Organizing Growth

After many years of large drops in the cost information and communicationtechnology, the evidence on its impact on productivity growth in non-IT produc-ing sectors continues to be mixed.We propose a framework to study the impactof information and communication technology on growth through its impacton organization and innovation. Agents accumulate knowledge through twoactivities: innovation (discovering new technologies) and exploitation (learninghow to use the current technology). Exploitation requires the development oforganizations to coordinate the work of experts, which takes time. The costsand bene…ts of such organizations depend on the cost of communicating andacquiring information. We …nd that while advances in information technologythat lower information acquisition costs always increase growth, improvementsin communication technology may lead to lower growth and even to stagnation,as the payo¤ to exploiting innovations through organizations increases relativeto the payo¤ of new radical innovations.[...]