B2B or Not to Be: Does B2B E-Commerce Increase Labour Productivity?

We implement an endogeneous switching-regression model for labour productivity and firms' decision to use business--to--business (B2B) e--commerce. Our approach allows B2B usage to affect any parameter of the labour productivity equation and to properly take account of strategic complementarities between the input factors and B2B usage. Empirical evidence from 1,460 German firms shows that there is a simultaneous relationship between labour productivity and the adoption of B2B. Firms deciding to use B2B e--commerce employ their input factors more efficiently than non--B2B users. Conversely, firms refrain from engaging in B2B probably because they expect the cost of B2B adoption not being sufficiently compensated by productivity gains.

Bertschek, Irene, Helmut Fryges and Ulrich Kaiser (2006), B2B or Not to Be: Does B2B E-Commerce Increase Labour Productivity?, International Journal of the Economics of Business Vol. 13, No. 3 , 387-405