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This paper analyzes the determinants and effects of e-commerce on firms' productivity using the longitudinal data from the Basic Survey of Japanese Business Structure and Activities (BSBSA). The main findings are as follows. (1) Excellent firms with higher productivity are more likely to utilize e-commerce in their purchase process, whereas inefficient firms with less productivity are likely to utilize it for selling and management. (2) Excellent firms in the manufacturing sector are less likely to introduce e-commerce, whereas those in the non-manufacturing sector, such as wholesale, are more inclined to use it. (3) E-commerce used in the purchase process has a positive influence on both the total factor productivity (TFP) level and TFP growth of firms, even when controlling for other firm characteristics.
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