On the longitudinal effects of IT use on firm-level employment

Hilal Atasoy, Rajiv D. Banker, Paul A. Pavlou

Research output: Contribution to journalArticlepeer-review

15 Scopus citations

Abstract

The effect of information technology (IT) on employment is a crucial question in today's economy given the increased digitization of work. To analyze the relationship between IT use and firm-level employment, we examine the longitudinal role of IT use in the firm's total number of employees. Our data set comes from the emerging economy of Turkey, and it represents firms of different sizes and industries. The data capture the firm's use of enterprise applications, such as enterprise resource planning and customer relationship management, and the use of Web applications, such as e-banking and e-government. Our empirical specifications exploit both within-firm and between-firm variations to show the positive effect of IT use on firm-level employment, which varies across IT applications over time. Interestingly, we find that the effects of the use of enterprise applicationsmaterialize after two years, whereas the effects of the use of Web applications are realized in the current year. We also examine whether the role of IT use in firm-level employment are moderated by firm size, average wage rate, and industry technology intensity. The long-term effects of the use of enterprise applications on firm-level employment are more pronounced in larger firms, with higher average wages, and in high-technology industries. The results are robust to alternative specifications and tests that address causality and endogeneity concerns. Implications for research, practice, and public policy are discussed.

Original languageEnglish (US)
Pages (from-to)6-26
Number of pages21
JournalInformation Systems Research
Volume27
Issue number1
DOIs
StatePublished - Mar 1 2016
Externally publishedYes

All Science Journal Classification (ASJC) codes

  • Information Systems and Management
  • Information Systems
  • Library and Information Sciences
  • Management Information Systems
  • Computer Networks and Communications

Keywords

  • Causality tests
  • Firm-level employment
  • IT use
  • Longitudinal effects of IT

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