New Releases by Erik Brynjolfsson

We examine what drives the diffusion of different types of information through email networks and the effects of these diffusion patterns on the productivity and performance of information workers. In particular, we ask: What predicts the likelihood of an individual becoming aware of a strategic piece of information, or becoming aware of it sooner? Do different types of information exhibit different diffusion patterns, and do different characteristics of social structure, relationships and individuals in turn affect access to different kinds of information? Does better access to information predict an individual''s ability to complete projects or generate revenue? We characterize the social network of a medium sized executive recruiting firm using accounting data on project co-work relationships and ten months of email traffic. We identify two distinct types of information diffusing over this network - ''event news'' and ''discussion topics'' - by their usage characteristics, and observe several thousand diffusion processes of each type of information. We find the diffusion of news, characterized by a spike in communication and rapid, pervasive diffusion through the organization, is influenced by demographic and network factors but not by functional relationships (e.g. prior co-work, authority) or the strength of ties. In contrast, diffusion of discussion topics, which exhibit shallow diffusion characterized by ''back-and-forth'' conversation, is heavily influenced by functional relationships and the strength of ties, as well as demographic and network factors. Discussion topics are more likely to diffuse vertically up and down the organizational hierarchy, across relationships with a prior working history, and across stronger ties, while news is more likely to diffuse laterally as well as vertically, and without regard to the strength or function of relationships. We also find access to information strongly predicts project completion and revenue generation. The effects are economically significant, with each additional ''word seen'' correlated with about $70 of additional revenue generated. Our findings provide some of the first evidence of the economic significance of information diffusion in email networks.

Examines how information technologies are affecting jobs, skills, wages, and the economy.

A key question for Internet commerce is the nature of competition with traditional brick-and-mortar retailers. Although traditional retailers vastly outsell Internet retailers in most product categories, research on Internet retailing has largely neglected this fundamental dimension of competition. Is cross-channel competition significant, and, if so, how and where can Internet retailers win this battle? This paper attempts to answer these questions using a unique combination of data sets. We collect data on local market structures for traditional retailers, and then match these data to a data set on consumer demand via two direct channels: Internet and catalog. Interestingly, our analyses show that Internet retailers face significant competition from brick-and-mortar retailers when selling mainstream products, but are virtually immune from competition when selling niche products. Furthermore, since the Internet channel sells proportionately more niche products than the catalog channel - a phenomenon sometimes called the "Long Tail", the competition between the Internet channel and local stores is less intense than the competition between the catalog channel and local stores. The methods we introduce can be used to analyze cross-channel competition in other product categories, and suggest that managers need to take into account the types of products they sell when assessing competitive strategies.

We use a controlled field experiment to investigate the dynamic effects of retail advertising. The experimental design overcomes limitations hindering previous investigations of this issue. Our study uncovers dynamic advertising effects that have not been considered in previous literature. We find that current advertising does affect future sales, but surprisingly, the effect is not always positive; for the firm''s best customers, the long-run outcome may be negative. This finding reflects two competing effects: brand switching and intertemporal substitution. We also find evidence of cross-channel substitution, with the firm''s best customers switching demand to the ordering channel that corresponds to the advertising.

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.

In an effort to reveal the fine-grained relationships between IT use, patterns of information flows, and individual information-worker productivity, we study task level practices at a midsize executive recruiting firm. We analyze both project-level and individual-level performance using: (1) detailed accounting data on revenues, compensation, project completion rates, and team membership for over 1300 projects spanning 5 years, (2) direct observation of over 125,000 email messages over a period of 10 months by individual workers, and (3) data on a matched set of the same workers'' self-reported IT skills, IT use and information sharing. These detailed data permit us to econometrically evaluate a multistage model of production and interaction activities at the firm, and to analyze the relationships among key technologies, work practices, and output. We find that (a) IT use is positively correlated with non-linear drivers of productivity; (b) the structure and size of workers'' communication networks are highly correlated with performance; (c) an inverted-U shaped relationship exists between multitasking and productivity such that, beyond an optimum, more multitasking is associated with declining project completion rates and revenue generation; and (d) asynchronous information seeking such as email and database use promotes multitasking while synchronous information seeking over the phone shows a negative correlation. Overall, these data show statistically significant relationships among technology use, social networks, completed projects, and revenues for project-based information workers. Results are consistent with simple models of queuing and multitasking and these methods can be replicated in other settings, suggesting new frontiers for IT value and social network research.

Price dispersion among commodity goods is typically attributed to consumer search costs. We explore the magnitude of consumer search costs using a data set obtained from a major Internet shopbot. For the median consumer, the benefits to searching lower screens are $2.24 while the cost of an exhaustive search of the offers is a maximum of $2.03. Interestingly, in our setting, consumers who search more intensively are less price sensitive than other consumers, reflecting their increased weight on retailer differentiation in delivery time and reliability. Our results demonstrate that even in this nearly-perfect market, substantial price dispersion can exist in equilibrium from consumer non-price attributes. Keywords: Search costs, shopbot, product differentiation, random coefficients choice model.

We present a framework and empirical estimates that quantify the economic impact of increased product variety made available through electronic markets. While efficiency gains from increased competition significantly enhance consumer surplus, for instance by leading to lower average selling prices, our present research shows that increased product variety made available through electronic markets can be a significantly larger source of consumer surplus gains. One reason for increased product variety on the Internet is the ability of online retailers to catalog, recommend and provide a large number of products for sale. For example, the number of book titles available at Amazon.com is over 23 times larger than the number of books on the shelves of a typical Barnes & Noble superstore and 57 times greater than the number of books stocked in a typical large independent bookstore. Our analysis indicates that the increased product variety of online bookstores enhanced consumer welfare by $731 million to $1.03 billion in the year 2000, which is between seven to ten times as large as the consumer welfare gain from increased competition and lower prices in this market. There may also be large welfare gains in other SKU-intensive consumer goods such as music, movies, consumer electronics, and computer software and hardware. Keywords: Consumer Surplus, Product Variety, Electronic Markets.

From the Sloan Management Review comes a remarkable collection of articles written by highly regarded experts in the field of e-business. This second book in the MIT SMR series is aimed at those seeking to integrate e-business into their enterprises as a way of maintaining -- or establishing -- competitive advantage. Strategies for E-Business Success offers a roadmap of the fundamental principles and tools executives need.

This paper assesses the value added by computer equipment and information systems labor by estimating several production functions that also include ordinary capital, ordinary labor and R & D capital.