Broadband Provision and Knowledge-Intensive Firms: A Causal Relationship?

Abstract

Despite the discussions about the importance of the digital economy, we are still far from understanding how Information and Communication Technologies (ICTs) affect economic activity in space. Recent studies have started untangling the spatial economic impact of ICTs, highlighting the potential use of ICTs as a local development tool. This paper contributes to this domain by exploring whether broadband Internet provision can act as an attractor for knowledge intensive business services in the US. Using Granger causality tests, this paper addresses the simultaneity issue between broadband Internet demand and supply at the very detailed spatial level of the US counties.

Internet infrastructure and regional convergence: Evidence from Turkey

“…In this regard, Tranos and Gillespie () draw attention to how information is distributed among settlements through ‘digital highways' and that being part of such networks creates locational advantages. This view is supported by Tranos and Mack () who observe a positive impact of early adoption of digital technologies on the presence of knowledge‐intensive businesses in US counties. Similarly, while expressing concerns about a simultaneous relationship, Kolko () argues that broadband expansion could attract economic activity.…”

“…Industrial characteristics (such as high IT reliance) and firm size are also found to affect the relationship between telecommunications and regional development (Mack and Grubesic ; Kolko ). Moreover, the relationship between firm location and communication infrastructure may be complex and spatially heterogeneous as shown by Mack () and Tranos and Mack () in their studies on US counties.…”

Access to broadband Internet and labour force outcomes: A case study of the Western Downs Region, Queensland

“…Some more recent literature have explored the effects on local business and entrepreneurship development. For instance, scholars are increasingly focusing on the effects of high-speed broadband on issues of regional development (Grubesic and Mack, 2015), on business innovation and entrepreneurship development (Alam and Adeyinka, 2016;Tranos and Mack, 2016) and on knowledge-intensive firms' differential performances (Mack and Rey, 2014) or firm-level productivity (Haller et al, 2015).…”

Using ‘Big Data’ to understand the impacts of Uber on taxis in New York City

“…A Wald test is then performed to indicate the preferred specification, which illustrates whether the lagged values of x improves the prediction of y or not. While the former result indicates that x Granger-causes y, the latter would signify the opposite (Hurlin and Venet 2001;Tranos 2012;Tranos and Mack 2016). In essence, Granger causality tests comprehend causality as temporal precedence between y and x.…”