Scaling up to the cloud: Cloud technology use and growth rates in small and large firms

TL;DR

This paper investigates how cloud service adoption influences the long-term growth of French firms, highlighting greater benefits for smaller firms and the role of cloud tech in reducing digitalization barriers.

Contribution

It provides empirical evidence that cloud technology use significantly boosts firm growth, especially for smaller firms, by lowering digitalization barriers.

Findings

Cloud services positively impact firm growth rates.

Smaller firms experience more significant growth benefits.

Cloud adoption helps reduce digitalization barriers.

Abstract

Recent empirical evidence shows that investments in ICT disproportionately improve the performance of larger firms versus smaller ones. However, ICT may not be all alike, as they differ in their impact on firms' organisational structure. We investigate the effect of the use of cloud services on the long run size growth rate of French firms. We find that cloud services positively impact firms' growth rates, with smaller firms experiencing more significant benefits compared to larger firms. Our findings suggest cloud technologies help reduce barriers to digitalisation, which affect especially smaller firms. By lowering these barriers, cloud adoption enhances scalability and unlocks untapped growth potential.