Broadband infrastructure, ICT use and firm performance: evidence for UK firms

DeStefano, Timothy; Kneller, Richard; Timmis, Jonathan

Abstract

The recent economics literature has begun to recognise that ICT is a heterogeneous technology altering information storage, processing and communication in distinct ways. In this paper we use the arrival of a new communication technology, ADSL broadband, to study the effects of heterogeneous types of ICT on firm performance. To do so free from endogeneity bias, we construct instruments using postcode-level geographic variation in 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. We find in turn, that ICT causally affects firm size (captured by either sales or employment) but not productivity.

Citation

DeStefano, T., Kneller, R., & Timmis, J. (2018). Broadband infrastructure, ICT use and firm performance: evidence for UK firms. Journal of Economic Behavior and Organization, 155, 110-139. https://doi.org/10.1016/j.jebo.2018.08.020

• Journal Article Type: Article
• Acceptance Date: Aug 23, 2018
• Online Publication Date: Sep 25, 2018
• Publication Date: 2018-11
• Deposit Date: Sep 5, 2018
• Publicly Available Date: Mar 26, 2020
• Journal: Journal of Economic Behavior & Organization
• Print ISSN: 0167-2681
• Electronic ISSN: 2328-7616
• Publisher: Elsevier
• Peer Reviewed: Peer Reviewed
• Volume: 155
• Pages: 110-139
• DOI: https://doi.org/10.1016/j.jebo.2018.08.020
• Keywords: ICT; broadband; firms; instrumental variable
• Public URL: https://nottingham-repository.worktribe.com/output/1060977
• Publisher URL: https://www.sciencedirect.com/science/article/pii/S0167268118302336?via%3Dihub
• Additional Information: This article is maintained by: Elsevier; Article Title: Broadband infrastructure, ICT use and firm performance: Evidence for UK firms; Journal Title: Journal of Economic Behavior & Organization; CrossRef DOI link to publisher maintained version: https://doi.org/10.1016/j.jebo.2018.08.020; Content Type: article; Copyright: © 2018 Elsevier B.V. All rights reserved.
• Contract Date: Sep 5, 2018