Cowboy capitalism does IT better

Information technology boosts UK productivity but US-owned firms do IT better

American establishments located in the UK spend more on ICT. These US multinationals use about 40% more ICT capital per worker than average whereas non-US multinationals use only about 20% more and purely domestic firms use much less than the average.

But this difference in ICT usage is only one part of the story. The US firms also seem to get more out of each dollar spent on ICT than domestic UK firms or multinationals from other countries.###

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Why are the returns so much higher for US firms? Evidence from a separate CEP study - which compares managerial 'best practice' in the United States, the UK, France and Germany - suggests that what gives US firms an advantage is that their organisational and managerial structures are conducive to getting the most out of ICT. American subsidiaries in Europe appear to be better managed than European firms and the subsidiaries of other multinationals.

So why do European firms not adopt more efficient forms of business organisation? There is some evidence that they are doing so. For example, the Walmart model has been imitated by some of the UK's largest supermarkets. It has also been transplanted directly as Walmart has acquired Asda, the UK's second largest supermarket.

But organisational changes are large and costly upheavals, so change is often slow and difficult. What's more, there are regulatory and cultural constraints to adopting US business practices in Europe. But these should not be overstated as according to the CEP study, subsidiaries of US multinationals located in Europe are significantly better managed than purely domestic firms and non-US multinationals.

O estudo completo, da autoria de Nick Bloom, Raffaella Sadun e John Van Reenen, está disponível aqui.