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On the Longitudinal Effects of IT Use on Firm-Level Employment

Author

Listed:
  • Hilal Atasoy

    (Fox School of Business, Temple University, Philadelphia, Pennsylvania 19122)

  • Rajiv D. Banker

    (Fox School of Business, Temple University, Philadelphia, Pennsylvania 19122)

  • Paul A. Pavlou

    (Fox School of Business, Temple University, Philadelphia, Pennsylvania 19122)

Abstract

The effect of information technology (IT) on employment is a crucial question in today’s economy given the increased digitization of work. To analyze the relationship between IT use and firm-level employment, we examine the longitudinal role of IT use in the firm’s total number of employees. Our data set comes from the emerging economy of Turkey, and it represents firms of different sizes and industries. The data capture the firm’s use of enterprise applications, such as enterprise resource planning and customer relationship management, and the use of Web applications, such as e-banking and e-government. Our empirical specifications exploit both within-firm and between-firm variations to show the positive effect of IT use on firm-level employment, which varies across IT applications over time. Interestingly, we find that the effects of the use of enterprise applications materialize after two years, whereas the effects of the use of Web applications are realized in the current year. We also examine whether the role of IT use in firm-level employment are moderated by firm size, average wage rate, and industry technology intensity. The long-term effects of the use of enterprise applications on firm-level employment are more pronounced in larger firms, with higher average wages, and in high-technology industries. The results are robust to alternative specifications and tests that address causality and endogeneity concerns. Implications for research, practice, and public policy are discussed.

Suggested Citation

  • Hilal Atasoy & Rajiv D. Banker & Paul A. Pavlou, 2016. "On the Longitudinal Effects of IT Use on Firm-Level Employment," Information Systems Research, INFORMS, vol. 27(1), pages 6-26, March.
    • Handle: RePEc:inm:orisre:v:27:y:2016:i:1:p:6-26
    DOI: 10.1287/isre.2015.0618
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    3. Hemant Jain & Balaji Padmanabhan & Paul A. Pavlou & T. S. Raghu, 2021. "Editorial for the Special Section on Humans, Algorithms, and Augmented Intelligence: The Future of Work, Organizations, and Society," Information Systems Research, INFORMS, vol. 32(3), pages 675-687, September.
    4. Ni Huang & Gordon Burtch & Yili Hong & Paul A. Pavlou, 2020. "Unemployment and Worker Participation in the Gig Economy: Evidence from an Online Labor Market," Information Systems Research, INFORMS, vol. 31(2), pages 431-448, June.
    5. Matthias Firgo & Peter Mayerhofer & Michael Peneder & Philipp Piribauer & Peter Reschenhofer, 2018. "Beschäftigungseffekte der Digitalisierung in den Bundesländern sowie in Stadt und Land," WIFO Studies, WIFO, number 61633.
    6. Hilal Atasoy & Rajiv D. Banker & Paul A. Pavlou, 2021. "Information Technology Skills and Labor Market Outcomes for Workers," Information Systems Research, INFORMS, vol. 32(2), pages 437-461, June.
    7. Christophe Combemale & Kate S Whitefoot & Laurence Ales & Erica R H Fuchs, 2021. "Not all technological change is equal: how the separability of tasks mediates the effect of technology change on skill demand [Patterns of industrial innovation]," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 30(6), pages 1361-1387.
    8. Monteiro, Natália P. & Straume, Odd Rune & Valente, Marieta, 2021. "When does remote electronic access (not) boost productivity? Longitudinal evidence from Portugal," Information Economics and Policy, Elsevier, vol. 56(C).
    9. Chaitanya Sambhara & Arun Rai & Sean Xin Xu, 2022. "Configuring the Enterprise Systems Portfolio: The Role of Information Risk," Information Systems Research, INFORMS, vol. 33(2), pages 446-463, June.
    10. Youngho Kang & Jeongmeen Suh, 2022. "Information technology and the spatial reorganization of firms," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 31(3), pages 674-692, August.
    11. Huang, Jiashun & Li, Weiping & Guo, Lijia & Hall, Jim W., 2022. "Information and communications technology infrastructure and firm growth: An empirical study of China's cities," Telecommunications Policy, Elsevier, vol. 46(3).
    12. Hüseyin Taştan & Feride Gönel, 2020. "ICT labor, software usage, and productivity: firm-level evidence from Turkey," Journal of Productivity Analysis, Springer, vol. 53(2), pages 265-285, April.
    13. Inha Oh & Dongnyok Shim, 2020. "IT Adoption and Sustainable Growth of Firms in Different Industries—Are the Benefits Still Expected?," Sustainability, MDPI, vol. 12(22), pages 1-29, November.
    14. Terence J. V. Saldanha & Arvin Sahaym & Sunil Mithas & Mariana Giovanna Andrade-Rojas & Abhishek Kathuria & Hsiao-Hui Lee, 2020. "Turning Liabilities of Global Operations into Assets: IT-Enabled Social Integration Capacity and Exploratory Innovation," Information Systems Research, INFORMS, vol. 31(2), pages 361-382, June.
    15. Biagi, Federico & Falk, Martin, 2017. "The Impact of ICT and E-Commerce Activities on Employment in Europe," Ratio Working Papers 285, The Ratio Institute.
    16. Inha Oh & Jungho Kim, 2023. "Frontiers and laggards: Which firms benefit from adopting advanced digital technologies?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(2), pages 753-766, March.

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