Digitalization as a tool to support innovation: A European perspective

Implementation of information and communication technologies has changed several aspects of the economy including innovation processes and their outputs. It is generally stated that the use of information and communication technologies enhances innovation. However, the process of digitalization, especially in transforming economies, is approximately in the middle of its formation and visible effects on innovation may occur only with more developed stages of digitalization. Hence, the aim of the present paper is to investigate the relationship between the digital transformation of the economy and the innovation performance at the level of the European Union member states. For comparison purposes the European countries are divided into the particular groups according to their level of digitalization and innovation performance. The results of analysis show positive interdependence between the Summary Innovation Index and the Digital Economy and Society Index. We take into account three-year values of both indexes with one-year lag in the case of the second one, since we expect a time shift in the innovation performance induced by the development of the digital economy and society. Moreover, the digital development – innovation matrix showed that the most digitalized European countries are the most innovative ones, a vice versa. The majority of the “old” European Union member states belong to the group of digitalized innovators, with relatively high level of digitalization associated with superior innovation performance. On the other hand, for the most of the “new” European Union member states, lower levels of digitalization are associated with below-average innovation performance. Only some exemptions were detected in this regard. Hence, digitalization can be considered as a tool to foster innovation