Technological capacity and firms’ recovery from Covid-19

Can higher technological capacity help firms to recover quicker from recessions? Analysing the effects of the Covid-19 pandemic on firm revenues in several countries, we find that firms headquartered in jurisdictions with better digital infrastructure generated relatively higher revenue during the s...

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Bibliographic Details
Published in:Economics letters 2021-12, Vol.209, p.110102, Article 110102
Main Authors: Doerr, S., Erdem, M., Franco, G., Gambacorta, L., Illes, A.
Format: Article
Language:English
Subjects:
Companies
COVID-19
Crisis
Impact analysis
Information technology
Infrastructure
Pandemic
Pandemics
Recovery
Revenue
Technological change
Technology
Technology adoption
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Summary:Can higher technological capacity help firms to recover quicker from recessions? Analysing the effects of the Covid-19 pandemic on firm revenues in several countries, we find that firms headquartered in jurisdictions with better digital infrastructure generated relatively higher revenue during the shock period. Improving a country’s technological capability by one standard deviation is associated with a relative increase in revenues of the average firm by around 4%. The positive effect of technology is more pronounced among smaller firms, suggesting that it could have helped the recovery of SMEs. •We examine whether technological capacity helps firms recover from the Covid shock.•A better digital infrastructure leads to higher firm revenue during the shock period.•The positive effect of technological capacity is more pronounced among smaller firms.
ISSN:0165-1765
1873-7374
DOI:10.1016/j.econlet.2021.110102