How internet helped firms cope with COVID-19

This paper questions whether firms’ internet connectivity and adoption helped them cope with the COVID-19 pandemic. Using data on 31,387 firms from 39 developing and developed economies, our results stress that businesses using website before the crisis showed higher absorption capacities than other firms during the crisis. The positive role of website use was mainly through the adoption of coping strategies, in particular home-delivery services, online sales or remote work. In contrast, the positive effect played by the prior use of internet is not explained by better access to external public (government support) or private (bank loan) financial resources. If prior internet use had a role on the resilience of firms, this is not the case for internet access. A negative effect of firm survival and labour adjustments is indeed found, but further analysis shows that this finding is explained by the mediating effect of 4G coverage on COVID policies’ stringency, suggesting that these policies were more effective in places with better internet coverage.

Cariolle, J., Léon, F. (2022) How internet helped firms cope with COVID-19, Ferdi Document de travail P300.