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PolicyResearchWorkingPaper10949

Digitalization,RemoteWorkandFirmResilienceEvidencefromtheCOVID-19Shock

CristinaConstantinescu

ArtiGrover

GauravNayyar

WORLDBANKGROUP

ProsperityPracticeGroup

DevelopmentResearchGroup&InternationalFinanceCorporation

October2024

ReproducibleResearchRepository

Averifiedreproducibilitypackageforthispaperisavailableat

,clickherefordirectaccess.

PolicyResearchWorkingPaper10949

Abstract

UsingBusinessPulseSurveydatafor61countriesduringtheCOVID-19pandemic,thispaperpresentsnovelfind-ingsonremotework,enabledbydigitalization,asasourceofresilienceforfirms.Theresultssuggestthefollowing.First,firmsinsectorswithgreateramenabilitytoremoteworkexperiencedasmalleradverseimpactofthepandemicincountrieswithbetterdigitalinfrastructure.Second,theseeffectsapplytobothexportingandnon-exportingfirms.Third,therearedifferencesacrosssectors.Amongfirmsin

themanufacturingsector,thebenefitsofremoteworkincountrieswithbetterdigitalinfrastructureaccruemoretoexportersrelativetonon-exporters,therebyreflectingapremiumtoexporting.Thisexportingpremiumisnotobservedintheservicesector,whichlargelycomprisesfirmsinnon-knowledgeintensiveservicesinthesample.Fourth,theeffectsoftheamenabilitytoworkremotelyincountrieswithbetterdigitalinfrastructuredonotdissipateovertime.

ThispaperisaproductoftheOfficeoftheChiefEconomist,ProsperityPracticeGroup,theDevelopmentResearchGroup,DevelopmentEconomics,andtheInternationalFinanceCorporation.ItispartofalargereffortbytheWorldBankGrouptoprovideopenaccesstoitsresearchandmakeacontributiontodevelopmentpolicydiscussionsaroundtheworld.PolicyResearchWorkingPapersarealsopostedontheWebat

/prwp.Theauthorsmaybecontacted

atagrover1@;ineagu@;andgnayyar@.Averifiedreproducibilitypackageforthispaperisavailableat

,clickherefordirectaccess.

ThePolicyResearchWorkingPaperSeriesdisseminatesthefindingsofworkinprogresstoencouragetheexchangeofideasaboutdevelopmentissues.Anobjectiveoftheseriesistogetthefindingsoutquickly,evenifthepresentationsarelessthanfullypolished.Thepaperscarrythenamesoftheauthorsandshouldbecitedaccordingly.Thefindings,interpretations,andconclusionsexpressedinthispaperareentirelythoseoftheauthors.TheydonotnecessarilyrepresenttheviewsoftheInternationalBankforReconstructionandDevelopment/WorldBankanditsaffiliatedorganizations,orthoseoftheExecutiveDirectorsoftheWorldBankorthegovernmentstheyrepresent.

ProducedbytheResearchSupportTeam

Digitalization,RemoteWorkandFirmResilience:EvidencefromtheCOVID-19Shock*

CristinaConstantinescu?ArtiGrover?andGauravNayyar§

JELclassification:D22,F14,L20,L25,O10.

Keywords:Digital,Remotework,Firms,Resilience,COVID-19,Trade

*TheauthorsareimmenselygratefultothemanyWorldBankGroupcolleaguesandcounterpartinstitutionsthathavesupportedtheBusinessPulseSurvey(BPS)datacollection,withoutwhomthisworkwouldnothavebeenpossible.Likewise,wethanktheEnterpriseAnalysisUnitoftheDevelopmentEconomicsGlobalIndicatorsDepartmentoftheWorldBankGroupformakingtheEnterpriseSurveydataavailable.WethankGeneGrossman,MonaHaddad,DenisMedvedev,AntonioNucifora,MarceloOlarreagaandDariaTaglionifortheirguidanceandstrategicsupportoftheBPSinitiative,andtheUmbrellaTradeTrustFundforfinancialsupport.WethankYewonChoi,ShwethaEapen,andMauricioLatorrefortheirresearchassistance.Theauthorsarealsogratefultothefollowingcolleaguesfortheirfeedbackattheconceptstageofthisproject:AsyaAkhlaque,AnaFernandes,CarolineFreund,MaryHallward-Driemeier,LeonardoIacovone,MicheleRuta,DariaTaglioni,GonzaloVarelaandErikvonUexkull.WethankEdgarAvalosandJesicaTorresfortheircontributionsintheinitialstagesoftheprojectandArthurJohannesGiesbertsforhisgenerosityinsharinghistoolforconvertingtextvariablesinto4-digitindustrycodes.WethankAlvaroEspitiaandco-authorsofEspitiaetal.(2021)forkindlysharingtheremoteworkflexibilityindicatorandtheoutputshareofdurableproductsbyindustry.TheviewsexpressedinthispaperaresolelythoseoftheauthorsanddonotnecessarilyreflectthoseoftheWorldBank,itsExecutiveDirectors,orthecountriestheyrepresent.

?TheWorldBank;email:ineagu@

?TheWorldBank;Correspondingauthor,email:agrover1@

§TheWorldBank;email:gnayyar@

2

1.Introduction

Thepandemic-inducedeconomiccrisisresultedfromachainreactioneffectofgloballockdownsimposedtocontaintheCOVID-19virus,whichreverberatedthroughdemand,supply,logistics

anduncertaintyshocksaroundtheworld(Apedo-Amahetal.,

2020)

.Forfirms,theuseofdigitaltechnologiesbecameakeypathwaytomitigatetheeconomiclossesthatresultedfromtheseshocks.

ThereisampleevidencethatillustratestheroleofdigitalizationinimprovingtheperformanceandresilienceoffirmsduringtheCOVID-19pandemic.Inacross-countrysetting,

Doerretal.

(2021)

findthatfirmsheadquarteredinjurisdictionswithbetterdigitalinfrastructuregeneratedrelativelyhigherrevenueduringthepandemic.Theauthorsfindthatimprovingacountry’sdigitaltechnologycapabilitybyonestandarddeviationisassociatedwitharelativeincreaseinrevenuesoftheaveragefirmbyaround4%.IntheUnitedStates,

Oikonomouetal.

(2023)findthatunemploymentincreased

lessinstateswithgreaterITadoptionbeforethepandemic.Similarly,

BellatinandGalassi

(2022)

findthatcitiesintheUnitedStateswithmorejobpostingsrelatedtodigitaltechnologiesbeforethepandemicwerecharacterizedbymorejobsduringthepandemic.

Therelationshipbetweendigitalizationandfirmperformancehasalsobeenanalyzedusingdataontechnologyuseattheindustry-andfirm-level.Usingdatafrom24,000firmsin75countries,

Copestakeetal.

(2022)findthatfirmsinindustriesthataremoredigitalizedexperiencedlower

revenuelossesfollowingtheCOVID-19recession.UsingdatafromtheMiddleEastandCentralAsiaregion,

Abrardietal.

(2022)findthatdigitally-enabledfirmsfacedalowerdeclineinsalesby

about4percentagepointsduringthepandemiccomparedtodigitally-constrainedfirms.

Cireraetal.

(2022)usefirm-levelsurveydatafromBrazil,Senegal,andVietNamtoshowthatpre-COVID19

digitaltechnologysophisticationhelpedfirmsmitigatetheinitialnegativeimpactofthepandemic.Further,thereisevidencethattheCOVID-19shockacceleratedtheuseofdigitalplatformsand

investmentindigitalsolutionsamongbusinesses(Avalosetal.,

2024),albeitmoreineconomies

withhigherdigitalpenetrationbeforethepandemic(Cavalloetal.,

2022)

.

Thereisalsoaburgeoningliteraturethatfocusesonthecapabilitytowork-from-home(WfH)asanimpliedlinkbetweendigitaltechnologiesandtheresilienceoffirms

.1

Firmswithhighpre-pandemicwork-from-homefeasibilityfaredsignificantlybetterduringtheCOVID-19pandemicintermsof

sales,netincomes,andstockreturnsthantheirpeers(Baietal.,

2020;

Criscuoloetal.,

2021;

Angelici

andProfeta,

2020;

Zhangetal.,

2022)

.

However,thereisnosystematicanalysisthatdirectlyteststhismechanism,thatis,whetherandhowdigitalizationaffectedfirmresiliencethroughremoteworkthatallowedindividualstooperateatphysicaldistanceduringthepandemic.Thisisimportantformicro,smallandmediumenterprises(MSMEs),whoseaccesstodigitaltechnologiesindevelopingcountriesisratherlimited.

Thereisalsonosystematicanalysisonwhetherthepositiveeffectofdigitalizationonfirmresilience

1Seeforexample

DingelandNeiman

(2020);

Koganetal.

(2020);

Carlettietal.

(2020);

AcharyaandSteffen

(2020);

Albuquerqueetal.

(2020);

Altigetal.

(2020);

Bretscheretal.

(2020);

Tambeetal.

(2020);

Fahlenbrachetal.

(2021);

Ramelli

andWagner

(2020);

Mahmudetal.

(2021)

.

3

throughWfHpracticesmaybefurthermediatedbyinternationaltrade.Somesectorsthataremostamenabletoremoteworkarealsoleastintensiveinface-to-faceinteractionsbetweenproducers

andconsumers,therebymakingthemmoretradableinternationally(AvdiuandNayyar,

2020)

.

Espitiaetal.

(2021)showthatexportersinsectorsthataremoreamenabletoremoteworkwere

abletobettermitigatethesupplyshockthroughoutthepandemicthanexportersinothersectors.Similarly,

Constantinescuetal.

(2022)findthatexportersinsectorsmoreamenabletoremotework

experienced,onaverage,adeclineinsalesof4percentagepointslessthanfirmsinsectorslessamenabletoremotework.Thesestudiesexaminetheimportanceofremoteworkontradeatanaggregateleveloronasampleoffirmstradingininternationalmarkets.Itisalsopossiblethatgloballyengagedfirmshavegreatercapabilitiesthatfacilitateimplementationofremotework

(Constantinescuetal.,

2022)eitherthroughbettermanagement(GroverandKarplus,

2021)or

technologyreadiness(Cireraetal.,

2022)

.

Ourworkfillsthesegapsintheliterature.First,itpresentsevidenceofaspecificmechanismbywhichdigitalizationaffectedfirmresilienceduringthepandemic,thusprovidingastrongertestofcausality.Indoingso,weaddressasignificantknowledgegap,particularlyforMSMEs,as66%ofoursamplebelongtothegroupofmicroorsmallfirms(employingfewerthan10individuals),while23%aremedium-sizedfirms(employingfewerthan50individuals).Second,itexaminesthedifferentialimpactofthismechanismofremoteworkflexibility,enabledbydigitalization,acrossexportersandnon-exporters.Third,itdistinguishesbetweenthepremiumonremoteworkenabledbydigitaltechnologiesderivedfromexporting,overandabovethehighercapabilitiesthathelpexportingfirmsself-selectintoglobalengagementanddigitaltechnologiesthatenableWfH.

UsingfourwavesofBusinessPulseSurveys(BPS)datafor61countriesduringtheCOVID-19pandemic,thispaperpresentsnovelfindingsondigitalization-enabledremoteworkasasourceofresilienceforfirms.Ourresultssuggestthefollowing.First,firmsinsectorswithgreateramenabilitytoremoteworkexperiencedasmalleradverseimpactofthepandemicincountrieswithbetterdigitalinfrastructure.Second,theseeffectswerelarger,butnotstatisticallysignificantlylarger,forgloballyengagedfirmsvis-á-visthedomesticallyorientedfirms.Third,whilethebenefitsofremoteworkincountrieswithbetterdigitalinfrastructureaccruetobothexportingandnon-exportingfirms,exportersinthemanufacturingsectorbenefitmore,therebyreflectingapremiumtoexporting,perse.Theseresultsarenotobservedintheservicessectors,whichinoursampleprimarilycomprisefirmsinnon-knowledgeintensiveservices.Fourth,theeffectsoftheamenabilitytoworkremotelyincountrieswithbetterdigitalinfrastructuredonotdissipateovertime.

Ourpapercontributestotheliteratureonshocksandeconomicresilience.Thisspanstheroleoftechnologyuse,tradepolicy,andaccesstofinanceacrosspreviouscrises.Ontechnology,firms

withhigherlevelsoftechnologicalreadinessperformedbetterduringthepandemic(Baietal.,

2020;

Cireraetal.,

2022;

Muzietal.,

2022)

.Similarly,technologicallydiversifiedfirms,measuredby

patentsindifferenttechnologies,arelessaffectedbynaturaldisasters(Hsuetal.,

2018)

.Ontradepolicy,

Calietal.

(2023)showthatnon-tariffbarriersaffectedtheabilityofIndonesianexportersto

respondtoforeigndemandshocksdrivenbyadepreciationoftheChineseyuan.Onfinance,the

4

resilienceandrecoveryoffirmsduringthe2009globalfinancialcrisiswascloselyassociatedwith

accesstocreditandtradefinance(Ahnetal.,

2011;

AmitiandWeinstein,

2011;

ChorandManova,

2012;

Crozetetal.,

2022)

.

Ourpaperalsocontributestotheliteraturethatsupportsthebenefitsofremotework.Inameta-analysisofempiricalstudiesonthetopic,

MartinandMacDonnell

(2012)findapositiverelationship

betweenteleworkandorganizationaloutcomes,includingproductivity,retention,organizationalcommitment,andperformancewithintheorganization.Inarandomizedcontrolledtrialof1,612graduateengineers,marketingandfinanceemployeesinalargetechnologyfirminChina,

Bloom

etal.

(2022)findthathybridWfHhasreducedattritionby33%andimprovedjobsatisfaction

measures.UsingearlierexperimentaldataforthesamelargetechnologyfirminChina,

Bloometal.

(2015)findthathome-basedworkledtoanincreaseinperformanceby13percent,ofwhichabout9

percentwasfromworkingmoreminutespershift(fewerbreaksandsick-days)and4percentfrommorecallsperminute(attributedtoaquieterworkingenvironment).Usingdatafromover200millionU.S.jobpostings,

Baietal.

(2020)findthatfirmswithhighpre-pandemicWFHfeasibility

hadsignificantlyhighersales,netincomes,andstockreturnsthantheirpeersduringthepandemic.

Lastly,ourpapercontributestotheliteraturethatanalyzestheunevenimpactoftheCOVID-19crisisontheprivatesector,withpersistentnegativeconsequencesforspecifictypesofcountries,sectorsandfirms.Forexample,theheterogeneouseffectsobservedarebasedoncertaincountry

characteristicssuchasincome,region,severityoflockdownandfeasibilitytoworkremotely(Dingel

andNeiman,

2020;

deLucioetal.,

2020)orsectorattributessuchascontractintensity,amenabilityto

remotework,GVCintensity,intensityofdurableproductsinoutput,dependenceonexternalfinance,

relianceonlettersofcredit,productskilllaborintensityandproductcomplexity(Basetal.,

2022;

Constantinescuetal.,

2022;

Crozetetal.,

2022;

Espitiaetal.,

2021)

.Amongfirmcharacteristicsthat

matter,someareexternalattributes,suchassize(Bricongneetal.,

2012;

Cireraetal.,

021a),global

engagement(Constantinescuetal.,

2022;

deLucioetal.,

2022),andintensityofGVCparticipation

(Constantinescuetal.,

2022;

Borinoetal.,

2021;

Brucaletal.,

2021;

deLucioetal.,

2022;

Hyunetal.,

2020),whileothersareinternaltraitssuchasmanagementcapabilities(GroverandKarplus,

2021;

Hyunetal.,

2020;

Brucaletal.,

2021;

Borinoetal.,

2021)andpre-crisisdigitalreadiness(Cireraetal.,

2022;

Constantinescuetal.,

2022)

.

Therestofthepaperisorganizedasfollows.Section2describesthedata.Section3specifiestheempiricalstrategy.Section4presentstheresults.Section5concludes.

2.DataandDescriptiveStatistics

OurworkcombinesdatafromtheWorldBankBusinessPulseSurveys(BPS)andtheCOVID-19follow-upoftheWorldBankEnterpriseSurveys(WBES)forthe(almost)twoyearsbetweenApril2020andSeptember2021.Sincetheonsetofthepandemic,thesesurveyshavebeenmonitoringtheimpactofthepandemicontheprivatesectoracrosstheworldoncriticaldimensionsofbusinessperformance,suchassales.Formostcountries,thesamplingframefortheBPSwasbasedonfirmcensusesfromStatisticsAgenciesorbusinesslistingsfromMinistriesofFinanceorEconomyand

5

BusinessAssociations.Additionaldetailsonthesurveymethodologyareofferedin

Apedo-Amah

etal.

(2020);

Cireraetal.

(021b);and

Cireraetal.

(021a)

.FortheWBESCOVID-19follow-upsurveys,seeforexample

Muzietal.

(2022)

.

Oursamplecovers68,007firm-levelobservationsfrom61countries.ThelistofcountriesandthenumberoffirmssampledineachcountryispresentedinAppendixTable

A1.2

Small,medium-sized,andlargefirms,respectively,accountfor6%,23%,and11%ofthesample.And19.3%offirmsinthesampleareexporters.Thesectoraldistributionisskewedtowardsthenon-agriculturalsectorthatcomprises94%offirmsinthesample(32%inmanufacturing,8%inhospitalityservices,32%inretailservices,3%inknowledge-intensiveservices,and19%inotherservices)(seeAppendixTable

A2)

.

WemeasuretheamenabilityforremoteworkbythefractionofoccupationsthatcanbeperformedremotelyintheU.S.computedin

Espitiaetal.

(2021)usingthe2017O*NETdata

.Thismeasureofamenabilityiscomputedatthelevelofboth2-digitand4-digitsectorsintheInternationalStandardIndustrialClassification(ISIC).TheWBESalreadyincludesthe2-digitand4-digitsectoridentifiersforeachfirminthesample.FortheBPS,weusethe2-digitand4-digitISICidentifiersobtainedby

Constantinescuetal.

(2022)usingthedescriptionoftheeconomicactivityforeachbusinesscollected

bytheenumerator.3

Atthe2-digitISIClevel,theamenabilitytoremoteworkrangesfrom14%incropandanimalproductionand32%inthemanufactureofwearingapparelto71%incomputerprogrammingservicesand72%infinancialservices(seeAppendixTableA3).

Wemeasureinternetpenetrationatthecountrylevelbythefractionofthepopulationusingtheinternetaswellasbythenumberofsecureinternetserversper1millionpeoplefor2019(orthelatestyearavailablebeforethepandemic).Theshareofindividualsusingtheinternetrangedfrom15.0%inMadagascarand16.5%inMozambiqueto89.9%intheSlovakRepublicand90.8%inCyprus.Similarly,thenumberofsecureinternetserversper1millionpeoplerangedfrom3inBurkinaFasoand8inMadagascarto83,313inEstoniaand56,187inCzechia(seeAppendixTable

A4)

.Wemeasuretheseverityofthepandemicacrosscountriesandovertimeusingdatafrom

Googlemobilityreportsaroundtransitstations(Google,

2021)

.Forcountrieswithoutavailable

data,weimputetheseveritybasedontheOxfordGovernmentResponseTrackerindex(Haleetal.,

2021)following

Apedo-Amahetal.

(2020)

.

Incountriesamongthetop5%intermsofdigitalinfrastructure(%ofthepopulationusingtheinternet),firmsinsectorswithgreateramenabilitytoremoteworkexperiencedasmallerdeclineinsales(Figure1).However,incountriesamongthebottom5%intermsofdigitalinfrastructure,thereisnoclearrelationshipbetweengreateramenabilitytoremoteworkandthechangeinfirms’sales(Figure2).

2Thesampleincludes43,389panelbusinesses,whichwereinterviewedmorethanonceinthe2-yearspan.

3Thealgorithmforallocatinga2-digitor4-digitISICsectortoeachfirmbasedonthefirm’smainactivityhasbeendevelopedby

GiesbertsandEapen

(2022)andfacilitatesafast,high-qualityand,ingreatpart,automaticISICassignation

totextfrommultiplelanguages.

6

Figure1:Percentagechangeinsalesandremoteworkintensity-countrieswithhighestdigitalinfrastructure

Figure2:Percentagechangeinsalesandremoteworkintensity-countrieswithlowestdigitalinfrastructure

7

3.EmpiricalStrategy

Duringthepandemic,WfHpracticeshelpedfirmsovercomeconstraintsofsocialdistancingthroughdigitalsolutionsthatsubstitutedforface-to-faceinteractions.So,thedevelopmentofdigitalinfras-tructureshoulddisproportionatelyhelpfirms(orindustries)moreamenabletoremoteworkingarrangements.Toassessthiseffect,weexploitthevariationinfirmsalesacrosssectorswithdifferentamenabilitytoremotework,andacrosscountrieswithdifferentlevelsofinternetpenetration.Inotherwords,weassesswhetherfirmsinsectorswithhigherfeasibilitytoworkremotelyweremoreresilientduringthepandemicincountrieswithhigherlevelsofinternetpenetration.Indoingso,weexaminetheinteractionbetweeninternetpenetrationbycountryandremoteflexibilitybysectorinaregressionexplainingchangesinsalesbyfirmduringthepandemicperiod.Thisishelpfulbecauseitlooksforevidenceofaspecificmechanismbywhichdigitalizationaffectsfirmresilience,therebyprovidingastrongertestofcausality.

Thisapproachwassuccessfullyappliedin

RajanandZingales

(1998)

-toshowthatindustriesdependentonexternalfinancegrowfasterincountrieswithhigherfinancialdevelopment-and

insubsequentcontributionstothefinancialdevelopmentliterature(Beck,

2003;

FismanandLove,

2003,

2007;

BeckandDemirgü?-Kunt,

2008;

Huretal.,

2006;

Manova,

2008,

2013)

.Thisapproachhasalsobeenappliedtoanalyzetopicsasdiverseasthelinkagesbetweenpropertyrightsandgrowth,firmentrycostsandfirmcreation,contractenforcementandcomparativeadvantage,uncertainty

aversionandgrowth,roadnetworksandtrade,anddigitalinfrastructureandtrade(Claessensand

Laeven,

2003;

ClaessensandKlapper,

2005;

Levchenko,

2007;

Nunn,

2007;

Jaimovich,

2019;

Paunov,

2016;

Fernandesetal.,

2019)

.

Ourspecificationisasfollows:

Yisct=α+β1sizeit+β2mobilityct+γ[remotes*internetc]+δs+δc+δt+?isct.(1)

Yisctdenotes,forfirmiinsectorsandcountryc,thereportedpercentchangeinsales,30dayspriortotheinterviewattimet,relativetothesameperiodin2019.Sizeictdenotesthesizeofthefirm(logofthenumberofemployees);mobilityctgaugesthecountry-specificseverityoftheshockthroughtheaveragemobilityaroundtransitstations30dayspriortotheinterviewasmeasuredintheGoogle

mobilityreports(Google,

2021)

.Theamenabilityofremoteworkatthe4-digitsectorlevelisdenotedbyremoteswhileinternetcdenotesinternetpenetrationatthecountrylevel

.4

Weincludefixedeffectsfor2-digitsectorsδsandcountryfixedeffectsδctocorrectforpotentiallyomittedcountryandsectorspecifictime-invariantcovariates.Wealsoincludequarterfixedeffectsδt(April-June2020,July-September2020,etc.)tocapturethechangingseverityoftheshock.

Weestimateequation1byleastsquaresforexportersandnon-exporters,togetherandseparately,tocompareestimatesofthecoefficientγacrosssamples.Sincesamplingweightsarenotconsistentlyavailableacrossdatasets,weweighttheestimatesusingtheinverseofthenumberofobservations

4Bothentertheregressionasz-scores.

8

ineachcountry.

Wethenintroduceatripleinteractiontermbetweenamenabilityofremoteworkatthesectorlevel,internetpenetrationatthecountrylevel,andanexporterdummyvariableatthefirmlevel.Thishelpsestablishwhetherornotthereisanexporterpremiumontheeffectofacountry’sdigitalinfrastructureonfirmperformance,conditionalonasector’samenabilitytoremotework.

4.Results

Thissectionpresentsthebaselineresults,robustnessofthoseresultsandtheheterogeneityintheeffects.

4.1Baselinespecification

Theresultsfromestimationofequation(1)presentedinTable

1

showthatfirmsinsectorsmoreamenabletoremoteworkingexperienced,onaverage,amoreresilientsalesperformanceduringthepandemicincountrieswithbetterdigitalinfrastructurecomparedtoothercountries,whencontrollingforcountryandsectorfixedeffects.Forthefullsample,theinteractionsbetweentheamenabilityofremoteworkatthesector-level(measuredastheshareofremoteworkers)andthecountry-levelqualityofdigitalinfrastructure(measuredasthepercentageofpopulationusingtheinternet)yieldsapositiveandstatisticallysignificantcoefficientof0.979forthechangeinfirms’sales(Table

1,column1)

.5

Table1:ChangeinSales

Full(1)

Exporters

(2)

Non-Exporters

(3)

Full(4)

Exporter

WfHxdigitalinfra.WfHxdigitalinfra.Xexporter

0.979***(0.254)

1.607**(0.626)

0.923***(0.280)

1.739***

(0.550)

0.980***

(0.278)

0.076

(0.605)

CountryF.E.

Yes

Yes

Yes

Yes

SectorF.E.

Yes

Yes

Yes

Yes

R-squared

0.262

0.308

0.241

0.262

Observations

68,007

13,145

54,862

68,007

TheF-stattestingtheequalityofcoefficientsincolumns2and3is0.998,withpvalue0.318.

Estimationsalsocontrolfor(log)firm’ssize,quarterF.E,andGoogle’sMobilityindex.Estimationsareweightedusingcountryweights.Standarderrorsinparentheses.Significancelevels***,**,and*,correspondtop<0.01,p<0.05,p<0.1,respectively.

Theamenabilityofremoteworkandinternetuse/penetrationdonotentertheregressionindividuallybecausetheformerareabsorbedinsectorfixed-effectsandthelatterincountryfixed-effects.

Notably,bothexportingandnon-exportingfirmsinsectorsthatareamenabletoremoteworkenjoyapremiumincountrieswithlargerpenetrationofinternetusers(columns2and3inTable

1)although

thecoefficientissmallerforthelatter.Thisisconsistentwiththeevidencethatevenwhenremote

workisfeasibleinagivensector,thedropinsaleswas6%-7%higherfornon-exporterscompared

withexporters(Constantinescuetal.,

2022)

.However,thedifferenceinthiscoefficientacrossthesamplesofexportersandnon-exportersisnotstatisticallysignificant.

5Theamenabilityofremoteworkandinternetuse/penetrationentertheregressionindividuallybecausetheformerareabsorbedinsectorfixed-effectsandthelatterincountryfixed-effects.

9

Itispossiblethatthelargercoefficientontheinteractiontermfortheexportersampleisdrivenbystrongerfirmcapabilitiesassociatedwithexporters

.6

Duringthepandemic,althoughallfirmsinvestedextensivelyindigitaltechnologiestoenableWfHamongotherthings,thelarger,innovative

orgloballyengagedfirmshaveinvestedrelativelymore(BellmannandHübler,

2021;

Riomand

Valero,

2020;

Constantinescuetal.,

2022)

.Totestthediffe