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Capital incentive policies in the age of cloud computing: An empirical case study

Author

Listed:
  • Raphaela Andres

    (ZEW Mannheim)

  • Timothy DeStefano

    (Harvard Business School)

  • Thomas Niebel

    (ZEW Mannheim)

  • Steffen Viete

    (ZEW Mannheim)

Abstract

This paper assesses whether current policy environments are appropriate for the emergence of cloud computing technology. In particular, this research uses firm level data for Germany and the United Kingdom to examine the impact of capital incentive programmes (a common policy present in most OECD countries) on cloud adoption. The design for many of these policies target investments in physical capital while excluding digital services like the cloud. Firms view digital investments and digital services as substitutes, therefore narrowly defined incentive programmes may actually discourage the use of emerging tools like cloud computing, which are found to enable the growth and performance of young entrants. Overall, the results find that while capital incentive policies encourage firm investments in ICT and other forms of capital, they actually reduce the probability of cloud adoption. Policy makers may therefore need to reconsider the design of capital incentive programmes within their jurisdictions.

Suggested Citation

  • Raphaela Andres & Timothy DeStefano & Thomas Niebel & Steffen Viete, 2020. "Capital incentive policies in the age of cloud computing: An empirical case study," OECD Science, Technology and Industry Working Papers 2020/07, OECD Publishing.
    • Handle: RePEc:oec:stiaaa:2020/07-en
    DOI: 10.1787/4bedeb36-en
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    Cited by:

    1. Tomaso Duso & Alexander Schiersch, 2022. "Let's Switch to the Cloud: Cloud Adaption and Its Effect on IT Investment and Productivity," Discussion Papers of DIW Berlin 2017, DIW Berlin, German Institute for Economic Research.
    2. Vives, Xavier & Banal-Estanol, Albert & Seldeslachts, Jo, 2022. "Ownership Diversification and Product Market Pricing Incentives," CEPR Discussion Papers 17686, C.E.P.R. Discussion Papers.
    3. Schiersch, Alexander & Duso, Tomaso, 2023. "Let's Switch to the Cloud: Cloud Adoption and its Effect on IT Investment and Productivity," VfS Annual Conference 2023 (Regensburg): Growth and the "sociale Frage" 277571, Verein für Socialpolitik / German Economic Association.

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    More about this item

    JEL classification:

    • D25 - Microeconomics - - Production and Organizations - - - Intertemporal Firm Choice: Investment, Capacity, and Financing
    • L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
    • 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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