ICT impact and firm size: Empirical results from Vietnam

Abstract

This paper examines the effect of firm size on firms’ ICT adoption and productivity impact by running models for four size groups of 11,709 Vietnamese firms. The results reveal two main points. Firstly, the application of basic ICT is relatively comparable among firms of different sizes; however, there exists a considerable adoption gap in more advanced ICT solutions and employees’ ICT skills between medium-large firms and micro-small firms. Secondly, although ICT applications positively impact the productivity of Vietnamese firms in the whole sample, the impact of each group of ICT applications varies among firms of different sizes. Basic ICT applications can increase the productivity of micro firms while they cannot do the same for larger firms. In contrast, the application of sophisticated software solutions and employees’ ICT skills can push productivity for medium and large firms while having an insignificant impact on micro and small ones. Models running for a sub-sample of manufacturing firms confirm the results. These results provide implications for business executives and policymakers who regard the digital economy as a strategy for economic development.