nep-ict New Economics Papers
on Information and Communication Technologies
Issue of 2021‒01‒11
five papers chosen by
Marek Giebel
Universität Dortmund

  1. Energy and Electricity Consumption of the Information Economy Sector in Finland By Hiekkanen, Kari; Seppälä, Timo; Ylhäinen, Ilkka
  2. Artificial Intelligence-Based Consumer Communication by Brick-and-Mortar Retailers in India Leading to Syllogistic Fallacy and Trap – Insights from an Experiment By H. R., Ganesha; Aithal, Sreeramana
  3. Information Integration, Coordination Failures, and Quality of Prescribing By Böckerman, Petri; Laine, Liisa T.; Nurminen, Mikko; Saxell, Tanja
  4. Cybersecurity Risk By Chris Florackis; Christodoulos Louca; Roni Michaely; Michael Weber
  5. International Sourcing in Portuguese Companies Evidence from Portuguese Micro Data By Ana Martins; Guida Nogueira; Eva Pereira

  1. By: Hiekkanen, Kari; Seppälä, Timo; Ylhäinen, Ilkka
    Abstract: Abstract The role of digital technologies is becoming increasingly important in our day-to-day life. Digital technologies have become part of our social life as well as business operations across different industrial and public sectors. Because of digitalization, the internet protocol and data traffic have been on the rise for several years. Several estimates of the growth in energy consumption of data networks and the information economy sector have been presented in recent years. Occasionally consumer behavior has been claimed to be behind of these increases in electricity use. This report analyzes the energy and electricity consumption of the Finnish information economy sector from 2011 until 2018. Additionally, we compare the Finnish electricity use to other European countries with similar data available. Our report shows that the energy efficiency of the technologies used in the information sector has not kept pace with the growth in the volumes of data transferred on fixed and mobile networks.
    Keywords: Information economy sector, ICT sector, IP traffic, Data usage, Energy consumption, Electricity consumption
    JEL: L8 L82 L86 L94
    Date: 2021–01–07
  2. By: H. R., Ganesha; Aithal, Sreeramana
    Abstract: It is observed that a majority of organized brick-and-mortar (B&M) retailers in India believe that they have adopted the latest Artificial Intelligence-based consumer communication (AIBCC) tools/solutions and are yielding accurate outputs that can be used for interpretation, conclusion, and decision-making concerning consumer communications. This belief/assumption in itself is a classic example of a syllogistic trap. This study reveals that the B&M retailers in India are least worried about AIBCC tools/solutions repeatedly sending promotional/campaign messages to consumers based on their past transactional data till they come back again to the store without knowing the ‘Purpose of Previous Purchase’. This is mere because the cost of such communications is negligible (Just costs about 1 US dollar for sending 500 messages to a mobile phone number). We have also observed that the B&M retailers are unaware of the potential negative impacts of false/fake/artificial promotional/campaign messages being sent to consumers as a result of syllogistic fallacy caused by the AIBCC tools/solutions on the overall brand image in the consumers’ minds. Experimentation results demonstrate that the existing belief of the organized B&M retailers in India which assumes that the AIBCC tools/solutions are accurate is just a misconception and does not hold. On the other hand, when we experimented by identifying two main gaps (input and output-level) in their existing AIBCC tool/solution for six months at over 35 percent stores of a select retailer, the real treatment effect indicated that the experimental group of stores has shown (i) two times higher rate of conversion to any promotional/campaign messages; (ii) 19 times better in capturing the ‘Purpose of Purchase’ field; (iii) 22% lesser consumer communication expenses; (iv) 22.80% higher revenue generation; and most importantly; (v) 4.25 times higher store-level profits in comparison with the control group of stores. We have also noted that in the control group of stores about 36% of the customers/consumers who have received the promotional/campaign messages from the automated AIBCC tool/solution were not real consumers. Besides finding evidence of the syllogistic fallacy and trap, our results are also consistent with our ‘Theory of B&M Retailing in India and the concept of ‘Debiasing by Instruction’ by Evans et al.
    Keywords: Indian Retail; Brick-and-Mortar Retail; Artificial Intelligence; Digital Analytics; Consumer Communication; Syllogistic Trap; Syllogistic Fallacy; Customer Relationship Management; CRM
    JEL: M15 M31 M39
    Date: 2020–12–15
  3. By: Böckerman, Petri (Labour Institute for Economic Research); Laine, Liisa T. (University of Pennsylvania); Nurminen, Mikko (Turku School of Economics); Saxell, Tanja (VATT, Helsinki)
    Abstract: Poor information flows hamper coordination, potentially leading to suboptimal decisions in health care. We examine the effects of a nationwide policy of information integration on the quality of prescribing. We use the rollout of an electronic prescribing system in Finland and prescription-level administrative data. We find no effect on the probability of co-prescribing harmful drug combinations in urban regions. In rural regions, this probability reduces substantially, by 35 percent. The effect is driven by prescriptions from unspecialized physicians and from multiple physicians. Improving the local information environment thus enhances coordination and narrows differences in the quality of prescribing.
    Keywords: health information technology, digitalization, e-prescribing, integration, quality of prescribing, public policy
    JEL: H51 H75
    Date: 2020–12
  4. By: Chris Florackis (University of Liverpool (UK)); Christodoulos Louca (Cyprus University of Technology); Roni Michaely (University of Geneva - Geneva Finance Research Institute (GFRI); Swiss Finance Institute); Michael Weber (University of Chicago - Finance)
    Abstract: We develop a novel firm-level measure of cybersecurity risk using textual analysis of cybersecurity- risk disclosures in corporate filings. The measure successfully identifies firms extensively discussing cybersecurity risk in their 10-K, displays intuitive relations with quantitative measures of cybersecurity risk disclosure language, exhibits a positive trend over time, is more prevalent among industries relying more on information technology systems, correlates with several characteristics linked to firms hit by cyber attacks and, importantly, predicts future cyber attacks. Stocks with high exposure to cybersecurity risk exhibit high expected returns on average, but they perform poorly in periods of increasing attention to cybersecurity risk.
    Keywords: Cyber attacks, Risk Disclosures, Textual Analysis, Stock returns
    JEL: G14 G32
    Date: 2020–11
  5. By: Ana Martins (Research Office of the Portuguese Ministry of the Economy and Digital Transition); Guida Nogueira (Research Office of the Portuguese Ministry of the Economy and Digital Transition); Eva Pereira (Research Office of the Portuguese Ministry of the Economy and Digital Transition)
    Abstract: Outsourcing is one of the main drivers behind economic globalization, especially international outsourcing. In general terms it refers to the process of moving stages of production to external providers, either domestic (usually labelled as domestic outsourcing) or international (commonly labelled as offshoring or simply outsourcing). Over time, technological advances in transportation and ICT developments, led to a substantial rise in this phenomenon, growing in extent and nature, from simple to more complex tasks related to both manufactures and services supply. International outsourcing is usually expected to reduce production costs and to increase efficiency, however it has received substantial attention from policy makers for its potential negative consequences on the labour market. This paper combines Portuguese firm-level data from the International Sourcing surveys and longitudinal administrative business record data, to explore the impacts of the sourcing status on a variety of firms’ performance measures specially focusing on employment, competitiveness and productivity. The results suggest that international sourcing has an ambiguous effect on firm level total employment, but a positive effect on both the subset of workers that receive a salary (a proxy to employees) and on R&D jobs, coupled with an increasing effect on firm level total labour costs. Alongside these results, our findings also show that offshoring has a positive causal effect on both firm-level export intensity and trade balance, however the efficiency gains hypothesis was not confirmed. In fact, the results show that newly offshoring firms experienced lower labour productivity growth with a negative effect on both capital stock and capital per person employed.
    Keywords: Outsourcing, international sourcing, offshoring, internationalization, productivity, employment and firm productivity, Propensity score matching
    JEL: F23 L24 F61 D24 J24 F16
    Date: 2020–12

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