Working Paper: CEPR ID: DP4428
Authors: Stephen N. Broadberry; Sayantan Ghosal
Abstract: This Paper first documents the comparative productivity performance of the United States and Britain since 1870, showing the importance of developments in services. We identify the transition in market services from customized, low-volume, high margin business organized on a network basis to standardized, high-volume, low margin business with hierarchical management, as a key factor. A model of the interaction between technology, organization and economic performance is then provided, focusing on the transition from networks to hierarchies. Four general lessons are drawn: (1) developments in services must be analysed if the major changes in comparative productivity performance among nations are to be understood fully; (2) different technologies and organizational forms can co-exist efficiently; (3) technological change can cause difficulties of adjustment in technology-using sectors if it is not suited to the social capabilities of the society; (4) reversal of technological trends can lead to reversal of comparative productivity performance.
Keywords: hierarchies; networks; organization; productivity; services; technology
JEL Codes: C79; N10; O40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| technology (O39) | productivity performance (O47) |
| transition from networks to hierarchies (D85) | productivity performance (O47) |
| technological change (O33) | difficulties of adjustment for sectors (F32) |
| social capabilities (Z13) | ability to adapt to technological changes (O33) |
| technology and organizational structure (L23) | productivity outcomes (O49) |
| technological changes not aligned with social capabilities (O35) | difficulties of adjustment (F32) |
| reversal of technological trends (O33) | reversal of comparative productivity performance (O49) |