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

DeStefano, Timothy; Kneller, Richard; Timmis, Jonathan

Authors

Timothy DeStefano

Jonathan Timmis



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.

Journal Article Type Article
Publication Date 2018-11
Print ISSN 0167-2681
Publisher Elsevier
Peer Reviewed Peer Reviewed
Volume 155
Pages 110-139
APA6 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. doi:10.1016/j.jebo.2018.08.020
DOI https://doi.org/10.1016/j.jebo.2018.08.020
Keywords ICT; broadband; firms; instrumental variable
Publisher URL https://www.sciencedirect.com/science/article/pii/S0167268118302336?via%3Dihub

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