Shane Greenstein

MBA Class of 1957 Professor of Business Administration

Shane Greenstein is the MBA Class of 1957 Professor of Business Administration at the Harvard Business School, and co-chair of the Digital Initiative. He teaches in the Technology, Operations and Management unit. Greenstein is co-director of the program on the economics of digitization at the National Bureau of Economic Research. He recently finished a book about the development of the commercial Internet in the United States, called How the Internet Became Commercial: Innovation, Privatization, and the Birth of a new NetworkHe also publishes commentary on his blog Digitopoly.

 

Shane Greenstein is the MBA Class of 1957 Professor of Business Administration at the Harvard Business School, and co-chair of the Digital Initiative. He teaches in the Technology, Operations and Management unit. Greenstein is co-director of the program on the economics of digitization at the National Bureau of Economic Research. He recently finished a book about the development of the commercial Internet in the United States, called How the Internet Became Commercial: Innovation, Privatization, and the Birth of a new NetworkHe also publishes commentary on his blog Digitopoly.

Greenstein previously taught at the Kellogg School of Management, Northwestern University, and at the University of Illinois, Urbana/Champaign. He received his BA from University of California at Berkeley in 1983, and his PhD from Stanford University in 1989, both in economics. He also continues to receive a daily education in life from his wife and children.

Journal Articles

  1. Digitization, Innovation, and Copyright: What Is the Agenda?

    Josh Lerner, Shane Greenstein and Scott Stern

    This essay discusses the need for research on the consequences of digitization, as well as the impact of alternative policies governing the creation and use of digital information. This agenda focuses on the development of research to investigate the economics of digitization, to analyze the governance of intellectual property in this sector, particularly through copyright, and to pioneer approaches to analyzing measurement of digitization. This agenda overlaps with many related open questions in organizational and strategy research.

    Keywords: Technology; Research; Copyright; Information Management; Innovation and Invention;

    Citation:

    Lerner, Josh, Shane Greenstein, and Scott Stern. "Digitization, Innovation, and Copyright: What Is the Agenda?" Strategic Organization 11, no. 1 (February 2013): 110–121. View Details
  2. Digital Dark Matter and the Economic Contribution of Apache

    Shane Greenstein and Frank Nagle

    Researchers have long hypothesized that research outputs from government, university, and private company R&D contribute to economic growth, but these contributions may be difficult to measure when they take a non-pecuniary form. The growth of networking devices and the Internet in the 1990s and 2000s magnified these challenges, as illustrated by the deployment of the descendent of the NCSA HTTPd server, otherwise known as Apache. This study asks whether this experience could produce measurement issues in standard productivity analysis, specifically, omission and attribution issues, and, if so, whether the magnitude is large enough to matter. The study develops and analyzes a novel data set consisting of a 1% sample of all outward-facing web servers used in the United States. We find that use of Apache potentially accounts for a mismeasurement of somewhere between $2 billion and $12 billion, which equates to between 1.3% and 8.7% of the stock of prepackaged software in private fixed investment in the United States and a very high rate of return to the original federal investment in the Internet. We argue that these findings point to a large potential undercounting of the rate of return from IT spillovers from the invention of the Internet. The findings also suggest a large potential undercounting of "digital dark matter" in general.

    Keywords: open source; Apache; Economic measurement; Digital economics; Measurement and Metrics; Open Source Distribution; Internet; Information Technology; Software; Economic Growth; Research and Development; Web Services Industry; Information Technology Industry; United States;

    Citation:

    Greenstein, Shane, and Frank Nagle. "Digital Dark Matter and the Economic Contribution of Apache." Research Policy 43, no. 4 (May 2014): 623–631. (Lead Article.) View Details

Book Chapters

  1. Schumpeterian Competition and Diseconomies of Scope: Illustrations from the Histories of Microsoft and IBM

    Timothy F. Bresnahan, Shane Greenstein and Rebecca M. Henderson

    We address a longstanding question about the causes of creative destruction. Dominant incumbent firms, long successful in an existing technology, are often much less successful in new technological eras. This is puzzling, since a cursory analysis would suggest that incumbent firms have the potential to take advantage of economies of scope across new and old lines of business and, if economies of scope are unavailable, to simply reproduce entrant behavior by creating a "firm within a firm." There are two broad streams of explanation for incumbent failure in these circumstances. One posits that incumbents fear cannibalization in the marketplace and so under-invest in the new technology. The second suggests that incumbent firms develop organizational capabilities and cognitive frames that make them slow to "see" new opportunities and that make it difficult to respond effectively once the new opportunity is identified. In this paper we draw on two of the most important historical episodes in the history of the computing industry, the introduction of the PC and of the browser, to develop a third hypothesis. Both IBM and Microsoft, having been extremely successful in an old technology, came to have grave difficulties competing in the new, despite some dramatic early success. We suggest that these difficulties do not arise from cannibalization concerns or from inherited cognitive frames. Instead they reflect diseconomies of scope rooted in assets that are necessarily shared across both businesses. We show that both Microsoft and IBM were initially very successful in creating freestanding business units that could compete with entrants on their own terms, but that as the new businesses grew, the need to share key firm-level assets imposed significant costs on both businesses and created severe organizational conflict. In IBM and Microsoft's case this conflict eventually led to control over the new business being given to the old and that in both cases effectively crippled the new business.

    Keywords: Technological Innovation; Opportunities; Competition; Information Technology; Innovation and Management; Organizations; Relationships; Information Technology Industry;

    Citation:

    Bresnahan, Timothy F., Shane Greenstein, and Rebecca M. Henderson. "Schumpeterian Competition and Diseconomies of Scope: Illustrations from the Histories of Microsoft and IBM." In The Rate and Direction of Inventive Activity Revisited, edited by Josh Lerner and Scott Stern. University of Chicago Press, 2012. View Details

Working Papers

  1. Schumpeterian Competition and Diseconomies of Scope: Illustrations from the Histories of Microsoft and IBM

    Timothy Bresnahan, Shane Greenstein and Rebecca Henderson

    We address a longstanding question about the causes of creative destruction. Dominant incumbent firms, long successful in an existing technology, are often much less successful in new technological eras. This is puzzling, since a cursory analysis would suggest that incumbent firms have the potential to take advantage of economies of scope across new and old lines of business and, if economies of scope are unavailable, to simply reproduce entrant behavior by creating a "firm within a firm." There are two broad streams of explanation for incumbent failure in these circumstances. One posits that incumbents fear cannibalization in the marketplace, and so under-invest in the new technology. The second suggests that incumbent firms develop organizational capabilities and cognitive frames that make them slow to "see" new opportunities and that make it difficult to respond effectively once the new opportunity is identified. In this paper we draw on two of the most important historical episodes in the history of the computing industry, the introduction of the PC and of the browser, to develop a third hypothesis. Both IBM and Microsoft, having been extremely successful in an old technology, came to have grave difficulties competing in the new, despite some dramatic early success. We suggest that these difficulties do not arise from cannibalization concerns or from inherited cognitive frames. Instead they reflect diseconomies of scope rooted in assets that are necessarily shared across both businesses. We show that both Microsoft and IBM were initially very successful in creating freestanding business units that could compete with entrants on their own terms, but that as the new businesses grew, the need to share key firm-level assets imposed significant costs on both businesses and created severe organizational conflict. In IBM and Microsoft's case this conflict eventually led to control over the new business being given to the old and that in both cases effectively crippled the new business.

    Keywords: Experience and Expertise; Investment; Technological Innovation; Resource Allocation; Failure; Opportunities; Prejudice and Bias; Technology Adoption; Computer Industry; Information Technology Industry;

    Citation:

    Bresnahan, Timothy, Shane Greenstein, and Rebecca Henderson. "Schumpeterian Competition and Diseconomies of Scope: Illustrations from the Histories of Microsoft and IBM." Harvard Business School Working Paper, No. 11-077, January 2011. View Details
  2. Do Experts or Collective Intelligence Write with More Bias? Evidence from Encyclopædia Britannica and Wikipedia

    Shane Greenstein and Feng Zhu

    Which source of information contains greater bias and slant—text written by an expert or that constructed via collective intelligence? Do the costs of acquiring, storing, displaying and revising information shape those differences? We evaluate these questions empirically by examining slanted and biased phrases in content on US political issues from two sources—Encyclopædia Britannica and Wikipedia. Our overall slant measure is less (more) than zero when an article leans towards Democrat (Republican) viewpoints, while bias is the absolute value of the slant. Using a matched sample of pairs of articles from Britannica and Wikipedia, we show that, overall, Wikipedia articles are more slanted towards Democrat than Britannica articles, as well as more biased. Slanted Wikipedia articles tend to become less biased than Britannica articles on the same topic as they become substantially revised, and the bias on a per word basis hardly differs between the sources. These results have implications for the segregation of readers in online sources and the allocation of editorial resources in online sources using collective intelligence.

    Keywords: Information; Prejudice and Bias; Online Technology;

    Citation:

    Greenstein, Shane, and Feng Zhu. "Do Experts or Collective Intelligence Write with More Bias? Evidence from Encyclopædia Britannica and Wikipedia." Harvard Business School Working Paper, No. 15-023, October 2014. View Details
  3. Information Technology and the Distribution of Inventive Activity

    Chris Forman, Avi Goldfarb and Shane Greenstein

    We examine the relationship between the diffusion of advanced internet technology and the geographic concentration of invention, as measured by patents. First, we show that patenting became more concentrated from the early 1990s to the early 2000s and, similarly, that counties that were leaders in patenting in the early 1990s produced relatively more patents by the early 2000s. Second, we compare the extent of invention in counties that were leaders in Internet adoption to those that were not. We see little difference in the growth rate of patenting between leaders and laggards in Internet adoption, on average. However, we find that the rate of patent growth was faster among counties that were not leaders in patenting in the early 1990s but were leaders in Internet adoption by 2000, suggesting that the Internet helped stem the trend towards more geographic concentration. We show that these results are largely driven by patents filed by distant collaborators rather than non-collaborative patents or patents by non-distant collaborators, suggesting low cost long-distance digital communication as a potential mechanism.

    Keywords: Patents; Internet; Technology Adoption; Innovation and Invention;

    Citation:

    Forman, Chris, Avi Goldfarb, and Shane Greenstein. "Information Technology and the Distribution of Inventive Activity." NBER Working Paper Series, No. 20036, April 2014. View Details
  4. Digital Dark Matter and the Economics of Apache

    Shane Greenstein and Frank Nagle

    Researchers have long hypothesized that spillovers from government, university, and private company R&D contribute to economic growth, but these contributions may be difficult to measure when they take a non-pecuniary form. The growth of networking devices and the Internet in the 1990s and 2000s magnified these challenges, as illustrated by the deployment of the descendent of the NCSA HTTPd server, otherwise known as Apache. This study asks whether this experience could produce measurement issues in standard productivity analysis, specifically omission and attribution issues, and, if so, whether the magnitude is large enough to matter. The study develops and analyzes a novel data set consisting of a 1% sample of all outward-facing web servers used in the United States. We find that use of Apache potentially accounts for a mismeasurement of somewhere between $2 billion and $12 billion, which equates to between 1.3% and 8.7% of the stock of prepackaged software in private fixed investment in the United States. We argue that these findings point to a large potential undercounting of "digital dark matter" and related IT spillovers from university and federal funding.

    Keywords: Measurement and Metrics; Internet; Performance Productivity; Software; Economic Growth; Research and Development;

    Citation:

    Greenstein, Shane, and Frank Nagle. "Digital Dark Matter and the Economics of Apache." NBER Working Paper Series, No. 19507, October 2013. View Details