Fact of the Week: European Firms That Adopted Information Technologies Such as E-Commerce Platforms and Enterprise Resource Planning Systems From 2002 to 2008 Did Not Decrease Employment

Many people assume that when firms adopt technology they reduce the number of workers. A recent study tested that proposition across 12 European countries (Austria, Denmark, Finland, France, Germany, Ireland, Italy, the Netherlands, Norway, Sweden, Slovenia, and the United Kingdom). It examined traditional measures of firm technology adoption, such as broadband penetration, computer usage, and mobile Internet access, as well as measures of more recent technologies, such as e-commerce platforms and enterprise resource planning systems. The study found that firms adopting these technologies from 2002 to 2008 did not decrease employment, on average.

In fact, the authors found that adopting enterprise resource planning systems (which one might assume eliminates jobs by revamping a firm’s organization structure) led to a minor increase in firm employment. That is because adopting such planning systems allows a firm to increase productivity through greater resource efficiency, and in doing so it can expand, creating more jobs.