Digitalization and ethnic diversity: Is there any social block?

Deniz Guvercin

Journal of Global Information Technology Management, 2025, vol. 28, issue 4, 305-321

Abstract: Numerous studies in the relevant literature show that the proliferation of automation and the adoption of digital technologies in the business sector have led to labor displacement by robots, lower wages for workers with low- and medium-level skills, and the disappearance of certain businesses. We hypothesize that these disruptions in the labor market, including the decline or disappearance of certain businesses, could trigger social reactions, especially in societies where ethnicity is a significant marker for social organization. To investigate this, the study empirically examines the impact of ethnic diversity on digital adoption. Using cross-sectional data from 71 countries for the year 2016, we apply the 2SLS instrumental variable econometric method to address endogeneity, with the distance to the nearest waterway serving as an instrument. Through several econometric models and tests for robustness – while controlling for various factors and using different ethnic fractionalization indices – we observe a negative impact of ethnic diversity on digital adoption in the business sector.

Date: 2025
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DOI: 10.1080/1097198X.2025.2568337

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