ORGandICT

Firm organization and the adoption of information and communication technologies

01/08/2023 to 31/07/2028

The objective of the project is to push the frontier of our understanding of how the adoption of information and communication technologies (ICT) affects the internal organization of firms and thus firm productivity, employees’ careers and wages; how ICT adoption affects the organization of firms’ global value chains (GVC) and thus domestic employee outcomes; and how ICT adoption affects the foreign sourcing of innovation and thus domestic innovation.

Existing research gives only partial answers to these questions as it provides limited insights into the economic mechanisms behind the effects of ICT adoption and the organization of GVC. Research is impeded by lack of data with exhaustive information on ICT, GVC, and firm and employee outcomes.

This project will change that. We will assemble novel, comprehensive data sets with specific information on firms’ ICT use, GVC, balance sheets, and patents, as well as all employees’ characteristics, tasks, and wages. We will break new ground by developing theory and conducting theory-based empirical analyses that both identify causal effects and shed light on the economic mechanisms behind them.

The project consists of three parts. Part 1 exploits unique features of the data to study how ICT adoption induces firms to reorganize employees. We will analyse changes to task complexity and autonomy, careers and wages within employees over time to explore complementarities between higher availability of information due to ICT and employee knowledge.
Part 2 quantifies the effect of ICT adoption on offshoring, and, for the first time, studies how ICT adoption and offshoring jointly affect the task complexity and autonomy, careers and wages of employees, testing the predictions of task-based models.
Part 3 evaluates the effect of ICT adoption on offshoring of research and development (R&D), a key determinant of
growth, and derives and tests novel conditions under which foreign R&D complements or substitutes domestic innovation.