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The need for speed: impacts of internet connectivity on firm productivity

  • Arthur Grimes

    ()

  • Cleo Ren
  • Philip Stevens

Fast internet access is widely considered to be a productivity-enhancing factor. Internet access speeds vary regionally within countries and even within cities. Despite articulate pleas for network upgrades to accelerate internet access, there is little rigorous research quantifying benefits to individual firms that arise from upgraded internet connectivity. We use a large New Zealand micro-survey of firms linked to unit record firm financial data to determine the impact that differing types of internet access have on firm productivity. Propensity score matching is used to control for factors, including the firm’s (lagged) productivity, that determine firms’ internet access choices. Having matched firms, we examine the productivity impacts that arise when a firm adopts different types (speeds) of internet connectivity. Broadband adoption is found to boost productivity but we find no productivity differences across broadband type. The results provide the first firm-level estimates internationally of the degree of productivity gains sourced from upgraded internet access.

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File URL: http://hdl.handle.net/10.1007/s11123-011-0237-z
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Article provided by Springer in its journal Journal of Productivity Analysis.

Volume (Year): 37 (2012)
Issue (Month): 2 (April)
Pages: 187-201

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Handle: RePEc:kap:jproda:v:37:y:2012:i:2:p:187-201
Contact details of provider: Web page: http://www.springerlink.com/link.asp?id=100296

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  1. Nick Bloom & John Van Reenen, 2006. "Measuring and Explaining Management Practices Across Firms and Countries," NBER Working Papers 12216, National Bureau of Economic Research, Inc.
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  12. B. K. Atrostic & Sang V. Nguyen, 2005. "It and Productivity in U.S. Manufacturing: Do Computer Networks Matter?," Economic Inquiry, Western Economic Association International, vol. 43(3), pages 493-506, July.
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  15. Fabling, Richard & Grimes, Arthur & Stevens, Philip, 2008. "A Comparison of Qualitative and Quantitative Firm Performance Measures," Occasional Papers 08/4, Ministry of Economic Development, New Zealand.
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