The Impact of Financial and Complementary Support Instrument on MSME Digitalization: A Multi-Country RCT in the European Union

The Digitrans Project will pilot an intervention to address these challenges by targeting 900 eligible MSMEs (5-35 employees, operational for at least 12 months, and at a foundational level of digital sophistication) in Bulgaria, Poland, and Slovakia. Each country will host 300 firms. Of these, 390 firms will receive a combination of financial subsidies and technical assistance to enhance their digital tool utilization.

The intervention comprises three main components:
1. Benchmarking Report: An automatically generated report comparing an eligible firm's digitalization level with similar firms from comparable sectors and sizes.
2. Financial Subsidy: Up to EUR 2,000 per firm to cover the costs of subscriptions or licenses for digital business tools, aiming to reduce financial barriers to digital adoption.
3. Technical Assistance: An 8-week advisory and training program providing hands-on support to MSMEs in preparing for and executing investments in digital tools and implementing related managerial and organizational changes. This includes:

The study will randomly assign eligible firms into one of three groups:
- Treatment Arm 1 – Firms receiving Financial Subsidy and Benchmarking Report – total of 195 firms (65 firms per country).
- Treatment Arm 2 – Firms receiving Financial Subsidy, Benchmarking Report, and Technical Assistance – total of 195 firms (65 firms per country).
- Control Group – Firms receiving the Benchmarking Report only – total of 195 firms (65 firms per country).

2024-07-07

2024-12-31

Technology Adoption, Technology Usage, Firm Performance

Technology Adoption: Index from 1 to 5, is constructed at the firm level based on survey responses aligned with the World Bank Firm-level Technology Adoption Framework (FAT). Firms report the acquisition of 4-6 types of technologies across eight General Business Functions (GBF): administration, planning, sourcing, marketing, sales, payment methods, quality control, and internal communication.

Technology Usage: Index, also ranging from 1 to 5, is constructed at the firm level by identifying which adopted tools are most frequently utilized in business operations for each GBF. Additional measures of usage intensity, such as the frequency of technology use, the extent of usage among firm staff, and specific functionalities employed, will also be gathered from the survey. This survey data will be supplemented with administrative data from the technologies themselves.

Firm Performance: Financial Performance: Includes indicators such as revenue, employment, and productivity, derived from business register information. Non-Financial Performance: Encompasses factors such as exporter status, collaboration with large firms, and the development of new products or services, based on survey responses.

Digital Knowledge and Practices, Managerial Practices, Financial Preferences

Digital Knowledge and Practices: Index created from answers to questions on topics including software update routines, data backup frequency, digital tool training, recent investments in digital technologies, methods of technology selection, and the use of technology integrators.

Managerial Practices: Index created from answers including including proactivity in addressing problems, performance monitoring, business management, people management, risk management, and change management.

Financial Preferences: Score from questions on financial decision-making preferences, specifically their choices between different digital technologies and their preferences for receiving money at different times.

The project aims to generate knowledge on the effectiveness of addressing non-financial challenges to enhance the productivity of MSMEs by improving their digital capabilities and managerial practices. By comparing both versions of the support, the study will provide insights into the effectiveness of assistance in overcoming informational constraints, improving managerial practices, and facilitating the effective use of digital technologies. This knowledge will be disseminated across EU Member States and the European Commission to inform further programs focusing on digital adoption and to create a scalable model for firm-level digital transformation.

Not available

Randomization done in office by a computer, using Stata software.

Individual Firm.

No

585 Firms (195 Firms in each of three countries).

585 Firms.

Treatment Arm 1: 195 Firms (65 Firms in each of three countries).

Treatment Arm 2: 195 Firms (65 Firms in each of three countries).

Control Group: 195 Firms (65 Firms in each of three countries).

Technology Adoption: - unit: GBF extensive index - MDE: 0.15 - SD: 0.19 - percentage: 5% Technology Usage: - unit: GBF intensive index - MDE: 0.15 - SD: 0.21 - percentage: 7% Firm performance - Employment - unit: ln Employment - MDE: 0.21 - SD: 0.23 - percentage: 15% Firm performance - Productivity - unit: ln Value added per Worker - MDE: 0.36 - SD: 0.35 - percentage: 27%