Working Paper: NBER ID: w11642
Authors: Chris Forman; Avi Goldfarb; Shane Greenstein
Abstract: How much do internal firm resources contribute to technology adoption in major urban locations, where the advantages from agglomeration are greatest? The authors address this question in the context of a business's decision to adopt advanced Internet technology. Drawing on a rich data set of adoption decisions by 86,879 U.S. establishments, the authors find that the marginal contribution of internal resources to adoption is greater outside of a major urban area than inside one. Agglomeration is therefore less important for highly capable firms. The authors conclude that firms behave as if resources available in cities are substitutes for both establishment-level and firm-level internal resources.
Keywords: technology adoption; urban areas; internal firm resources; agglomeration
JEL Codes: R30; O33; L86
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Internal capabilities (L15) | Wei adoption (F13) |
| Location (urban vs remote) (R39) | Wei adoption (F13) |
| Internal capabilities and Location (R53) | Wei adoption (F13) |
| Internal capabilities (L15) | Benefits of agglomeration (R11) |
| Establishment capabilities (high vs low) and Location (urban vs remote) (R53) | Wei adoption (F13) |