Week 11_Mithas and Whitaker (2007)_Xinyu

Is the World Flat or Spiky? Information Intensity, Skills, and Global Service Disaggregation

Service Disaggregation driven by information technology has been studied on industry, firm and plant level. Yet, none has taken the angle of occupation on individual level to understand the determinants of global service disaggregation. This paper thus extend the previous research on service activities by proposing a positive relationship between information intensity and service disaggregation potential, driven by IT. Furthermore, it hypothesizes that the positive effect of information intensity on disaggregation potential is mediated through three characteristics of occupations: codifiability, standardizability, and modularizability. Considering the important role of skill level of occupation, the paper also posits that the skill level has both direct and indirect negative impact on those three characteristics and disaggregation potential. Finally, the necessity of physical presence is posited to reduce the potential of service disaggregation.

The paper provides empirical evidence by using a combined dataset from different sources, which contains more than 300 occupations. Most of the key variables are manually coded and self-verified. An OLS model is applied as the main model, and an ordered probit model is used for robustness check. The results support the direct positive effect of information intensity on disaggregation potential, as well as partial mediating effect only by modularizability. Also, a mixed support of occupational skill level arises. The findings point out what make service occupations easy to be disaggregated and explains the mechanism behind this causality.