Decoding Microsoft: Intangible Capital as a Source of Company Growth / Charles R. Hulten.

Format:

Book

Author/Creator:

Hulten, Charles R.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w15799.

NBER working paper series no. w15799

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Decoding Microsoft

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2010.

Summary:

A great deal of research has been devoted to the effects of technical change on economic growth. Less attention has been given to the factors driving the growth of the technological innovators themselves. This paper examines the case of one of the central contributors to the IT revolution, the Microsoft Corporation. The company's sources of growth are estimated using the conventional Solow-Jorgenson-Griliches "residual" model, expanded to include investments in product research and development, sales and marketing, and organizational development (collectively termed the company's "intangible" capital). The picture of Microsoft that emerges from this analysis is a story about the successful use of knowledge inputs to produce knowledge outputs. It is also a story of the importance of product innovation, rather than process innovation, as a source of total factor productivity growth. The theoretical underpinnings of the empirical analysis are also examined, and a model is sketched in which the neoclassical growth accounting framework is linked to the theoretically messier world of the Schumpeterian competitor via the Berndt-Fuss theorem on capital utilization.

Notes:

Print version record

March 2010.