Capital incentives in the age of intangibles

Timothy DeStefano, Nick Johnstone, Richard Kneller and Jonathan Timmis ()

No 2020-06, Discussion Papers from University of Nottingham, GEP

Abstract: Cloud computing presents a significant change in the way firms access digital technology and enables data-driven business models. Now, firms can acquire their storage, processing and software needs as a cloud computing service rather than making upfront fixed cost investments in capital. Yet, policies that encourage digital diffusion are still targeted towards investment in physical IT capital. This paper exploits a UK tax incentive for capital investment to examine firm adoption of cloud computing and big data analytics. Using a quasi-natural experimental approach our empirical results show that the policy increased investment in IT capital and hardware as one would expect; but it reduced the adoption of cloud and big data analytics. The adverse effects of the policy on cloud and big data adoption are particularly pronounced for small firms.

Keywords: ICT; cloud computing; big data analytics (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-big, nep-ict and nep-pay
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Persistent link: https://EconPapers.repec.org/RePEc:not:notgep:2020-06

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