Information and communications technology infrastructure and firm growth: An empirical study of China's cities |
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| Institution: | 1. School of Public Affairs, University of Science and Technology of China, Hefei, 230026, PR China;2. Institute of Intellectual Property, University of Science and Technology of China, Hefei, 230026, PR China;3. Labor and Worklife Program, Harvard University, Cambridge, MA, 02138, USA;4. International School of Business and Finance, Sun Yat-sen University, Zhuhai, 519082, PR China;5. Faculty of Human, Social and Political Science, University of Cambridge, Cambridge CB2 3RQ, UK;6. School of Geography and the Environment, University of Oxford, Oxford OX1 3QY, UK |
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| Abstract: | Despite the importance of information and communications technology (ICT), previous studies of the business value of information technology have yielded mixed results. This study provides new empirical evidence that demonstrates the impact of cities' ICT on firm performance. A series of panel datasets are assembled to measure the improvement of city's ICT infrastructure and the change of firm performance during the years 2001–2016 in China. The findings demonstrate that city's ICTs positively promoted firm performance, including financial profitability, marketing performance and innovation performance. Instrumental variables are employed to verify the positive impact of city's ICTs infrastructure on firm profitability. Taking advantage of an exogenous variation of telecommunications upgrade as a natural experiment, this study uses the difference-in-difference approach to establish causality between cities' ICT infrastructure and firm profitability. Mechanisms are explored, which shows that better labour quality, lower costs and higher transparency are the three possible channels through which ICTs influence firm profitability. |
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| Keywords: | ICT Infrastructure Firm performance Productivity Causality And city |
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