Internet infrastructure effect on firm behaviour: Evidence from UK ADSL broadband rollout

Mao, Yixuan 2025. Internet infrastructure effect on firm behaviour: Evidence from UK ADSL broadband rollout. PhD Thesis, Cardiff University. Item availability restricted.

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Abstract

This thesis examines the economic impacts of broadband infrastructure on firm behaviour in the United Kingdom, focusing on firm entry and exit dynamics, firm performance, and the structural shift towards servitisation in manufacturing. It constructs a novel regional broadband access index using Ofcom data and BT ADSL local exchange activation records, which is merged with the VAT business registration database and firm-level ARDX data to assess the effects of local broadband access on firm outcomes. To address endogeneity concerns and identify causal effects, the analysis employs staggered difference-in-differences (DiD) and event-study designs. In terms of firm dynamics, broadband rollout is associated with lower firm entry and higher firm exit. After controlling for local economic and demographic conditions, the effect on entry becomes insignificant, while the effect on exit remains significant: broadband rollout increases exits by 5.3%. These effects are concentrated in manufacturing, where entry declines and exits rise, driving the aggregate results. In terms of firm performance, broadband access does not significantly affect average turnover or labour productivity, while its impact on employment is weakly positive. Heterogeneity analysis sheds light on this insignificance: large firms experience labour productivity increase, whereas small firms expand employment but their labour productivity decrease. Sectoral evidence shows similarly mixed effects, motor trade and retail benefit more, while sectors such as real estate experience negative impacts. In terms of servitisation, broadband access promotes a shift towards services in manufacturing by increasing the proportion of service revenue relative to goods revenue. This effect is stronger among firms with higher levels of research and development, which amplifies the move towards a service-oriented business model. Overall, this thesis highlights the heterogeneous impacts of broadband and digital infrastructure, showing that its effects vary across firm size, sector, and capacity for innovation, rather than delivering uniform gains.

Item Type:	Thesis (PhD)
Date Type:	Completion
Status:	Unpublished
Schools:	Schools > Business (Including Economics)
Date of First Compliant Deposit:	10 February 2026
Last Modified:	10 Feb 2026 16:56
URI:	https://orca.cardiff.ac.uk/id/eprint/184580

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