Capital Incentive Policies in the Age of Cloud Computing: An Empirical Case Study

48 Pages Posted: 16 Sep 2020 Last revised: 3 May 2021

See all articles by Raphaela Andres

Raphaela Andres

ZEW – Leibniz Centre for European Economic Research

Timothy DeStefano

Harvard University - Business School (HBS)

Thomas Niebel

ZEW – Leibniz Centre for European Economic Research

Steffen Viete

German Council of Economic Experts

Date Written: 2020

Abstract

The following paper assesses whether current policy environments are appropriate for the emergence of cloud computing technology. In particular, this research uses firm-level data for Germany and the UK to examine the impact of capital incentive programmes (a common policy present in most OECD countries) on cloud adoption. The design for many of these policies target investments in physical capital while excluding digital services like the cloud. Firms view digital investments and digital services as substitutes, therefore narrowly defined incentive programmes may actually discourage the use of emerging tools like cloud computing, which are found to enable the growth and performance of young entrants. Overall, the results find that while capital incentive policies encourage firm investments in ICT and other forms of capital, they actually reduce the probability of cloud adoption. Policy makers may therefore need to reconsider the design of capital incentive programmes within their jurisdictions.

Keywords: Cloud Computing, Investment Scheme, ICT Adoption, Technology Diffusion, Policy Evaluation.

JEL Classification: D25, L22, O33

Suggested Citation

Andres, Raphaela and DeStefano, Timothy and Niebel, Thomas and Viete, Steffen, Capital Incentive Policies in the Age of Cloud Computing: An Empirical Case Study (2020). ZEW - Centre for European Economic Research Discussion Paper No. 20-036, Available at SSRN: https://ssrn.com/abstract=3693660 or http://dx.doi.org/10.2139/ssrn.3693660

Raphaela Andres (Contact Author)

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Timothy DeStefano

Harvard University - Business School (HBS) ( email )

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

Thomas Niebel

ZEW – Leibniz Centre for European Economic Research ( email )

P.O. Box 10 34 43
L 7,1
D-68034 Mannheim, 68034
Germany

Steffen Viete

German Council of Economic Experts ( email )

Federal Statistical Office
Gustav-Stresemann-Ring 11
Wiesbaden, Hessen 65180
Germany

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