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Information Technology, Productivity, and Asset Ownership: Evidence from Taxicab Fleets

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  • Evan Rawley

    (Columbia Business School, New York, New York 10027)

  • Timothy S. Simcoe

    (School of Management, Boston University, Boston, Massachusetts 02215)

Abstract

We develop a simple model that links the adoption of a productivity-enhancing technology to increased vertical integration and a less skilled workforce. We test the model’s key prediction using novel microdata on vehicle ownership patterns from the Economic Census during a period when computerized dispatching systems were first adopted by taxicab firms. Controlling for time-invariant firm-specific effects, firms increase the proportion of taxicabs under fleet ownership by 12% when they adopt new computerized dispatching systems. An instrumental variables analysis suggests that the link between dispatching technology and vertical integration is causal. These findings suggest that increasing a firm’s productivity can lead to increased vertical integration, even in the absence of asset specificity.

Suggested Citation

  • Evan Rawley & Timothy S. Simcoe, 2013. "Information Technology, Productivity, and Asset Ownership: Evidence from Taxicab Fleets," Organization Science, INFORMS, vol. 24(3), pages 831-845, June.
    • Handle: RePEc:inm:ororsc:v:24:y:2013:i:3:p:831-845
    DOI: 10.1287/orsc.1120.0758
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    References listed on IDEAS

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