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Firms’ digitalization during the COVID-19 pandemic: a tale of two stories

Author

Listed:
  • Edgar Avalos
  • Xavier Cirera
  • Marcio Cruz
  • Leonardo Iacovone
  • Denis Medvedev
  • Gaurav Nayyar
  • Santiago Reyes Ortega

Abstract

The COVID-19 pandemic accelerated the digital transformation of businesses. Using a unique global panel dataset, this paper documents the patterns of digital adoption during the pandemic across firms in 57 (mostly developing) countries. The data show the tale of two stories. On one hand, the pandemic drove firms to increase the use of digital platforms and invest in digital solutions. On the other hand, the digital divide increased across several dimensions. There remain substantial gaps between small and large firms as well as across sectors, particularly for new investments in digital solutions. Firms that did not use any digital platform or channel before the pandemic, also lagged in their response to the pandemic, increasing the gap with those that were more digitally ready. Moreover, although the share of online sales across firms for all size groups increased, there is a growing concentration of online sales among top firms. The paper analyzes some of the factors associated with this increase in the digital divide and discusses the policy implications addressing the widening digital divide and leveraging the benefits of rapid digitalization.

Suggested Citation

  • Edgar Avalos & Xavier Cirera & Marcio Cruz & Leonardo Iacovone & Denis Medvedev & Gaurav Nayyar & Santiago Reyes Ortega, 2024. "Firms’ digitalization during the COVID-19 pandemic: a tale of two stories," Science and Public Policy, Oxford University Press, vol. 51(6), pages 1241-1256.
    • Handle: RePEc:oup:scippl:v:51:y:2024:i:6:p:1241-1256.
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    1. Amin,Mohammad & Viganola,Domenico, 2021. "Does Better Access to Finance Help Firms Deal with the COVID-19 Pandemic ? Evidence from Firm-Level Survey Data," Policy Research Working Paper Series 9697, The World Bank.
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    5. World Bank, 2022. "Digitalizing SMEs to Boost Competitiveness," World Bank Publications - Reports 38108, The World Bank Group.
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