Published: 2008
Place of publication: Boston]
Language: eng
Number of pages: 46
Description: In the mid-1990s, productivity growth accelerated sharply in the U.S. economy. In this paper, we identify several other industry-level changes that have occurred during the same time and argue that they are consistent with an increased use of information technology (IT). We use case studies to illustrate how IT has enabled firms to more rapidly replicate improved business processes throughout an organization, thereby not only increasing productivity but also market share and market value. We then empirically document a substantial increase in turbulence starting in the 1990s, as measured by the average intra-industry rank change in sales, earnings before interest, taxes, depreciation and amortization (EBITDA), and other metrics. In particular, we find that IT-intensive industries account for most of this increase in turbulence, especially after 1995. In addition, we find that IT-intensive industries became more concentrated than non IT-intensive industries after 1995, reversing the previous trend. The combination of increased turbulence and concentration, especially among IT-intensive industries, is consistent with recent theories of hypercompetition as well as Schumpeterian creative destruction. We conclude that the improved ability of firms to replicate business innovations has changed the nature of business competition.
Notes: "Revised October 2008"--Publisher's web site.

Includes bibliographical references.