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More bits - more bucks? Measuring the impact of broadband internet on firm performance

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  • Bertschek, Irene
  • Cerquera, Daniel
  • Klein, Gordon J.

Abstract

The paper provides empirical evidence for the causal impact of broadband Internet on the economic performance of German firms. Performance is measured in terms of labour productivity and realised process and product innovations. The analysis refers to the early phase of DSL expansion in Germany from 2001 to 2003, when roughly 60 percent of the German firms already used broadband Internet. Identification relies on instrumental variable estimation taking advantage of information on the availability of DSL broadband at the postal code level. The results show that broadband Internet has no impact on firms' labour productivity whereas it exhibits a positive and significant impact on their innovation activity. --

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Bibliographic Info

Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 11-032.

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Date of creation: 2011
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Handle: RePEc:zbw:zewdip:11032

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Keywords: labour productivity; innovation; broadband Internet;

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References

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  1. Koutroumpis, Pantelis, 2009. "The economic impact of broadband on growth: A simultaneous approach," Telecommunications Policy, Elsevier, vol. 33(9), pages 471-485, October.
  2. Michael Polder & George van Leeuwen & Pierre Mohnen & Wladimir Raymond, 2010. "Product, Process and Organizational Innovation: Drivers, Complementarity and Productivity Effects," CIRANO Working Papers 2010s-28, CIRANO.
  3. Chris Forman & Avi Goldfarb & Shane Greenstein, 2012. "The Internet and Local Wages: A Puzzle," American Economic Review, American Economic Association, vol. 102(1), pages 556-75, February.
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  5. Flaig, Gebhard & Stadler, Manfred, 1994. "Success Breeds Success. The Dynamics of the Innovation Process," Empirical Economics, Springer, vol. 19(1), pages 55-68.
  6. Bettina Peters, 2006. "Persistence of Innovation Stylised Facts and Panel Data Evidence," DRUID Working Papers 06-30, DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies.
  7. Hardy, Andrew P., 1980. "The role of the telephone in economic development," Telecommunications Policy, Elsevier, vol. 4(4), pages 278-286, December.
  8. Röller, Lars-Hendrik & Waverman, Leonard, 2000. "Telecommunications Infrastructure And Economic Development: A Simultaneous Approach," CEPR Discussion Papers 2399, C.E.P.R. Discussion Papers.
  9. Rachel Griffith & Elena Huergo & Jacques Mairesse & Bettina Peters, 2006. "Innovation and Productivity Across Four European Countries," Oxford Review of Economic Policy, Oxford University Press, vol. 22(4), pages 483-498, Winter.
  10. Mirko Draca & Raffaella Sadun & John Van Reenen, 2006. "Productivity and ICT: a review of the evidence," LSE Research Online Documents on Economics 4561, London School of Economics and Political Science, LSE Library.
  11. Anusua Datta & Sumit Agarwal, 2004. "Telecommunications and economic growth: a panel data approach," Applied Economics, Taylor & Francis Journals, vol. 36(15), pages 1649-1654.
  12. Dale W. Jorgenson & Mun S. Ho & Kevin J. Stiroh, 2007. "A retrospective look at the U.S. productivity growth resurgence," Staff Reports 277, Federal Reserve Bank of New York.
  13. Duggal, Vijaya G. & Saltzman, Cynthia & Klein, Lawrence R., 2007. "Infrastructure and productivity: An extension to private infrastructure and it productivity," Journal of Econometrics, Elsevier, vol. 140(2), pages 485-502, October.
  14. Timothy F. Bresnahan & Erik Brynjolfsson & Lorin M. Hitt, 1999. "Information Technology, Workplace Organization and the Demand for Skilled Labor: Firm-Level Evidence," NBER Working Papers 7136, National Bureau of Economic Research, Inc.
  15. Cronin, Francis J. & Parker, Edwin B. & Colleran, Elisabeth K. & Gold, Mark A., 1991. "Telecommunications infrastructure and economic growth : An analysis of causality," Telecommunications Policy, Elsevier, vol. 15(6), pages 529-535, December.
  16. Bart van Ark & Mary O'Mahoney & Marcel P. Timmer, 2008. "The Productivity Gap between Europe and the United States: Trends and Causes," Journal of Economic Perspectives, American Economic Association, vol. 22(1), pages 25-44, Winter.
  17. Holt, Lynne & Jamison, Mark, 0. "Broadband and contributions to economic growth: Lessons from the US experience," Telecommunications Policy, Elsevier, vol. 33(10-11), pages 575-581, November.
  18. Tobias Kretschmer, 2012. "Information and Communication Technologies and Productivity Growth: A Survey of the Literature," OECD Digital Economy Papers 195, OECD Publishing.
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Citations

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Cited by:
  1. Jung, Juan, 2014. "Regional inequalities in the impact of broadband on productivity: Evidence from Brazil," MPRA Paper 56177, University Library of Munich, Germany.
  2. Nadine Fabritz, 2013. "The Impact of Broadband on Economic Activity in Rural Areas: Evidence from German Municipalities," Ifo Working Paper Series Ifo Working Paper No. 166, Ifo Institute for Economic Research at the University of Munich.
  3. Bertschek, Irene & Niebel, Thomas, 2013. "Mobile and more productive? Firm-level evidence on the productivity effects of mobile internet use at the early stage of diffusion," ZEW Discussion Papers 13-118, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
  4. Gruber, H. & Hätönen, J. & Koutroumpis, P., 2013. "Broadband access in the EU: An assessment of future economic benefits," 24th European Regional ITS Conference, Florence 2013 88492, International Telecommunications Society (ITS).
  5. Haller, Stefanie A. & Lyons, Sean, 2012. "Broadband adoption and firm productivity: evidence from Irish manufacturing firms," MPRA Paper 42626, University Library of Munich, Germany.

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