Policy Briefs

A Snapshot of SME digitalization in Georgia
Monday, 22 May, 2023

Digitalization can be defined as the process of change that digital technology causes or influences in all aspects of life. For businesses, it implies digital improvements which alter business models, alongside the way in which products or services are manufactured and delivered. Therefore, it should hardly come as a surprise that digitalization has become increasingly important in the modern world, which is firmly rooted in the principles of competition.

According to Ernst and Young (2018), the digitalization of businesses is closely linked to their performance. More precisely, a survey of 200 human resources professionals across Europe found that “digitally mature” companies exhibit higher productivity and growth rates combined with a lower staff turnover. Moreover, an OECD (2015) study revealed that productivity grows 5% to 10% faster in companies that invest in digital solutions, such as data-driven analytics.

Interestingly, it transpires that the introduction of digital solutions can be an important coping mechanism for firms during economic downturns, such as the recent pandemic. Indeed, the World Bank’s Business Pulse Survey (BPS) identified that controlling for size, Malaysian enterprises investing in new digital solutions during the crisis experienced a 12-percentage point lower decline in sales compared to those without such investment.