BPEA | 2002 No. 1

Intangible Assets: Computers and Organizational Capital

Lorin M. Hitt,
Lorin Hitt
Lorin M. Hitt Professor of Operations, Information and Decisions - The Wharton School, The University of Pennsylvania
Shinkyu Yang, and
Shinkyu Yang New York University
Erik Brynjolfsson
Erik Brynjolfsson headshot
Erik Brynjolfsson Director - Stanford Digital Economy Lab, Jerry Yang and Akiko Yamazaki Professor and Senior Fellow - Stanford Institute for Human Centered AI
Discussants: Martin Neil Baily and Robert E. Hall
Robert Hall Headshot
Robert E. Hall Robert and Carole McNeil Joint Hoover Senior Fellow and Professor of Economics - Stanford University

2002, No. 1

In developed economies, production requires not only such traditional
factors as capital and labor but also skills, organizational structures and
processes, culture, and other factors collectively referred to as “intangible
assets.” Detailed investigation of some of these types of assets has found
that they are often large in magnitude and have important productivity
benefits. For example, Dale Jorgenson and Barbara Fraumeni found that
the stock of human capital in the U.S. economy dwarfs that of physical
capital and has grown over time.1 Bronwyn Hall, Zvi Griliches, and
Baruch Lev and Theodore Sougiannis found evidence that research and
development (R&D) assets bring benefits in the form of positive marginal
product and market valuation.2 Timothy Bresnahan, Brynjolfsson,
and Hitt have found that certain organizational practices, when combined
with investments in information technology (IT), were associated with
significant increases in productivity in the late 1980s and early 1990s.