Assessing the "digital divide" and its regional determinants : evidence from a web-scraping analysis

Following the 'death of distance' postulate, digitization may reduce or even eliminate the penalty of firms being located in rural areas compared with those in urban agglomerations. Despite many recent attempts to measure digitization effects across space, there remains a lack of empirical evidence regarding the adoption of digital technologies from an explicit spatial perspective, i.e. comparing urban with rural areas. Using web-scraping data for a representative sample of 345,000 German firms, we analyze the determinants of homepage usage. Accordingly, we show that homepage usage - as a proxy for the degree of digitization of the respective firm - is highly dependent on location, whereby firms in urban areas are more than twice as likely to use webpages than those located in rural areas. Our county-level analysis shows that a high population density, young population, net gains in internal migration, high educational level and high firm-specific revenues have a positive and significant effect on the probability that firms conduct digital marketing using webpages. Access to broadband internet has a positive effect in rural areas. There are no differences between urban, suburban and rural areas in terms of webpage up-todateness as well as social media usage. We conclude that there is a substantial digital divide in online marketing and discuss policy implications.