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Picking up speed: Does ultrafast broadband increase firm productivity?

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  • Richard Fabling

    () (Independent Researcher)

  • Arthur Grimes

    () (Motu Economic and Public Policy Research)

Abstract

We estimate whether there are productivity gains from ultrafast broadband (UFB) adoption and whether any gains are higher when firms undertake complementary organisational investments. Using an IV strategy based on proximity to schools (that were targeted in the UFB roll-out), we find that the average effect of UFB adoption on employment and (labour and multifactor) productivity is insignificantly different from zero, even for firms in industries where we might expect the returns to UFB to be relatively high. Conversely, we find that firms making concurrent investments in organisational capital specifically for the purpose of getting more from their ICTs appear to experience higher productivity growth, at least in first-difference specifications. Firms making these joint (UFB-organisational) investment decisions are significantly more likely to report other positive outcomes from their ICT investments, consistent with the identified relationship with productivity being causal.

Suggested Citation

  • Richard Fabling & Arthur Grimes, 2016. "Picking up speed: Does ultrafast broadband increase firm productivity?," Working Papers 16_22, Motu Economic and Public Policy Research.
  • Handle: RePEc:mtu:wpaper:16_22
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    File URL: http://motu-www.motu.org.nz/wpapers/16_22.pdf
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    References listed on IDEAS

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    Cited by:

    1. Briglauer, Wolfgang & Dürr, Niklas S. & Gugler, Klaus, 2019. "A retrospective study on the regional benefits and spillover effects of high-speed broadband networks: Evidence from German counties," ZEW Discussion Papers 19-026, ZEW - Leibniz Centre for European Economic Research.
    2. Briglauer, Wolfgang & Gugler, Klaus, 2018. "Go for gigabit? First evidence on economic benefits of (ultra-)fast broadband technologies in Europe," ZEW Discussion Papers 18-020, ZEW - Leibniz Centre for European Economic Research.
    3. DeStefano, Timothy & Kneller, Richard & Timmis, Jonathan, 2018. "Broadband infrastructure, ICT use and firm performance: Evidence for UK firms," Journal of Economic Behavior & Organization, Elsevier, vol. 155(C), pages 110-139.
    4. Werner Hölzl & Susanne Bärenthaler-Sieber & Julia Bock-Schappelwein & Klaus S. Friesenbichler & Agnes Kügler & Andreas Reinstaller & Peter Reschenhofer & Bernhard Dachs & Martin Risak, 2019. "Digitalisation in Austria. State of Play and Reform Needs," WIFO Studies, WIFO, number 61892, January.
    5. Eyal Apatov & Nathan Chappell & Arthur Grimes, 2018. "Is internet on the right track? The digital divide, path dependence, and the rollout of New Zealand’s ultra-fast broadband," Working Papers 18_04, Motu Economic and Public Policy Research.
    6. Briglauer, Wolfgang & Dürr, Niklas & Gugler, Klaus, 2019. "A Retrospective Study on the Regional Benefits and Spillover Effects of High-Speed Broadband Networks: Evidence from German Counties," 30th European Regional ITS Conference, Helsinki 2019 205171, International Telecommunications Society (ITS).
    7. Briglauer, Wolfgang & Stocker, Volker & Whalley, Jason, 2018. "Public Policy Targets in EU Broadband Markets: The Role of Technological Neutrality," 29th European Regional ITS Conference, Trento 2018 184936, International Telecommunications Society (ITS).
    8. Arthur Grimes & Wilbur Townsend, 2017. "The Effect of Fibre Broadband on Student Learning," Working Papers 17_03, Motu Economic and Public Policy Research.
    9. Houngbonon, Georges V. & Liang, Julienne, 2018. "The Impact of Broadband Internet on Employment in France," 29th European Regional ITS Conference, Trento 2018 184945, International Telecommunications Society (ITS).
    10. Abrardi, Laura & Cambini, Carlo, 2019. "Ultra-fast broadband investment and adoption: A survey," Telecommunications Policy, Elsevier, vol. 43(3), pages 183-198.
    11. Kausik Chaudhuri & S. N Rajesh Raj & Subash Sasidharan, 2018. "Broadband Adoption and Firm Performance: Evidence from Informal Sector Firms in India," Working Papers id:12744, eSocialSciences.

    More about this item

    Keywords

    Ultrafast broadband adoption; fibre-to-the-door; productivity; organisational change; complementary investments;

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L23 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Organization of Production
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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