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Proximity and Software Programming: IT Outsourcing and the Local Market
Get PDFPrior interviews conducted by the Software Industry Center with service providers in the Indian software industry
suggested the need for some face-to-face communication in coordination-intensive activities. That is, despite improvements in communication capabilities due to information technology (IT), some IT services may still be inherently nontradable. This observation motivates the present paper. We examine the question of which services are tradable within a concrete setting: the outsourcing of IT services across a broad cross-section of establishments in the United States. If markets for IT services are local, then we should expect the entry decisions of IT services firms will depend upon the size of the local market and conversely, increases in local supply should increase the likelihood of outsourcing by lowering cost of outsourcing. If markets are not local, then the composition of local demand should matter little to the entry decisions of suppliers, and local supply will not affect outsourcing. We analyze outsourcing decisions from 52,191 establishments with over 100 employees at the end of 2002, for two types of IT services: programming and design, and hosting. Programming and design projects require communication of detailed user requirements whereas hosting requires less coordination between client and service provider than programming and design. Our empirical results bear out this intuition: Supply of programming and design services are more sensitive to increases in local market demand than are providers of hosting services, and the probability of outsourcing programming and design is increasing the local supply of outsourcing, but the outsourcing of hosting is not. This suggests that hosting services are more tradable than programming and design, and there is some irreducible non-tradable or “local” component to programming and design services
The Effect of Project Labor Agreements on the Cost of School Construction
Get PDFThis paper investigates the impact of project labor agreements on school construction cost in New England. In contrast to prior research, which applied very leanly specified cost models to secondary data, this study explores more sophisticated models using a rich data set on school characteristics collected by the authors to control for the increased complexity inherent in PLA-built schools. The results indicate that while simple models exhibit large positive PLA effects, such effects are lacking in more complete models. We suggest that the PLA coefficients in simple models are capturing the increased complexity, and cost, of school projects built under PLAs
Imports, Technology, and the Success of the American Steel Industry
Get PDFAmerica’s concern over the international competitiveness of its traditional industries has recently focused on the fate of the American steel industry. Rising steel import levels, falling domestic prices, and a record number of mills declaring bankruptcy seemed to represent yet another case of declining American market power. The Bush administration
implemented trade protection and urged the industry to consolidate in order to better face foreign competition. To a large extent, however, these protectionist measures may be unwarranted. The current American steel industry, in fact, represents a story of technological achievement and competitive success far more than a story of manufacturing capacity lost to cheap foreign imports. Advanced technology has been a major factor in the restructuring and competitiveness of the American steel industry, leading to changes in the workforce, raw material requirements, capital equipment, production scale, and geographic location of steel mills. This technology has been implemented in a host of new thin-slab mini-mills, which have proven capable of producing premium steel products in direct competition with the best of the traditional steel mills. This paper attempts to disentangle and assess the impact of both foreign and domestic competition on the flat-rolled steel industry by empirically testing a model that evaluates sources of injury to industry competitiveness. The analysis finds that, while rising import levels may have aggravated the decline of traditional steel production, domestic competition, represented by advanced mini-mill production methods, have had a more fundamental and long-term effect on the structure and competitiveness of the American steel industry
Is Open Source Software "Better" Than Closed Source Software? Using Bug-Fix Rates to Compare Software Quality
Get PDFIf free software is also better software, as is claimed, we should all be downloading programs one day. While software
quality itself is hard to define and measure, one can compare the rate of change of quality of open and closed source programs by comparing three pairs of comparable programs. Estimates of a hazard rate model find that the open source version of two programs are modified more quickly in response to bug reports. The two "faster response" open source programs are supported by communities of user-developers, whereas a third "slower response" program was written by programmers who were paid to develop the software for others. Thus open source software is found to undergo improvements more rapidly when it is produced and maintained by its users
Buyer-Seller Relationships: The Role of Expectations, Communication Behavior, and Appraisal Processes in Problem Solving
Get PDFThe potential benefits of integrated supply chain management are significant, yet pressures to maintain a mutually beneficial relationship can be compromised by the pressures felt within partner firms. Moreover, creating and maintaining successful supply relationships is a complicated process that is very dependent on the interactions of people involved. This paper reports the results of an 18-month longitudinal study of three pairs of powder metallurgy part producers and their customers. Using 62 field interviews from participants at different levels of each organization, the paper develops a model of buyer-seller problem solving based on interpersonal relationship literature
Technical Assistance Programs and the Diffusion of Environmental Technologies in the Printing Industry: The Case of SMEs
Get PDFThe goal of this paper is to better understand the diffusion of environmentally preferable manufacturing technology (as
distinct from pollution control technology) in small and medium sized firms (SMEs) and the influence of technical
assistance programs on the diffusion of these technologies. We draw our insights from the printing industry, a sector where
small firms predominate. We find that smaller firms lag in the adoption of environmental technologies. While there are
multiple programs designed to address this problem, SMEs find these programs comparatively less useful than larger firms.
We highlight a number of factors that adversely influence the ability of information and expertise provided by these
programs to actually facilitate environmental technology adoption in small companies. We then point to several ways in
which the EPA and others are experimenting with ways to make these programs more effective
Searching for Silicon Valley in the Rust Belt: The Evolution of Knowledge Networks in Akron and Rochester
Get PDFDense social networks are thought to be a pre-requisite for innovation-led economic growth and, as a result, building socalled "knowledge networks" has become an important goal for some policy-makers. This has certainly been the case among "rust belt" communities where innovation and economic growth historically depended on the activities of very large
industrial companies. The restructuring of those companies in the 1980s focused the attention of policy makers and
regional economic leaders on ways to rebuild regional innovative capacity and much of this attention has been directed toward building up knowledge networks.
Drawing on structured interviews as well as data from a unique longitudinal and network analysis of inter-organizational relationships, this paper presents empirically grounded case studies of two well-matched mature industrial cities that were simultaneously subjected to these forces: Akron, Ohio and Rochester, New York. Until the 1980s, Akron, Ohio was known as the "tire capital of the world." But by 1997, not a single car tire was produced there. Nevertheless, many of the tire companies--or at least parts of them--maintained R&D facilities in the region while shifting their emphasis toward advanced
polymer technologies (the general class of materials which include synthetic rubber, fibers and engineered plastics).
Similarly, Rochester, New York was home to several internationally prominent optics and optical-electronic companies. In the 1980s, these companies moved significant parts of their production process out of the region, and the community has pursued efforts to develop a base of high-tech photonics and opto-electronics firms since.
Despite the similarity of their situations, the policies and practices employed to rebuild knowledge networks differed. In Akron, those efforts were directed toward generating a strong identity among local actors while offering a "window" into technology coming out of the prominent university's labs as a kind of inducement to participation--an approach which I refer to as a "fountain" approach. In Rochester, on the other hand, efforts were directed more toward forging relationships among local actors through a variety of opportunities for collaboration--a "forum" approach. The results indicate that the forum approach has been more effective both in terms of re-building the region's intellectual network as well as in terms of spurring the creation of innovative companies. More generally, the results point to a number of implications for how policy can more effectively help to build "social capital" within communities undergoing acute economic crises
An Econometric Analysis of the Impact of Technology on the Work Lives of Truck Drivers
Get PDFWe investigate the relationship between technology and drivers’ work lives using data from the UMTIP Driver Survey.
Focusing first on which types of drivers are more likely to use satellite technology, we find that drivers in private carriage, union drivers, and those paid by the hour or as percent of revenue are least likely to drive trucks equipped with SBS. The largest firms are most likely to equip their trucks with SBS, providing some evidence of scale effects of this technology. There is also evidence that SBS technology is used as a substitute for experience.
Examining the impact of satellite technology on worker outcomes, we find that SBS does more than simply lower drivers’ pay. Consistent with the skill-bias hypothesis, drivers who use satellite systems may be paid less per mile. In contrast, drivers on satellite-equipped trucks realize 17.6% higher annual earnings. The higher earnings are due to the increased mileage of such drivers, about 22,000 additional miles per year. Part of this mileage gain is explained by efficiencies provided by these systems, but drivers with satellites also work 14% more hours weekly. The increased hours would account for approximately 60 percent of the increase in mileage; the remaining 40 percent is associated with improved productivity and is captured entirely by the firm. The overall finding, that technology improves productivity and earnings but intensifies and lengthens the workday, is consistent with sociological studies of technology (Graham, 1995)
Can Electricity Markets Be Competitive? Lessons from Deregulation
Get PDFThe success in deregulating the airlines, trucking, railroad, natural gas, and petroleum industries led to deregulating the
electricity industry in 1998 in California and Pennsylvania, and subsequently in several other states. The debacle in
California caused that state to re-regulate, and some states followed that lead. This paper examines the electricity market to
find the conditions necessary to create a competitive market and draws lessons for other industries
Supermarket Characteristics and Operating Costs in Low-Income Areas
Get PDFResearch on low-income household food costs shows that the poor often have limited shopping opportunities and pay
slightly higher prices for food. It is often hypothesized that higher prices are due, at least in part, to higher operating costs for stores that serve low-income households. This paper reports on research assessing how supermarket characteristics and operating costs differ with the percentage of sales derived from food stamp redemptions. Stores with a high percentage of revenues from food stamps generally offer fewer services that save time and add convenience for shoppers. They also offer a
different mix of products, with a greater portion of sales coming from dry groceries and meat. Stores serving low-income shoppers use relatively little labor per 1,000 square feet of selling area. This helps keep labor costs as a percent of sales low, but gross margins for stores serving low-income consumers are also relatively low.
Results from a cost function analysis indicate that stores serving low-income consumers are relatively well adapted to their market environment. But larger, more progressive supermarkets operated by major chains could provide significant competition for the typical store serving the urban poor. Overall, our results do not provide strong support for the hypothesis that it costs more to operate supermarkets that serve low-income consumers