Superstar Companies Know How to Deploy Digital Capital

What has caused the emergence of superstar companies that dominate their sectors? Is it the recent state of anti-trust enforcement? Or do these firms thrive because, for some reason, they are more productive than others? The answer makes an enormous difference to how policy makers across the globe should respond.1

One thing that leading companies have in common, it turns out, is that they spend what it takes to put information technology to productive use. New research from the Hutchins Center on Fiscal and Monetary Policy at Brookings finds that they make significantly higher investments in “digital capital” than other firms do. This insight helps explain widening differences in companies’ market share and productivity — and raises the question of whether generally accepted accounting measures should evolve.