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Which Factors Determine the Adoption of the Internet of Things? Impacts and Benefits

  • Miruna Sarbu EMAIL logo
Veröffentlicht/Copyright: 3. November 2021

Abstract

This paper provides first econometric evidence on the determinants of the Internet of Things among firms and on potential performance impacts. The analysis is based on representative firm-level data from 874 German firms. A probit model and an instrumental variable regression serve as econometric approach. The results reveal that especially collaboration platforms and B2B e-commerce increase the propensity to use the Internet of Things. The results further indicate that product innovation is highest for firms jointly using the Internet of Things and collaboration platforms while a reduction of the workforce is also highest in this case. In contrast, there is no evidence for a potential impact on sales development.

JEL Classification: L23; L25; O31; O32

Corresponding author: Miruna Sarbu, Technical University of Kaiserslautern, P.O. Box 3049, 67653 Kaiserslautern, Germany, E-mail:

Acknowledgements

I would like to thank Irene Bertschek, Olga Slivko, Philipp Weinschenk and Brian Cooper for helpful comments and suggestions. All errors are my own.

  1. Declaration of Interest: I disclose any financial or other substantive conflict of interest. This research did not receive any specific grant from funding agencies in the public, commercial, or not-for-profit sectors.

Appendix

Table 5:

Distribution of firms across industries.

Industry Observations Percentage
Consumer goods 61 6.98
Chemical and pharmaceutical industry 31 3.55
Basic materials 59 6.75
Metal industry 63 7.21
Electrical industry 76 8.70
Machinery 48 5.49
Automotive industry 18 2.06
Retail trade 65 7.44
Wholesale trade 67 7.67
Transportation 52 5.95
Content and media 53 6.06
IT and telecommunication 35 4.00
Financial services 66 7.55
Real estate and leasing 41 4.69
Consulting and advertising 42 4.81
Technical services 64 7.32
Enterprise services 33 3.77
Sum 874 100
  1. Source: ZEW ICT Survey 2014, own calculations.

Table 6:

Distribution of the Internet of Things by industries.

Industry Share of firms with the Internet of Things
Consumer goods 0.03
Chemical and pharmaceutical industry 0.03
Basic materials 0.05
Metal industry 0.03
Electrical industry 0.18
Machinery 0.25
Automotive industry 0.22
Retail trade 0.02
Wholesale trade 0.00
Transportation 0.04
Content and media 0.02
IT and telecommunication 0.06
Financial services 0.17
Real estate and leasing 0.02
Consulting and advertising 0.05
Technical services 0.06
Enterprise services 0.03
  1. Source: ZEW ICT Survey 2014, own calculations.

Table 7:

Probit estimation: coefficient estimates.

Dependent variable: dummy for the Internet of Things
(1) (2) (3)
Constant term 1.689 *** ( 0.082 ) 3.059 *** ( 0.680 ) 4.023 *** ( 0.848 )
Wikis (dummy variable) 0.291 ( 0.180 ) 0.232 ( 0.221 ) 0.219 ( 0.218 )
Blogs (dummy variable) 0.047 ( 0.230 ) 0.057 ( 0.250 ) 0.109 ( 0.261 )
Social networks (dummy variable) 0.115 ( 0.215 ) 0.014 ( 0.224 ) 0.058 ( 0.235 )
Collaboration platforms (dummy variable) 0.740 *** ( 0.158 ) 0.594 *** ( 0.174 ) 0.430 ** ( 0.173 )
Employees with PC (share of employees) 1.422 *** ( 0.392 ) 1.327 *** ( 0.411 )
Employees with Internet (share of employees) 0.123 ( 0.324 ) 0.060 ( 0.340 )
Employees with mobile Internet (share of employees) 0.156 ( 0.427 ) 0.316 ( 0.454 )
Firms with 50–499 employees (dummy variable) 0.475 *** ( 0.174 ) 0.366 ** ( 0.187 )
Firms with >500 employees (dummy variable) 1.846 *** ( 0.336 ) 1.666 *** ( 0.351 )
Highly qualified employees (share of employees) 0.594 ( 0.446 ) 0.657 ( 0.492 )
Medium-qualified employees (share of employees) 0.419 ( 0.454 ) 0.475 ( 0.508 )
Employees < 30 (share of employees) 0.295 ( 0.462 ) 0.319 ( 0.494 )
Employees > 50 (share of employees) 0.035 ( 0.407 ) 0.290 ( 0.413 )
Competitors 0–5 (dummy variable) 0.425 ** ( 0.164 ) 0.411 ** ( 0.161 )
Competitors >50 (dummy variable) 0.155 ( 0.249 ) 0.109 ( 0.259 )
IT training (share of employees) 0.130 ( 0.352 )
ERP software (dummy variable) 0.693 ** ( 0.328 )
Big data (dummy variable) 0.127 ( 0.168 )
R&D activity (share of expenditures) 0.435 ( 0.538 )
Export activity (dummy variable) 0.183 ( 0.192 )
B2B e-commerce (dummy variable) 0.429 ** ( 0.180 )
B2C e-commerce (dummy variable) 0.113 ( 0.229 )
Job rotation (dummy variable) 0.085 ( 0.192 )
Self-dependent teams (dummy variable) 0.137 ( 0.191 )
Industry dummies (dummy variables) No Yes Yes
Basic materials (dummy variable) 1.165 * ( 0.068 )
Electrical industry (dummy variable) 1.411 ** ( 0.060 )
Machinery (dummy variable) 2.023 *** ( 0.063 )
Automotive industry (dummy variable) 1.530 ** ( 0.069 )
Observations 874 874 874
Log-likelihood at zero −226.35937 −221.13618 −221.13618
Log-likelihood of final model −209.62023 −154.27410 −146.11798
χ 2 -Statistic (likelihood-ratio test) 34.63 ( p = 0.000 ) 118.39 ( p = 0.000 ) 125.74 ( p = 0.000 )
Pearson χ 2 -statistic (goodness-of-fit test) 9.93 ( p = 0.536 ) 758.51 ( p = 0.666 ) 808.78 ( p = 0.143 )
  1. Significance levels: * 10 % , ** 5 % , *** 1 % . Robust standard errors in parentheses. Reference categories: unqualified employees, employees between 30 and 50 years of age, small firms, firms with 6–50 competitors. Zero coefficients model used as benchmark.

Table 8:

2SLS regression: coefficient estimates – first stage.

Dependent variable: dummy for big data
(1)
Constant term 0.129 ( 0.087 )
Wikis (dummy variable) 0.0133 ( 0.055 )
Blogs (dummy variable) 0.027 ( 0.058 )
Social networks (dummy variable) 0.001 ( 0.052 )
Collaboration platforms (dummy variable) 0.121 ** ( 0.048 )
Employees with PC (share of employees) 0.141 ** ( 0.062 )
Employees with Internet (share of employees) 0.065 ( 0.051 )
Employees with mobile Internet (share of employees) 0.030 ( 0.078 )
Firms with 50–499 employees (dummy variable) 0.178 *** ( 0.036 )
Firms with >500 employees (dummy variable) 0.359 *** ( 0.083 )
Highly qualified employees (share of employees) 0.018 ( 0.084 )
Medium-qualified employees (share of employees) 0.117 ** ( 0.057 )
Employees < 30 (share of employees) 0.001 ( 0.072 )
Employees > 50 (share of employees) 0.055 ( 0.079 )
Competitors 0–5 (dummy variable) 0.015 ( 0.029 )
Competitors >50 (dummy variable) 0.025 ( 0.046 )
IT training (share of employees) 0.043 ( 0.074 )
ERP software (dummy variable) 0.058 ** ( 0.028 )
R&D activity (share of expenditures) 0.191 * ( 0.109 )
Export activity (dummy variable) 0.003 ( 0.031 )
B2B e-commerce (dummy variable) 0.027 ( 0.030 )
B2C e-commerce (dummy variable) 0.063 * ( 0.035 )
Job rotation (dummy variable) 0.002 ( 0.038 )
Self-dependent teams (dummy variable) 0.022 ( 0.028 )
Industry dummies (dummy variables) Yes
Wholesale trade (dummy variable) 0.182 ** ( 0.087 )
Real estate and leasing (dummy variable) 0.249 ** ( 0.108 )
Systematical search of the Internet for content on firm’s products and services (dummy variable) 0.120 *** ( 0.036 )
Observations 874
F-statistic (test for weak instruments) 10.93 ( p = 0.001 )
Partial R 2 -statistic 0.016
Minimum eigenvalue test statistic 12.99
10% 15% 20% 25%
2SLS size of nominal 5% Wald test 16.38 8.96 6.66 5.53
LIML size of nominal 5% Wald test 16.38 8.96 6.66 5.53
Durbin–Hausman test: robust score C h i 2 ( 1 ) : 0.093 ( p = 0.7597 )
Wu–Hausman test: robust regression F ( 1,832 ) : 0.089 ( p = 0.7655 )
  1. Significance levels: *: 10 % , **: 5 % , ***: 1 % . Robust standard errors in parentheses. Reference categories: unqualified employees, employees between 30 and 50 years of age, small firms, firms with 6–50 competitors. Big data instrumented with systematical search of the Internet for content on firm’s products and services.

Table 9:

Table of pairwise correlation: correlation coefficients.

Variable Sales development Product innovation Employment trend
Sales development 1.0
Product innovation 0.004 1.0
Employment change 0.72 −0.02
Internet of Things 0.04 0.21 −0.04
Internet of Things
And B2B e-commerce 0.03 0.19 −0.06
Internet of Things
And collaboration platforms 0.0003 0.15 −0.08
  1. Source: ZEW ICT Survey 2014, own calculations.

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Received: 2021-03-26
Accepted: 2021-10-04
Published Online: 2021-11-03
Published in Print: 2022-02-23

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