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The growing digital divide in Europe and the United States

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  • Désirée Rückert
  • Reinhilde Veugelers
  • Christoph Weiss

Abstract

Using a new survey on digitalisation activities of firms in the EU and the US, we identify digitalisation profiles based on the current use of digital technologies and future investment plans in digitalisation. Our analysis confirms the trend toward digital polarisation and a growing digital divide in the corporate landscape with, on one side, many firms that are not digitally active, and on the other side, a substantial number of digitally active firms forging ahead. Old small firms, with less than 50 employees and more than 10 years old, are significantly more likely to be persistently digitally non-active. We show that these persistently non-digital firms are less likely to be innovative, increase employment or command higher mark-ups. These trends are likely to exacerbate the digital divide across firms in the EU and the US.

Suggested Citation

  • Désirée Rückert & Reinhilde Veugelers & Christoph Weiss, 2020. "The growing digital divide in Europe and the United States," Working Papers of Department of Management, Strategy and Innovation, Leuven 654659, KU Leuven, Faculty of Economics and Business (FEB), Department of Management, Strategy and Innovation, Leuven.
    • Handle: RePEc:ete:msiper:654659
    Note: paper number MSI_2007
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    2. Björn Döhring & Atanas Hristov & Christoph Maier & Werner Roeger & Anna Thum-Thysen, 2021. "COVID-19 acceleration in digitalisation, aggregate productivity growth and the functional income distribution," International Economics and Economic Policy, Springer, vol. 18(3), pages 571-604, July.
    3. Gathmann, Christina & Kagerl, Christian & Pohlan, Laura & Roth, Duncan, 2024. "The pandemic push: Digital technologies and workforce adjustments," Labour Economics, Elsevier, vol. 89(C).
    4. Roger Enriquez & David Han & Richard Harris & Christopher Reddick, 2025. "Exploring digital access and digital engagement of senior small business owners," Quality & Quantity: International Journal of Methodology, Springer, vol. 59(4), pages 3631-3647, August.

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    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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