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Digitalization as a driver of European SMEs’ financial performance during COVID-19

Author

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  • Savvakis, Georgios A.
  • Kenourgios, Dimitris
  • Trakadas, Panagiotis

Abstract

This paper analyzes the impact of the European economy's digitalization on the financial performance of European small and medium enterprises (SMEs) during COVID-19. Using a panel data from 2017 to 2022 of 12,179 European SMEs and a European transformed digitalization index, we find that the financial performance of SMEs is significantly and negatively associated with the COVID-19 pandemic. Digitalization seems to have played a key role in helping SMEs to combat the effects of the pandemic. We find that digitalization significantly increases SMEs’ financial performance, as measured by various performance measurements and mediates the COVID-19 negative effect. Digitalization is more significant during the COVID-19 era compared to the pre-pandemic period. Our results are robust to alternative performance measures.

Suggested Citation

  • Savvakis, Georgios A. & Kenourgios, Dimitris & Trakadas, Panagiotis, 2024. "Digitalization as a driver of European SMEs’ financial performance during COVID-19," Finance Research Letters, Elsevier, vol. 67(PA).
    • Handle: RePEc:eee:finlet:v:67:y:2024:i:pa:s154461232400878x
    DOI: 10.1016/j.frl.2024.105848
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    More about this item

    Keywords

    Digital transformation; Uncertainty; Financial performance; SMEs;
    All these keywords.

    JEL classification:

    • D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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