There are three essays on the economics of information technology innovation in my dissertation: 1. Procurement contracting strategies in a hierarchical supply network; 2. R and D offshoring and technology learning in emerging economies firm level evidence from the information technology industry; 3. Software design strategies in markets with open source competitors. The first essay addresses the impact of an information technology enabled hierarchical supply structure on a firm s procurement strategies. The second essay investigates information technology hardware innovation. I examine R and D offshoring of information technology hardware firms and its impact on R and D effort of firms in host countries. The third essay focuses on software innovation. I investigate open source software and its impact on the design of proprietary software in terms of number of features bundled in the software.