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The Impact of Production Digitalization Investments on European Companies’ Financial Performance

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  • Aiste Lastauskaite

    (School of Economics and Business, Kaunas University of Technology, Donelaicio St. 73, 44249 Kaunas, Lithuania)

  • Rytis Krusinskas

    (School of Economics and Business, Kaunas University of Technology, Donelaicio St. 73, 44249 Kaunas, Lithuania)

Abstract

Businesses investing in production digitalization equipment are supposed to benefit from increased productivity, enhanced efficiency, and revenue growth. Despite the increasing use of digital technologies in business, many companies still struggle to measure and maximize their returns from production digitalization investments. This research assesses the impact of production digitalization investments on companies’ financial performance (operating revenue) for European businesses in the period of 2013 to 2021. To achieve this target, we performed a Fixed Effects Panel Regression analysis, using a sample size of 5706 records from the Orbis database for 30 countries, covering 634 business units. The production digitalization investment in this research is expressed by a calculated variable value, measured as the annual change in a company’s Plant and Machinery value, adjusted with corresponding an annual depreciation value for the assets. The regression output was analyzed by considering the characteristics of the company size and business location. The results suggest that companies in Eastern Europe benefit more from production digitalization than those in Western Europe. The analysis highlights the tendency for the company costs of the employee and intangible fixed asset value to increase as production digitalization investments grow. Additionally, it shows that large companies tend to gain more from such investments than smaller ones. The analysis provides support and guidance for businesses’ production digitalization investment strategic decision-making processes.

Suggested Citation

  • Aiste Lastauskaite & Rytis Krusinskas, 2024. "The Impact of Production Digitalization Investments on European Companies’ Financial Performance," Economies, MDPI, vol. 12(6), pages 1-16, June.
    • Handle: RePEc:gam:jecomi:v:12:y:2024:i:6:p:138-:d:1407797
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    References listed on IDEAS

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