On the Longitudinal Effects of IT Use on Firm-Level Employment

Information Systems Research (Forthcoming)

Fox School of Business Research Paper No. 15-087

44 Pages Posted: 14 Nov 2011 Last revised: 3 Dec 2015

See all articles by Hilal Atasoy

Hilal Atasoy

Temple University - Department of Accounting; IZA Institute of Labor Economics

Rajiv D. Banker

Temple University - Department of Accounting

Paul A. Pavlou

Temple University - Department of Management Information Systems; Temple University - Department of Strategic Management

Date Written: July 18, 2013

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 ERP and CRM, 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 found that the effects of the use of enterprise applications materialize 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.

Keywords: IT use, firm-level employment, longitidunal effects of IT, causality tests

Suggested Citation

Atasoy, Hilal and Banker, Rajiv D. and Pavlou, Paul A., On the Longitudinal Effects of IT Use on Firm-Level Employment (July 18, 2013). Information Systems Research (Forthcoming); Fox School of Business Research Paper No. 15-087. Available at SSRN: https://ssrn.com/abstract=1958037 or http://dx.doi.org/10.2139/ssrn.1958037

Hilal Atasoy (Contact Author)

Temple University - Department of Accounting ( email )

Philadelphia, PA 19122
United States

IZA Institute of Labor Economics ( email )

P.O. Box 7240
Bonn, D-53072
Germany

Rajiv D. Banker

Temple University - Department of Accounting ( email )

Philadelphia, PA 19122
United States

Paul A. Pavlou

Temple University - Department of Management Information Systems ( email )

1810 N. 13th Street
Floor 2
Philadelphia, PA 19128
United States

Temple University - Department of Strategic Management ( email )

Fox School of Business and Management
Philadelphia, PA 19122
United States

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