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The Impact of Digital Transformation Technology Adoption on Firm Performance in the General Machinery Industry

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  • Sangsoo Park

    (Korea Institute for Industrial Economics and Trade)

Abstract

This study empirically examines how the adoption of digital transformation (DX) technologies affects firm performance in South Korea’s general machinery industry. Drawing on six waves (2017-2022) of the national Survey of Business Activities (SBA) and applying a combined propensity-score matching and difference-in-differences (PSM-DID) design to a panel of 614 firms, the analysis estimates the average treatment effect on the treated (ATET) of overall DX adoption and conducts technology-specific analysis for the seven most widely adopted DX technologies. Aggregate DX adoption is associated with statistically significant increases in sales, employment, debt and other liabilities, and total assets. The effects, however, are heterogeneous across technologies: the adoption of IoT, robotics, and VR/AR technologies raise sales, while big data and 3D printing lead to higher employment and increases in paid-in capital. The adoption of cloud and AI technologies were not found to have statistically significant effects on the financial indicators considered within the 2017-2022 observation window, suggesting that their effects on performance may take longer to materialize or require complementary investments. These results suggest that DX policy for the general machinery industry should be differentiated by technology, with priority given to financial and workforce support measures that ease firm-level adoption frictions.

Suggested Citation

  • Sangsoo Park, 2026. "The Impact of Digital Transformation Technology Adoption on Firm Performance in the General Machinery Industry," Industrial Economic Review 023555, Korea Institute for Industrial Economics and Trade.
    • Handle: RePEc:ris:kieter:023555
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    JEL classification:

    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • L64 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Machinery; Business Equipment; Armaments
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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