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Innovation for the Future - What Will Be the Technology in 2050?

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Author says, that the value of computers in general is more restricted by human imagination, or ability of mamangerial staff to discover new organizational structure, unveil possible capabilities to increase effectiveness with interaction of the machine. As new instruments and innovations built are evolvingand most of them are built jus on top of the computer ground, application of computers expand well beyond their initial purpose of storage and computing. These changes lead to the conclusion about computating technologies being a ‘general purpose technology’, which means that the economic contribution of such technology will be underestimated simply by accounting capital investment. By encouraging future innovations, built on the ground of general-purpose technology, it has drastically bigger value if accounted for all consequences (examples of general purpose technologies could be electricity, steam engine, telegraph).

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Part of innovations, evolving on top of GPT, were purely technical, another part is directly related to organizational innovation. For exapmple, electric motor made possible for enterprices to expand its structure well beyond regions of direct power suply, telegraph helped to start forming geographically dispersed enterprices. Conclusion is that investment in information technology are tightly connected to productivity increase and organizational changes inside enterprices. Two aspects of the IT value are considered: its ability to drive complementary organizational changes and, as a result, increase of the productivity by reducing costs and enabling firm to increase output quality in form of new product or intangibles: convenience, timeliness, quality, variety, Brynjolfsson and Yang. Baily and Gordon, Gullickson and Harper. Author admits that firm level analysis is more suitable for measurement of intangible investments and innovation assotiated with IT, as those factors cannot be captured at macroeconomic measurement approaches. ‘Total capital stock (including intangible assets) associated with the computerization of the economy may be understated by a factor of ten’. Case studies confirm that IT drives changes in different orgaizational areas across enterprice. Moreover, if it does not, then any gain from new technology will be outweighted by negative effect on organizational area due to improper innovation management. Only sufficient amount of managerial innovation would lead to positive interaction of ICT innovation and firm outcomes. Kermerer and Sosa,1991 presented the evidence of tight relation between proper management and ICT innovation can lead to significant positive results inside enterprices. Violation of such rules has led to failure for many large-scale IT projects. Case studies suggest, that investment in organizational learning as complement to ICT innovation could be much bigger then direct investment into new technologies. Strong link between investments in IT and organizational innovation was revealed in numerous studies: Brynjolfsson and Hitt, Linchberg – found significant positive connection with ICT investments and productivity, in terms of value added (however extremely heterogeneous across firms).

Average contribution of computer caital to total output in average exceed 0.60 dollar per dollar of capital stock. Contribution of it labour is also exceeding labor costs. Greenan and Mairesse found computer output elasticities to be positive and consistent with previous study. Kelley foundthet the most productive methal-working plants use computer-controlled machinery Muhkopadhyay, Rajiiv and Srinvasan, 1997 studied that ICT innovation can induce some productivity increase in government activities at process level (package sorting or toll collection). Lehr and Lichtenberg, 1998 found positive impact at higher level of aggregation. However studies done on aggregated level (economy-level, sector level data), showed negligible link with productivity and ICT investment, as measured directly. Rose – multiple times increase in computer investment did not increased productivity for white collar workers. Morrison and Berndt , 1995, Morrison, 1996 – gross marginal product of ‘high tech capital’ was less then its cost, as labor saving investments turned into increase in professional labor demand. What is the direction of causality? Doms, Dunne and Troske found that plants that had ICT technologies, had higher productivity and wages, however they found that this was commonly the case even before the technologies were introduced.

Cood it be possible, that instead of ICT causes increase in output, unexpectedly high sales of companies lead to higher expenditures on ICT technologies? As Brynjoffson, Brynjolfsson and Hitt suggest, organizational and management aspect of individual firm will strongly link to success of ICT implementation and returns to ICT investments. Brinjolfsson and Hitt also examined, that information technology impact is larger, when considering longer time periods – it rises from 2 to 8 times. Explanation to this fact may be slow levels of integration of new technologies, organizational efforts, learning and time needed to fully utilize new technologies and solutions.

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