Cloud Computing and Firm Growth

68 Pages Posted: 5 Jun 2020

See all articles by Timothy DeStefano

Timothy DeStefano

Harvard University - Business School (HBS)

Richard Kneller

University of Nottingham

Jonathan Timmis

World Bank Group

Date Written: 2020


Cloud computing enables a shift in the costs of ICT adoption from investment in fixed capital to pay-on-demand services allowing firms to scale and reorganize. Using new firm-level data we examine the impact of cloud on firm growth, using zip-code-level instruments of the timing of high-speed fiber availability and speeds. Cloud leads to the growth of employment and revenue for young firms, but they become concentrated in fewer establishments. For incumbents, we find smaller scale effects but dispersed activity through closing establishments and moving employment farther from the headquarters. Moreover, cloud adoption leads to worker relocation across establishments within firms.

Keywords: cloud, digital, productivity, firms

JEL Classification: J230, J240, L200, O330

Suggested Citation

DeStefano, Timothy and Kneller, Richard and Timmis, Jonathan, Cloud Computing and Firm Growth (2020). CESifo Working Paper No. 8306, Available at SSRN: or

Timothy DeStefano (Contact Author)

Harvard University - Business School (HBS) ( email )

Soldiers Field Road
Morgan 270C
Boston, MA 02163
United States

Richard Kneller

University of Nottingham ( email )

University Park
Nottingham, NG8 1BB
United Kingdom

Jonathan Timmis

World Bank Group ( email )

10 Marina Boulevard
Marina Bay Financial Center, Tower 2, #34-02
Singapore, DC 018983

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