Broadband impact on small business growth in Kentucky

Abstract

PurposeThe paper aims to examine the relationship between broadband availability and firm establishment growth rates by employment size and by industry to assess the impact of broadband on small business growth in Kentucky.Design/methodology/approachThe paper uses a modified growth model as the theoretical foundation for empirical analysis.FindingsBroadband availability does increase growth in small and medium‐sized businesses. While broadband does tend to affect specific industries differently, the scope of the affects is limited to only a few industries: broadband encourages growth in small manufacturing firms, but discourages growth in financial services.Research limitations/implicationsThe scope of analysis is limited to the period of 2003‐2005, while some of the counties in Kentucky did not have sizable broadband deployment until 2005. Owing to the lack of data availability, the current research does not consider demand‐side factors, though several industries considered are likely to be demand‐driven rather than cost‐driven.Originality/valueUtilizing unique broadband saturation data for Kentucky counties, this study presents ex‐post analysis of the effect of broadband deployment on local economies.