# **1 Introduction**

Economists and sociologists have long been interested in studying the technologies involved in production. Going back to the seminal works by Ryan and Gross (1943) and Griliches (1957) on the diffusion of hybrid varieties of corn, the dominant approach to measuring technology has reflected whether a potential adopter uses an advanced technology. In addition to studying technology diffusion (e.g., Mansfield, 1961) and the drivers of adoption (e.g., Foster and Rosenzweig, 1995; Duflo, Kremer and Robinson, 2011; Atkin, Khandelwal and Osman, 2017), this approach has facilitated the study of the effect of technology on productivity (e.g., Bartel, Ichniowski and Shaw, 2007; Juh ́asz, Squicciarini and Voigtl ̈ander, 2020) or on wages (e.g., Krueger, 1993; DiNardo and Pischke, 1997). The relevance of these questions has motivated researchers to measure the use of (typically a few) advanced technologies by firms in numerous sectors.<sup>1</sup> Recently, the Canadian “Survey of Advanced Technology” has extended the scope of these measurement efforts to record whether firms use a significant number (between 41 and 50, depending on the round) of advanced technologies. Yet, despite all the progress, existing measures of technology still fall short of providing a comprehensive characterization of technology within firms. From a technological standpoint, firms largely remain black boxes.

For starters, the number of technologies covered is rather limited when compared to how many technologies are involved in production processes. Second, their focus on the presence of advanced technologies makes it impossible to understand how production takes place in companies without such advanced technologies. This concern is most relevant in developing countries where advanced technologies have diffused less. Third, since their unit of analysis is the firm, existing studies are not designed to study what business functions benefit from each technology. This drawback is particularly problematic for general technologies that can be relevant for multiple business functions. Finally, existing surveys largely omit questions about how intensively a technology is employed in the firm, and therefore, they do not reveal whether a technology that is present is widely utilized or just marginally.<sup>2</sup> To overcome these limitations, this paper pursues a new strategy to measure technology that shifts the unit of analysis from the firm to the business function level. Core to our

> 1For example, Davies (1979) covers 26 manufacturing technologies, Trajtenberg (1990) measures the presence of CAT-scanners in hospitals, Brynjolfsson and Hitt (2000); Stiroh (2002); Bresnahan, Brynjolfsson and Hitt (2002); Akerman, Gaarder and Mogstad (2015) measure the presence of some ICTs such as computers or access to internet. This practice has been assimilated by the statistical offices from advanced economies, including the US Census Bureau (ICTS and ABS), the Eurostat (Community Survey of ICT Usage), and the Statistics Canada (SAT), who have developed ICT surveys for that purpose.

> 2One exception is Mansfield (1963), and the papers that have followed him, which study the diffusion of a technology within a company providing a proxy for the intensity with which the technology is used.

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