Cloud Computing by Max Jonas

Max Jonas is a Catolica-Lisbon student and this year we won the CTIE “Best Master Thesis Award 2020”! Here we share with you a small article from Max, about his thesis! We hope you enjoy it!

The pace of technological progress has become increasingly fast over the past years, which requires companies to respond instantaneously to state-of-the-art technologies to stay competitive. In this context, Cloud Computing changes the way firms are able to provide, use, and access powerful computing resources and thereby, strongly impacted the IT industry over the past decade. It enables any firm, independent of its financial resources, to access scalable, cost-efficient, and reliable computing resources as a utility on a pay-per-use basis. In addition, Cloud services entail the potential to increase the efficiency of workflows. This is likely to boost the competitiveness of firms and thereby, drives economic growth.

Production theory suggests that productivity enhancements are benefited through technological progress, which allows firms to use their inputs more efficiently. Building on detailed survey data on the usage of technologies in firms in the Portuguese market and firm-level financial information, the productivity effects associated with the usage of Cloud Computing are analyzed. In accordance with prevailing productivity research, the productivity gains are measured by means of the Cobb-Douglas production function. The econometric analysis is conducted in R using Ordinary Least Squares and Multiple Group Fixed Effects as estimation methods.

The study presents empirical evidence that Cloud Computing contributes positively to the productivity of firms in the Portuguese market, provided that firms operate in industries with above-average Cloud usage. Moreover, it is shown that the IT intensity and Internet infrastructure of firms do not significantly impact the effect of Cloud Computing on productivity. The findings suggest that firm size influences the realization of productivity gains through Cloud Computing. Also, the results indicate that early adopters of Cloud Computing tend to perceive greater productivity benefits than late adopters.

This research contributes to the literature by focusing on the isolated impact of Cloud use on productivity in firms. The results lend important support in managerial decision-making related to Cloud Computing usage. Built on the potential impact of Cloud Computing on the economic environment of firms, and the productivity effects found in the analysis, it is suggested that research focuses on the relationship of Cloud Computing and firm productivity as it may become even more important in the coming years.