Week 11 -Reading Summary – Leting Zhang

Atasoy, H., Banker, R. D., & Pavlou, P. A. (2016). On the Longitudinal Effects of IT Use on Firm-Level Employment. Information Systems Research, 27(1), 6-26.

This study examines how IT use affect firm-level employment, more specifically, how web and enterprise applications differentially play a role in the firm’s employment, how firm size, the average skill level of its employees,  industry technology intensity, as moderators influence IT impacts on employment.

In the theory part, the paper specifies three mechanisms behind this impact: productivity gains, make versus buy decisions, labor complementarity versus substitution. then differentiating enterprise applications and web applications, because the implementation of enterprise applications require more investments and organizational change, so it takes more time to materialize them compared to web applications. Next, it illustrates moderator’s role, specifically, the materialization of IT is more slowly in larger firms; IT use would have a stronger role in employment for firms with high level of skills and firms in the high-tech industry.

This study uses a firm-level survey from TurkStat which has several advantages, compared to other commonly used datasets, it is more representative, more granular and it covered smaller firms. Fixed effects model is used to examine the relationship between IT usage and employment. It also uses several strategies to deal with endogeneity, including using a series of control variables, analyzing the timing of changes in IT use and employment, and generalized propensity score. The results are robust.

The paper has several conclusions. Firstly, there is a positive relationship between IT use and firm-level employment on average; furthermore, the effect of enterprise applications is lagged, but the use of web application materialize in the current year; the longitudinal impact led by the use of enterprise application  is more salient in larger firms with higher average wages in high-tech industries, while the current effects of the use of web application are more pronounced in small firms. It provides several implications for public policy.