Firm level evidence on diffusion and returns on ICT: a study on Indian informal MSMEs

Information and Communication Technology (ICT) plays a major role in reorienting business operations across the globe, but their impact may vary in different businesses. A developing nation's informal micro, Small and Medium Enterprises (MSMEs) have a significant developmental role in the economy. Thereby, we focus on two related questions: What factors determine ICT adoption among informal MSMEs? Second, what is the collective impact of ICT and Human resources (HR) on firm economic performance? Using a nationally representative sample of more than 250,000 Indian informal firms, we found three important conclusions. First, several firm and organizational level factors impact ICT adoption at intra and inter-firm levels. Second, the least productive and Micro firms could extract relatively higher ICT returns. Third, mixed results for ICT-HR complementary effects indicate the relevance of the ICT-productivity paradox.