Prior studies have examined the productivity impact of spillovers, primarily in the context of R&D (Coe and Helpman 1995) and a few in the context of IT (Chang and Gurbaxani 2012; Cheng and Nault 2007). The primary transmission mechanism by which these benefits lead to spillovers is when an investing firm trades with other firms. In our context, this would occur when an IT services firm that has invested in R&D sells services related to its knowledge capital. Put differently, a firm may receive external benefits embodied in traded goods and services when suppliers cannot charge quality-adjusted prices for their output due to competition (Griliches 1979). As a result, a substantial portion of the benefits are transmitted from suppliers to their trading partners (Bresnahan 1986; Cheng and Nault 2007).