Abstract
We develop a simple model that links the adoption of a productivity-enhancing technology to increased vertical integration and a less skilled workforce. We test the model's key prediction using novel microdata on vehicle ownership patternsfrom the Economic Census during a period when computerized dispatching systems were first adopted by taxicab firms. Controlling for time-invariant firm-specific effects, firms increase the proportion of taxicabs under fleet ownership by 12% when they adopt new computerized dispatching systems. An instrumental variables analysis suggests that the link between dispatching technology and vertical integration is causal. These findings suggest that increasing a firm's productivity can lead to increased vertical integration, even in the absence of asset specificity.
Original language | English (US) |
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Pages (from-to) | 831-845 |
Number of pages | 15 |
Journal | Organization Science |
Volume | 24 |
Issue number | 3 |
DOIs | |
State | Published - May 2013 |
Keywords
- Asset ownership
- Capabilities
- Information technology
- Productivity
- Vertical integration