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October 5, 2005

NBER Report on Technology Adoption

Technology Adoption In and Out of Major Urban Areas:
When Do Internal Firm Resources Matter Most?
by Chris Forman, Avi Goldfarb, Shane Greenstein  -  #11642


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.

October 5, 2005 | Permalink


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