Patterns of Advanced Technology Adoption and Manufacturing Performance: Employment Growth, Labor Productivity, and Employee Earnings

Previous studies of the relationship between technology adoption and performance in U.S. manufacturing plants take the number of technologies in use as a measure of technological sophistication. These studies generally find a positive monotonic relationship between technology counts and employment growth and earnings and productivity levels among otherwise similar plants. However, the technology count approach masks potential differences in performance among plants that adopt the same number, but different combinations, of technologies. The present study advances earlier work by examining how plant performance is associated with specific technology combinations. The analysis yields several important insights. First, there is enormous diversity in technology adoption patterns. Second, specific technology combinations (e.g., computer aided design combined with numerically controlled machines vs. computer aided manufacturing combined with numerically controlled machines) generally have different degrees of association with plant performance, even among the plants that adopt the same number of technologies. Third, plants that integrate fabrication with assembly operations appear to use advanced technologies more effectively than those engaged in only fabrication or assembly.