The impact of ICT adoption on productivity: evidence from Portuguese firm-level data

Abstract This paper studies the impact of ICT adoption on labour productivity and TFP of Portuguese firms in the period 2004–2020. We merge annual survey data on the adoption of six ICT dimensions—PC, internet, ICT staff, website, online purchases and online sales—and firm-level variables that make it possible to compute productivity measures and control for different heterogeneity dimensions. The paper proxies the ICT adoption of each firm using a principal component approach and takes a leave-one-out instrumental variable to assess causality. Results show a positive and sizeable impact of ICT adoption on TFP and labour productivity. When ICT dimensions are considered separately, online sales and the existence of a website stand out as the most important dimensions for productivity gains. The existence of ICT staff in the firm, which is complementary to other technologies, also has an important impact.