Shane Greenstein

MBA Class of 1957 Professor of Business Administration

Shane Greenstein is the MBA Class of 1957 Professor of Business Administration and co-chair of the HBS Digital Initiative. He teaches in the Technology, Operations and Management Unit. Professor Greenstein is also co-director of the program on the economics of digitization at The National Bureau of Economic Research.

 

Shane Greenstein is the MBA Class of 1957 Professor of Business Administration and co-chair of the HBS Digital Initiative. He teaches in the Technology, Operations and Management Unit. Professor Greenstein is also co-director of the program on the economics of digitization at The National Bureau of Economic Research.

Encompassing a wide array of questions about computing, communication, and Internet markets, Professor Greenstein’s research extends from economic measurement and analysis to broader issues. His most recent book focuses on the development of the commercial Internet in the United States. He also publishes commentary on his blog, Digitopoly, and his work has been covered by media outlets ranging from The New York Times and The Wall Street Journal to Fast Company and PC World.

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

The Economics of Enterprise IT

  1. 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 who 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.

    Citation:

    Forman, Chris, Avi Goldfarb, and Shane Greenstein. "Information Technology and the Distribution of Inventive Activity." In The Changing Frontier: Rethinking Science and Innovation Policy, edited by Adam Jaffe and Benjamin Jones, 169–196. University of Chicago Press, 2015. View Details
  2. Which Industries Use the Internet?

    Chris Forman, Avi Goldfarb and Shane Greenstein

    Citation:

    Forman, Chris, Avi Goldfarb, and Shane Greenstein. "Which Industries Use the Internet?" In Organizing the New Industrial Economy. Vol. 12, edited by Michael R Baye, 47–72. Advances in Applied Microeconomics. Emerald Group Publishing, 2003. View Details
  3. The Geographic Dispersion of Commercial Internet Use

    Chris Forman, Avi Goldfarb and Shane Greenstein

    Citation:

    Forman, Chris, Avi Goldfarb, and Shane Greenstein. "The Geographic Dispersion of Commercial Internet Use." In Rethinking Rights and Regulations: Institutional Responses to New Communication Technologies, edited by Lorrie Faith Cranor and Steven S. Wildman, 113–145. MIT Press, 2003. View Details

Technological Competition in Computing

  1. Mobile Computing: The Next Platform Rivalry

    Timothy Bresnahan and Shane Greenstein

    Competition to become one of several dominant mobile platforms is intense. Platforms compete for developers, who create applications which make the platform valuable for users. Why doesn't one form of platform governance emerge as superior? This essay will stress the reasons for differentiation and proposes a new argument linked to a platform's "hierarchy." Hierarchical governance features can help at one moment but then get in the way at a later time. These arguments are illustrated by different approaches to platform governance taken by the major mobile platform sponsors of recent years.

    Citation:

    Bresnahan, Timothy, and Shane Greenstein. "Mobile Computing: The Next Platform Rivalry." American Economic Review: Papers and Proceedings 104, no. 5 (May 2014): 475–480. View Details
  2. 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

The Commercialization of Internet Infrastructure

  1. How the Internet Became Commercial: Innovation, Privatization, and the Birth of a New Network

    Shane Greenstein

    In less than a decade, the Internet went from being a series of loosely connected networks used by universities and the military to the powerful commercial engine it is today. This book describes how many of the key innovations that made this possible came from entrepreneurs and iconoclasts who were outside the mainstream—and how the commercialization of the Internet was by no means a foregone conclusion at its outset. Shane Greenstein traces the evolution of the Internet from government ownership to privatization to the commercial Internet we know today. This is a story of innovation from the edges. Greenstein shows how mainstream service providers that had traditionally been leaders in the old-market economy became threatened by innovations from industry outsiders who saw economic opportunities where others didn't—and how these mainstream firms had no choice but to innovate themselves. New models were tried: some succeeded, some failed. Commercial markets turned innovations into valuable products and services as the Internet evolved in those markets. New business processes had to be created from scratch as a network originally intended for research and military defense had to deal with network interconnectivity, the needs of commercial users, and a host of challenges with implementing innovative new services.
  2. Issues in Data Caps and Usage-Based Pricing

    Brad Burnham, Shane Greenstein, Neil Hunt, Kevin McElearney, Marc Morial, Dennis Roberson and Charles Slocum

    Citation:

    Burnham, Brad, Shane Greenstein, Neil Hunt, Kevin McElearney, Marc Morial, Dennis Roberson, and Charles Slocum. "Issues in Data Caps and Usage-Based Pricing." Report, U.S. Federal Communications Commission, Open Internet Advisory Committee, Economic Impacts Working Group, May 2013. View Details
  3. Nurturing the Accumulation of Innovations: Lessons from the Internet

    Shane Greenstein

    Citation:

    Greenstein, Shane. "Nurturing the Accumulation of Innovations: Lessons from the Internet." In Accelerating Energy Innovation: Insights from Multiple Sectors, edited by Rebecca Henderson and Richard G. Newell, 189–224. National Bureau of Economic Research Conference Report. University of Chicago Press, 2011. View Details
  4. The Economic Geography of Internet Infrastructure in the United States

    Shane Greenstein

    Citation:

    Greenstein, Shane. "The Economic Geography of Internet Infrastructure in the United States." Chap. 8 in Handbook of Telecommunications Economics, Volume 2: Technology Evolution and the Internet, edited by Sumit K. Majumdar, Ingo Vogelsang, and Martin Cave, 289–364. Elsevier/North-Holland, 2005. View Details
  5. The Evolution of Advanced Large Scale Information Infrastructure in the United States

    Shane Greenstein, Mercedes Lizardo and Pablo Spiller

    Citation:

    Greenstein, Shane, Mercedes Lizardo, and Pablo Spiller. "The Evolution of Advanced Large Scale Information Infrastructure in the United States." In Down to the Wire: Studies in the Diffusion and Regulation of Telecommunications Technologies, edited by Allan Shampine, 3–36. Nova Science Publishers, 2003. View Details
  6. Determinants of the Regional Distribution of Information Technology Infrastructure in the United States

    Shane Greenstein and Mercedes Lizardo

    Citation:

    Greenstein, Shane, and Mercedes Lizardo. "Determinants of the Regional Distribution of Information Technology Infrastructure in the United States." In The Electronic Village: Public Policy Issues of the Information Economy, edited by Dale Orr and Thomas Wilson. C.D. Howe Institute, 1999. View Details

The Economics of Digitization

  1. Economic Analysis of the Digital Economy

    Avi Goldfarb, Shane Greenstein and Catherine Tucker

    As the cost of storing, sharing, and analyzing data has decreased, economic activity has become increasingly digital. But while the effects of digital technology and improved digital communication have been explored in a variety of contexts, the impact on economic activity—from consumer and entrepreneurial behavior to the ways in which governments determine policy—is less well understood. Economic Analysis of the Digital Economy explores the economic impact of digitization, with each chapter identifying a promising new area of research. The Internet is one of the key drivers of growth in digital communication, and the first set of chapters discusses basic supply-and-demand factors related to access. Later chapters discuss new opportunities and challenges created by digital technology and describe some of the most pressing policy issues. As digital technologies continue to gain in momentum and importance, it has become clear that digitization has features that do not fit well into traditional economic models. This suggests a need for a better understanding of the impact of digital technology on economic activity, and Economic Analysis of the Digital Economy brings together leading scholars to explore this emerging area of research.

    Keywords: Technology; Economics;

    Citation:

    Goldfarb, Avi, Shane Greenstein and Catherine Tucker, eds. Economic Analysis of the Digital Economy. University of Chicago Press, 2015. 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
  3. Does Service Bundling Reduce Churn?

    Jeff Prince and Shane Greenstein

    We examine whether bundling in telecommunications services reduces churn using a series of large, independent cross sections of household decisions. To identify the effect of bundling, we construct a pseudo-panel dataset and utilize a linear, dynamic panel-data model, supplemented by nearest-neighbor matching. We find bundling does reduce churn for all three "triple-play" services. The effect is only "visible" during times of turbulent demand. We also find evidence that broadband was substituting for pay television in 2009. This analysis highlights that bundling helps with customer retention in service industries, and may play an important role in preserving contracting markets.

    Keywords: Communication Technology; Customer Satisfaction; Product Marketing; Telecommunications Industry;

    Citation:

    Prince, Jeff, and Shane Greenstein. "Does Service Bundling Reduce Churn?" Journal of Economics & Management Strategy 23, no. 4 (Winter 2014): 839–875. View Details
  4. Digitization, Innovation, and Copyright: What Is the Agenda?

    Shane Greenstein, Josh Lerner 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:

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

Working Papers

  1. 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
  2. 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

Cases and Teaching Materials

  1. Streaming Over Broadband: Why Doesn't My Netflix Work?

    Shane Greenstein and Michael Norris

    In late 2013 and early 2014, Netflix service over the major U.S. Internet Service Providers (ISPs) suffered major slowdowns. What were the causes of these problems? What could Netflix do to solve them?

    Keywords: Digital Innovation; internet; broadband service; Internet; Technology; Infrastructure; Utilities Industry; United States;

    Citation:

    Greenstein, Shane, and Michael Norris. "Streaming Over Broadband: Why Doesn't My Netflix Work?" Harvard Business School Case 616-007, November 2015. View Details