Ease of Doing Internet Business

Internet Association. Washington, DC (2017)

27 Pages Posted: 11 Aug 2017

See all articles by Christopher Hooton

Christopher Hooton

George Washington University Institute of Public Policy; Internet Association

Joo Chung

Internet Association

Davin Kaing


Date Written: 2017


How do you build the next Silicon Valley? This paper offers an empirical examination of the factors that help foster internet firms and employment. It builds off literature examining factors related to the economic potential of places. We examine the internet industry using the identification methodologies established by the sector’s trade association, the Internet Association (Siwek, 2015). First, we develop a theoretical conceptualization of the key factors for an internet business environment and develop a simple index to examine the correlation between factors and internet sector productivity using U.S. states. Building off the first exercise, we then develop a parsimonious model predicting the percent share of Internet Sector Establishments and Internet Sector Employees for over 3000 US counties. We adjust for spatial auto-correlation by using Huber-White heteroscedasticity-consistent standard errors and through fixed-effects for US Census Bureau Divisions.

The results reveal a strong and statistically significant relationship between the number of internet establishments and key internet factors generally categorized into four themes:

1) Internet Business Environment,

2) Internet Accessibility,

3) Innovation Financing, and

4) General Business Governance.

We find similar results for internet sector employment, though weaker and less significant. The findings suggest that the development of certain business environmental factors within an area can help, though not guarantee, the development of an area’s internet sector, but also that there are no single ‘silver bullets’. We argue that economic potential factors should be seen as prudent ‘first steps’ for policymakers that can lay a foundation for other policies.

Keywords: internet sector, technology, regional development, economic development, area-based policy, ease of business

JEL Classification: O1, O2, R1, R5

Suggested Citation

Hooton, Christopher and Chung, Joo and Kaing, Davin, Ease of Doing Internet Business (2017). Internet Association. Washington, DC (2017). Available at SSRN: https://ssrn.com/abstract=3016437

Christopher Hooton (Contact Author)

George Washington University Institute of Public Policy ( email )

Institute of Public Policy
2121 I Street NW
Washington, DC DC 20052
United States

HOME PAGE: http://https://gwipp.gwu.edu/

Internet Association ( email )

Washington, DC
United States

HOME PAGE: http://https://internetassociation.org/

Joo Chung

Internet Association ( email )

1333 H Street NW
Washington, DC 20005
United States

Davin Kaing

Independent ( email )

No Address Available

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