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Does COVID-19 pandemic spur digital business transformation? Evidence from selected MENA countries

Author

Listed:
  • Mohammed Elhaj Mustafa Ali
  • Ebaidalla M. Ebaidalla

Abstract

Purpose - In the light of high reliance on digital technology to mitigate the consequences of the coronavirus disease 2019 (COVID-19) pandemic and its containment measures, this study investigates the factors influencing firms' decision to adopt digital technologies during COVID-19 in four Middle East and Northern African (MENA) countries, namely, Egypt, Jordan, Morocco and Tunisia. Design/methodology/approach - The study used the International Labour Organization (ILO)/Economic Research Forum (ERF) COVID-19 - MENA Monitor Enterprise Survey (CMMENT), comprising 5,480 firms, surveyed during 2020–2021. The empirical model is estimated using the linear probability model (LPM) to address the problem of unobserved heterogeneity between firms, countries, and time. Findings - The results revealed that firm characteristics, such as firm size and foreign ownership, encourage digital transformation in the business sector. Moreover, firms that face challenges during the pandemic, comply with the containment measures, and receive government assistance are more likely to adopt digital solutions. Furthermore, the results indicated that firms operating in services sector have a higher likelihood to adopt digital technology. Disaggregating the total sample into several sub-samples, the results are robust across countries and technology types, supporting the initial hypothesis that COVID-19 encourages digital transformation in the MENA region. Originality/value - The study has numerous contributions. First, to the best of the authors' knowledge, this is the sole study that uses micro data collected during the COVID-19 to examine the factors influencing firms' decision to adopt and invest in digital solutions in the MENA countries. Second, the paper employs the LPM estimator to address the issue of unobserved heterogeneity between firms, countries and time. Finally, the paper offers some practical recommendations for accelerating digital transformation in MENA region.

Suggested Citation

  • Mohammed Elhaj Mustafa Ali & Ebaidalla M. Ebaidalla, 2023. "Does COVID-19 pandemic spur digital business transformation? Evidence from selected MENA countries," International Journal of Social Economics, Emerald Group Publishing Limited, vol. 50(12), pages 1672-1687, May.
    • Handle: RePEc:eme:ijsepp:ijse-01-2023-0029
    DOI: 10.1108/IJSE-01-2023-0029
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    More about this item

    Keywords

    Business sector; COVID-19; Digital technologies; MENA countries; D22; O14; O33; Q55;
    All these keywords.

    JEL classification:

    • D22 - Microeconomics - - Production and Organizations - - - Firm Behavior: Empirical Analysis
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q55 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environmental Economics: Technological Innovation

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