What is IT Familiarity

Why do some small and medium enterprises (SMEs) adopt Internet broadband technologies (high-speed connection and complementary applications) and others do not? This chapter aims at analyzing the issue through an econometric investigation. Relying on the (thin) previous empirical literature on the topic and focusing on a large and representative sample of Italian SMEs, we analyze the determinants of broadband connection and adoption of complementary applications. Results of the econometric analysis reveal that: (i) among firm-specific characteristics, size and the firm’s need to communicate are major determinants both of broadband connection and use of complementary applications, while indicators of firm efficiency and of the competitive pressure suffered from the SME positively affect only the number of used applications, while not exerting any impact on the decision to connect; (ii) among location-specific characteristics, the level of telecommunications infrastructure positively influences both connection and applications use, while the presence within the local labor market of young and skilled workforce makes SMEs adopt more applications; (iii) time-specific variables like those related to the actual and future price of the high-speed Internet connection affect SMEs’ decision to adopt broadband. These findings have important implications for suppliers and policy makers.