Virtual Properties

Austan Goolsbee:

They wanted to know if there was any evidence that the American genius with information technology transfers to locations outside the United States. If American companies turn computers into productivity better than anyone else, can businesses in Britain do the same when they are taken over by Americans?

And in the huge service sectors — financial services, retail trade, wholesale trade — they found compelling evidence of exactly that. American takeovers caused a tremendous productivity advantage over a non-American alternative.

When Americans take over a business in Britain, the business becomes significantly better at translating technology spending into productivity than a comparable business taken over by someone else. It is as if the invisible hand of the American marketplace were somehow passing along a secret handshake to these firms.

Companies like Wal-Mart seem to be more adept at translating technology into productivity than anyone else. The Asda supermarket chain in Britain, for example was a middling fourth in its home market before it was taken over by Wal-Mart in 1999. Asda proceeded to grow, sharply, and has taken the No. 2 spot.