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Firm Productivity and Learning with Digital Technologies: Evidence from Cloud Computing

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Listed:
  • James M. Brand
  • Mert Demirer
  • Connor Finucane
  • Avner A. Kreps

Abstract

We study firm productivity and learning in cloud computing by leveraging CPU utilization data from over one billion virtual machines used by nearly 100,000 firms. We find large and persistent dispersion in firms’ productivity with cloud computing, similar to canonical results in the literature. More productive firms respond better to demand fluctuations, show higher attentiveness to resource utilization, and use a wider variety of specialized machines. New-adopters learn to be more productive with the cloud over time, improving 33.0% in their first year, but it takes four years for them to reach a steady state, slower than many previously studied settings. Our results indicate substantial aggregate implications of inefficiencies in computing: improving firm productivity reduces the use of computing resources by up to 35% and electricity by up to 28%.

Suggested Citation

  • James M. Brand & Mert Demirer & Connor Finucane & Avner A. Kreps, 2024. "Firm Productivity and Learning with Digital Technologies: Evidence from Cloud Computing," NBER Working Papers 32938, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32938
    Note: IO PR
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    More about this item

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L86 - Industrial Organization - - Industry Studies: Services - - - Information and Internet Services; Computer Software

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