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Information technology, capabilities and Asset Ownership: Evidence from Taxicab Fleets

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  • Evan Rawley
  • Tim Simcoe

Abstract

We examine how information technology (IT) influences asset ownership through its impact on firms’ and agents’ capabilities. In particular, we propose that when IT is a substitute for agents’ industry-specific human capital, IT adoption leads to increased vertical integration. We test this prediction using micro data on vehicle ownership patterns from the Economic Census during a period when computerized dispatching systems were first adopted by taxicab firms. The empirical tests exploit exogenous variation in local market conditions, to identify the impact of dispatching technology on firm asset ownership. The results show that firms increase the proportion of taxicabs owned by 12% when they adopt new computerized dispatching systems. The findings suggest that firms increasingly vertically integrate when they acquire resources that substitute for their agents’ capabilities.

Suggested Citation

  • Evan Rawley & Tim Simcoe, 2010. "Information technology, capabilities and Asset Ownership: Evidence from Taxicab Fleets," DRUID Working Papers 10-01, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
    • Handle: RePEc:aal:abbswp:10-01
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