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Information Technology, Productivity, and Asset Ownership: Evidence from Taxicab Fleets

Rawley, Evan; Simcoe, Timothy S.

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 patterns from 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.

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Organization Science, Articles in Advance
DOI
https://doi.org/10.1287/orsc.1120.0758

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Academic Units
Business
Published Here
April 12, 2013