Overcoming Obstacles: The Internet's Contribution to Firm Development

Based on 49,610 firm observations across 117 developing and emerging countries for 2006–2011, we show that their respective industries’ adoption of the Internet had positive spillover effects on firms’ productivity across world regions and economies at different development stages. We find that even firms facing financial constraints, frequent power outages, skills shortages, corruption and cumbersome labor regulations gained. Quantile regression results confirm these conclusions hold across different levels of productivity. They also show that the most productive firms benefited much more than the least productive firms. This suggests absorptive capacities are critical for the Internet to support firm development.