The need for speed: impacts of internet connectivity on firm productivity

Broadband access is widely considered to be a productivity-enhancing factor, but there are few firm-level estimates of its benefits. We use a large micro-survey of firms linked to longitudinal firm financial data to determine the impact that broadband access has on firm productivity. Propensity scor...

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Bibliographic Details
Published in:Journal of productivity analysis 2012-04, Vol.37 (2), p.187-201
Main Authors: Grimes, Arthur, Ren, Cleo, Stevens, Philip
Format: Article
Language:English
Subjects:
Accounting/Auditing
Broadband
Broadband transmission
Business structures
Business surveys
Connectivity
Data transmission
Econometrics
Economic models
Economic theory
Economics
Economics and Finance
Employment
Estimates
Hypotheses
Impact analysis
Information technology
Internet
Internet access
Labor productivity
Microeconomics
Operations Research/Decision Theory
Point estimators
Productivity
Studies
Technology adoption
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Summary:Broadband access is widely considered to be a productivity-enhancing factor, but there are few firm-level estimates of its benefits. We use a large micro-survey of firms linked to longitudinal firm financial data to determine the impact that broadband access has on firm productivity. Propensity score matching is used to control for factors, including the firm's own lagged productivity, that determine a firm's internet access choice. Instrumental variables estimates are employed as a robustness check. Results indicate that broadband adoption boosts firm productivity by 7-10%; effects are consistent across urban versus rural locations and across high versus low knowledge intensive sectors.
ISSN:0895-562X
1573-0441
DOI:10.1007/s11123-011-0237-z