Corvinus research: surprising, but there is no obvious link between digitisation and business performance  

The researchers from Corvinus, Dávid Losonci, László Lőrincz and Krisztina Demeter, with their co-authors, analysed the diffusion of digitisation techniques, frequently referred to as Industry 4.0, and their relationship with business performance based on data gathered from 2,510 manufacturing companies in Hungary. The study was published in the January issue of the Economic Review.  

The manufacturing sector is an important economic sector in our country. The survey sample represented one third of the companies in the sector, from metalworking and machinery manufacturing to food and chemical companies with more than 10 employees. Thus, compared to other research on digitisation in manufacturing, the researchers took a novel approach, as business performance indicators based on company reports have up to now been studied mainly only in relation to listed or large companies. In addition, data from the company reports were linked to data from the digitisation survey of Eurostat, which is one of the pillars of the DESI (Digital Economy and Society Index).  

Better business performance is for the time being just the promise of the future  

The results show that in Hungary there is no obvious link between the digitisation of manufacturing companies and business performance indicators, namely operational efficiency (e.g. inventory management) and profitability levels. However, it is clear that complex digital activity is typical of more productive firms. The study finds that the reason for this lack of connection may be, among other things, the particularity of the country or region. Previous research shows that Hungary lags behind developed countries in digitisation. Thus, the researchers suggest that domestic digitisation investments have not yet reached the stage where they can be profitable, if they have started at all. 

Two-thirds of Hungarian companies use basic digital technologies, with considerable differences between sectors  

The Corvinus study highlights, consistently with international surveys, that although the IT infrastructure is available, there are very substantial differences in the diffusion of digitisation techniques in the manufacturing sector. 77% of companies in the sector have a website, while just over a tenth have a shop.  More than a third of companies use e-business software and electronic data interchange solutions to support their management. A similar proportion of companies have IT staff and provide training in IT skills. So far, few companies have experience with solutions that are often linked to Industry 4.0 (big data, machine learning, 3D printing).  

The highest average level of digitisation was found in the pharmaceuticals sector, but the automotive, computer and electronics and the beverage industries also show above average digitisation levels. Digitisation techniques are less widely used in Hungary in the clothing, leather and footwear and woodworking industries. Online distribution is most common in the beverage and printing industries, while cloud services are common in the pharmaceutical industry. The use of 3D printing has been most widespread in the automotive, plastics, metal and electrical equipment manufacturing sectors, while robotics are most common in the automotive and vehicle manufacturing sectors, typically in larger companies. Complex digital activity is more typical of larger, more technologically intensive companies that are export-oriented. They also showed that even in the most complex digitisation factor, foreign companies have only a slight advantage.  

In response to the study, the Hungarian Economic Association is organising a professional online event entitled “Digitalisation and business performance – domestic manufacturing experiences” on 9 February, where the authors will introduce the main findings of the research, followed by a roundtable discussion with other experts on the subject.