Let's Switch to the Cloud: Cloud Adoption and Its Effect on IT Investment and Productivity

Tomaso Duso and Alexander Schiersch

No 9944, CESifo Working Paper Series from CESifo

Abstract: The advent of cloud computing promises to improve the way firms utilize IT solutions. Firms are expected to replace large and inflexible fixed-cost investments in IT with more targeted variable spending in cloud solutions. In addition, cloud usage is expected to increase the productivity of firms, as it allows them to quickly customize the IT they require to their specific needs. We assess these assertions using data on a representative sample of firms provided by the German statistical offices for the years 2014 and 2016, which allows to observe who are the cloud users. Our analysis explicitly accounts for the self-selection into cloud adoption within an endogenous treatment regression framework. Broadband availability at the municipality level is used as an exogenous shifter for cloud usage. We show that, while cloud adoption does not impact IT investment in any sectors, it does significantly improve labor productivity for firms in manufacturing and in information and communication services.

Keywords: cloud computing; investment; productivity; IT; substitution; firm performance (search for similar items in EconPapers)
JEL-codes: D24 D25 L60 L80 O14 O33 (search for similar items in EconPapers)
Date: 2022
New Economics Papers: this item is included in nep-eff, nep-eur, nep-pay and nep-tid
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Related works:
Working Paper: Let's Switch to the Cloud: Cloud Adoption and its Effect on IT Investment and Productivity (2023)
Working Paper: Let's Switch to the Cloud: Cloud Adaption and Its Effect on IT Investment and Productivity (2022)
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Persistent link: https://EconPapers.repec.org/RePEc:ces:ceswps:_9944

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