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Information Communication Technologies and Firm Performance: Evidence for UK Firms

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  • Timothy De Stefano
  • Richard Kneller
  • Jonathan Timmis

Abstract

A recent literature has begun to recognise that ICT is heterogeneous and the effects from improving communication are distinct from those that improve the storage and processing of information. In this paper we use the arrival of a new communication technology, ADSL broadband internet, to study the effects of communication ICT on firm performance. To do so free from endogeneity bias, we construct instruments using the infrastructure underlying broadband internet - the pre-existing telephone network. We show that, after placing various restrictions on the sample, instruments based on the timing of ADSL broadband enablement and the cable distance to the local telephone exchange satisfy the conditions for instrument relevancy and validity for some types of ICT. We find in turn, that communication-ICT causally affects firm size (captured by either sales or employment) but not productivity.

Suggested Citation

  • Timothy De Stefano & Richard Kneller & Jonathan Timmis, 2016. "Information Communication Technologies and Firm Performance: Evidence for UK Firms," Discussion Papers 16/01, University of Nottingham, School of Economics.
    • Handle: RePEc:not:notecp:16/01
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    File URL: https://www.nottingham.ac.uk/economics/documents/discussion-papers/2016-01.pdf
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    Cited by:

    1. Rizov, Marian & Vecchi, Michela & Domenech, Josep, 2022. "Going online: Forecasting the impact of websites on productivity and market structure," Technological Forecasting and Social Change, Elsevier, vol. 184(C).
    2. Juan Jung & Enrique López-Bazo & Matteo Grazzi, 2017. "“Internet and enterprise productivity:evidence from Latin America”," AQR Working Papers 201705, University of Barcelona, Regional Quantitative Analysis Group, revised May 2017.

    More about this item

    Keywords

    ICT; firms; instrumental variable JEL codes: D22; D24; O3;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • D2 - Microeconomics - - Production and Organizations

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