White paper on creativity - ebla center

Chapter 9Some people even talked of a “Wal-Mart effect”, as being the origin ofmost growth (over 80%) in the overallproductivity of factors. On the otherhand, the industrial sectors generatingthe new information andcommunications technology – i.e.those which introduced productinnovations, which, in turn, becameprocess innovations in thedownstream sectors – partly onaccount of their small size, onlycontributed in a very small way to thecountry’s overall growth, at least interms of direct economicallymeasurable effects.In short, in response to RobertSolow’s celebrated quip (1987) whichnonplussed leading US economists forover a decade: “You can see thecomputer age everywhere but in theproductivity statistics”, Jorgenson(2001) demonstrated that computerswere seen in the statistics but in thosereferring to users rather thanproducers. Moreover, as far as drivinggrowth is concerned, the Italian casehad always been a clear example ofhow the capacity to adopt and diffusenew technologies in the cultural fabricof user companies is much moreimportant than the capacity to createthem ex novo. From at least the 1950suntil the early 1990s, the Italianeconomy showed a remarkablecapacity for growth in output andoverall productivity of factors, basedon the capacity to adopt newtechnologies incorporated inintermediate and capital goods, oftenimported and in any case introducedby small-size sectors.Closer study of the so-called “Wal-Mart effect” allows us to put forwardsome interpretative theories. In thiscase one of the largest contemporarycompanies adopted original softwareapplications for its tens of thousandsof outlets in an immense logisticsnetwork linking up production centresfor durable and other consumer goodsworldwide to its distribution networkserving the main metropolitan areas inNorth America.In this case the high costs required todesign specific dedicated applicationsoftware for Wal-Mart were spreadover such a huge company that theunit costs were very low and theeconomic benefits were enormous andhighly significant.The Wal-Mart case thus represents theumpteenth proof of the importance ofeconomies of density which in the caseof information and communicationstechnology become very important.The conception, design, elaborationand implementation of applicationsoftware has a particularly high cost.These expenses are paid in advance bythe customer company and are spreadout over activities of variabledimensions. Basically, there is atenuous relationship between theexpenses paid in advance and theeffective dimension of the activities towhich they are applied. More precisely,the advance payments do not vary as afunction of the volume of activities,but rather as a function of theirvariety. The outlay for the initialintroduction of an applicationWHITE PAPER ON CREATIVITY 213