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The Importance of ICT use for Self-Employed Workers During the Covid-19 pandemic

In a recent article, Dr. André van Stel and Professor Andrew Burke, Dean of Trinity Business School, together with co-authors, investigate the relationship between ICT use frequency and entrepreneurial earnings by self-employed workers in Europe. Read about their findings below where they discuss their research.

The worldwide diffusion of the information and communication technology (ICT) has increased over the last decade at breakneck speed. Digital skills are needed to participate in today’s modern societies and to improve one’s economic situation. This may be even more so the case during the current Covid-19 pandemic. However, there are huge inequalities in access and adoption of ICT, affecting not only households but also businesses. Many scholars have defined this phenomenon as “digital divide”. Differences in usage of ICT among firms are likely to affect firm performance. However, although many studies exist on performance effects of ICT in large firms, less is known about ICT effects in (very) small firms let alone in one-man businesses operated by own-account workers. Therefore we investigated the relationship between ICT implementation by self-employed workers and their performance (as measured by earnings).

As expected, we found that earnings rise with the level of ICT use but only from a threshold of utilisation accounting for at least 25 per cent of the time. This is intuitive as meaningful ICT usage requires practice and maintenance of skills. We also found evidence for an indirect negative relationship between job tenure, ICT adoption and entrepreneurial performance in the sense that job tenure was found to be negatively related to ICT adoption and usage frequence (indicating an inertia effect), while ICT adoption and usage are positively related to performance. In simple terms, entrepreneurs who have been running their business for a relatively long period of time are more often reluctant to change their way of doing business (i.e. they rely on ‘old habits’ while refusing to embrace the possibilities of the digital revolution). This reluctance, in turn, impacts negatively on their earnings.

Finally, our research also suggested that there may be an optimal level (in terms of earnings) of ICT use for solo self-employed workers (i.e. self-employed without employees). In particular, our findings suggested that those self-employed who use ICT ‘all of the time’ do not have enough time left to maintain networks or visit clients. Perhaps a minimum amount of time spent on ‘offline’ maintenance of contacts is necessary for optimal performance as a solo self-employed. More (future) research on this particular finding is necessary though.

Although our research was carried out before the current Covid-19 pandemic, our findings have clear implications for the current ‘new normal’ in business. First, regarding our finding on ‘inertia’ by entrepreneurs, it is clear that it will become even more important in the current times to adjust quickly to digital ways of working. However, this is easier said than done, particularly for those entrepreneurs who made minimal use of ICT so far. Not only will they have to catch up with digital ways that were already practiced by many competitors pre-corona, but in addition, they have to adapt to the more intense use of ICT that the whole business world is experiencing these days, including the use of online meetings. Second, and related to the first implication, our finding that a minimum time spent on ‘offline’ maintenance of contacts is necessary for solo self-employed workers is particularly interesting. The future will tell to what extent replacement of physical meetings by distant meetings via online video platforms such as Zoom and Skype, will lead to the same level of efficiency and maintenance of good client and supplier relations as used to be the case when physical meetings were the standard in doing business.

A short interview (held pre-corona) about the findings can be found here while the full article can be found here.