Measuring the Impact of Infrastructure Quality on Firm Performance: a Review of Literature, Metrics, and Evidence

DOI

10.2991/aebmr.k.211119.022How to use a DOI?

Keywords

literature review; public infrastructure; infrastructure metrics; firm performance; firm productivity; capacity utilization; impact analysis; firm-level data

Abstract

Research purpose:

This paper aims to provide a selective overview of recent studies on measuring the impact of infrastructure quality on firm performance. In particular, the paper identifies relevant definitions and metrics that are widely used for research, reviewing the key findings to date for infrastructure impact analysis with a focus on studies addressing developing countries. Then, the range of computer analytical methods and tools used to estimate impact is meticulously examined in accordance with the availability of various types of data.

Research motivation:

Infrastructure quality is an important part of the production process. Limited public service quality may directly or indirectly affect the economic activities of firms. However, measuring the impact of infrastructure quality on business activities is highly dependent on the availability of data types. Therefore, in the research of infrastructure impact analysis, it is necessary to determine relevant indicators and estimation techniques for each type of available data.

Research design, approach and method:

Systematic review is applied to provide a summary of recent studies and to answer the research question. We searched for literature on the impact of infrastructure on firms from 2005 to 2021. Then, from the selected research reports, we checked the data set used in the literature, and selected the research based on firm-level database.

Main findings:

The paper finds that infrastructure quality measured by length of road/highway, duration of electricity/water suspension, length of internet cables are the relevant metrics in the studies of infrastructure impact analysis. In addition, capacity utilization rate and total factor productivity (TFP) are widely used as indicators for firm performance. The paper indicates the key influences of various infrastructure sectors on business activities which can be summarized as: (1) High-quality infrastructure services play a vital role for both firm’s growth and its competitiveness; (2) Quality of road infrastructure is important to explain patterns of absolute advantage, explaining why firm in one region produce more efficiently than firm in others; (3) Quality of power supply and telecommunication infrastructure is important for explaining patterns of comparative advantage which introduces opportunity cost as a factor for analysis in choosing between different options for production diversification.

Practical/managerial implications:

The paper provides a guideline to conduct an infrastructure impact analysis based on firm-level data.

Copyright

© 2021 The Authors. Published by Atlantis Press International B.V.

Open Access

This is an open access article under the CC BY-NC license.

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TY  - CONF
AU  - Ha Thi Thu TRANG
AU  - Pham Thi Thanh HONG
PY  - 2021
DA  - 2021/12/07
TI  - Measuring the Impact of Infrastructure Quality on Firm Performance: a Review of Literature, Metrics, and Evidence
BT  - Proceedings of the International Conference on Emerging Challenges: Business Transformation and Circular Economy (ICECH 2021)
PB  - Atlantis Press
SP  - 211
EP  - 220
SN  - 2352-5428
UR  - https://doi.org/10.2991/aebmr.k.211119.022
DO  - 10.2991/aebmr.k.211119.022
ID  - TRANG2021
ER  -