The impact of digital transformation on European countries: insights from a comparative analysis

Authors

DOI:

https://doi.org/10.24136/eq.2021.012

Keywords:

digital transformation, technological development, economy 4.0, society 4.0, company 4.0, European countries

Abstract

Research background: In the era of the digital revolution, the Internet, automation and robotisation, new industrial relations and dynamic interactions among different stakeholders are giving rise to new opportunities and challenges. The changes associated with the enforcement of the ?Industry 4.0? concept require adaptation to these developments at different levels of the economy and society in order to support digital transformation.

Purpose of the article: The aim of this paper is to measure and assess the impact of digital transformation on European countries (EU). The comparative analysis of technological development in EU countries includes three dimensions: the digitalisation of society (Society 4.0), the ability of the economy to face the challenges of technological development (Economy 4.0), as well as the exploitation of ICT in companies (Companies 4.0).

Methods: The empirical section of the article was built on a two-stage analytical approach: (a) cluster analysis methods to assess differences and similarities between EU countries (Hierarchical Cluster and K-Means Cluster) and (b) the multi-criteria decision-making method (TOPSIS) to rank countries according to the adopted evaluation criteria. For the purposes of this analysis, data from the Eurostat database have been applied.

Findings & value added: The results of this analysis demonstrate the impact of technological transformation on the economy and society in EU countries grouped according to a similar level of development, such as countries with high, medium and low performance. This has contributed to indicating the cohesion in technological development achieved by each country group and to recognising the digitalisation gap between EU Member States. The novelty of this study consists in applying the multi-stage, multi-criteria analysis based on cluster analysis and the TOPSIS method, as well as the comparative analysis of the impact of technological developments on the societies and economies of EU countries. This paper extends similar studies by focusing on the application of a broad range of indicators regarding a holistic perspective including three dimensions: societies, economies and companies. The results provide valuable insights into evaluating the technological progress in European countries.

Downloads

Download data is not yet available.

References

Abolhassan, F. (Ed.) (2017). The drivers of digital transformation: why there's no way around the cloud. Springer: Cham.

Aruldoss, M., Lakshmi, M., & Venkatesan, P. (2013). A survey on multi-criteria decision making methods and its applications. American Journal of Information Systems, 1(1), 31?43. doi: 10.12691/ajis-1-1-5.

Balcerzak, A. P. (2016). Technological potential of European economy. Proposition of measurement with application of multiple criteria decision analysis. Montenegrin Journal of Economics, 12(3), 7?17. doi: 10.14254/1800-5845.20 16/12-3/1.

Balcerzak, P. A., & Pietrzak, B. M. (2017). Digital economy in Visegrad Countries. Multiple-criteria decision analysis at regional level in the years 2012 and 2015. Journal of Competitiveness, 9(2), 5?18. doi: 10.7441/joc.2017.02.01.

Bryman, A., & Bell, E. (2007). Business research methods. Oxford: Oxford University Press.

Caruso, G., Gattone, S. A., Fortuna, & F., DiBattista, T. (2017). Cluster analysis as a decision-making tool: a methodological review. In E. Bucciarelli, S. H. Chen & J. Corchado (Eds.). Decision economics: in the tradition of Herbert A. Simon's heritage. Cham: Springer International Publishing. doi: 10.1007/978-3-319-60882-2.

Castelo-Branco, I., Cruz-Jesus, F., & Oliveira, T. (2019). Assessing industry 4.0 readiness in manufacturing: evidence for the European Union. Computers in Industry, 107, 22?32. doi: 10.1016/j.compind.2019.01.007.

Compagnucci, S., Berni, G., Massaro, G., & Masulli, M. (2017). Thinking the future of European industry: digitalization, Industry 4.0 and the role of EU and national policies. Bruxelles: I-com - Institute for Competitiveness.

Crowther, D., & Lancaster, G. (2008). Research methods: a concise introduction to research in management and business consultancy. New York: Taylor & Francis.

Denecken, S. (2015). Conquering disruption through digital transformation. SAP White Paper, New York: SAP.

Dutton, H. W. (2014). Putting things to work: social and policy challenges for the Internet of things. Info, 16(3), 1?21. doi: 10.1108/info-09-2013-0047.

European Commission (2017). Key lessons from national industry 4.0 policy initiatives in Europe. Digital transformation monitor. Brussels: European Commission.

European Union (2018). 2018 international digital economy and society index. Luxembourg: European Union. doi: 10.2759/745483.

European Union (2019). Digital Europe for a more competitive, autonomous and sustainable Europe. Retrieved from https://ec.europa.eu/digital-single-market/en/news/digital-europe-more-competitive-autonomous-and-sustainable-europe-brochure (30.04.2020).

Filippetti, A., & Peyrache, A. (2013). Is the convergence party over? Labour productivity and the technological gap in Europe. Journal of Common Market Studies, 51(6), 1006?1022. doi: 10.1111/jcms.12066.

Fitzgerald, M., Kruschwitz, N., Bonnet, D. & Welch, M. (2013). Embracing digital technology: a new strategic imperative. MIT Sloan Management Review: Research report. Massachusetts Institute of Technology. Retrieved from https://www.capgemini.com/fi-en/wp-content/uploads/sites/27/2017/07/embrac ing_digital_technology_a_new_strategic_imperative.pdf (30.04.2020).

Hess, T., Matt, C., Benlian, A., & Wiesböck, F. (2016). Options for formulating a digital transformation strategy. MIS Quarterly Executive, 15(2), 123?139.

Johnston, M. P. (2014). Secondary data analysis: a method of which the time has come. Qualitative and Quantitative Methods in Libraries, 3(3), 619?626.

Kagermann, H. (2014). Chancen von Industrie 4.0 nutzen. In T. Bauernhansl, M. ten Hompel & B. Vogel-Heuser (Eds.). Industrie 4.0 in produktion, automatisierung und logistik. Wiesbaden: Springer Fachmedien.

Kane, G. C., Phillips, A. N., Copulsky, J. R., & Andrus, G. R. (2019). The technology fallacy: how people are the real key to digital transformation. Massachusetts, USA: MIT Press.

Kašparová, M., & Barva, J. (2018). Data analysis of European Union states: youth behavior in digital world. Scientific Papers of the University of Pardubice, Series D journal, 26, 44 (3/2018).

Kergroach, S. (2017). Industry 4.0: new challenges and opportunities for the labour market. Foresight and Sti Governance, 11(4), 6?8. doi:10.17323/2500-2597.2017.4.6.8

Laukkanen, T. (2016). Consumer adoption versus rejection decisions in seemingly similar service innovations: the case of the Internet and mobile banking. Journal of Business Research, 69(7), 2432?2439. doi: 10.1016/j.jbusres.2016.01 .013.

Máchová, R., & Lněnička, M. (2015). Reframing e-government development indices with respect to new trends in ICT. Review of Economic Perspectives, 15(4), 383?412. doi: 10.1515/revecp-2015-0027.

Matt, C., Hess, T., & Benlian, A. (2015). Digital transformation strategies. Business & Information Systems Engineering, 57(5), 339?343. doi: 10.1007/s12599 -015-0401-5.

Mazali, T. (2018). From industry 4.0 to society 4.0, there and back. AI & Society, 33, 405?411. doi: 10.1007/s00146-017-0792-6.

Mihai, M., ?i?an, E., Manea, D. I., & Apostu, S. A. (2018). Digital health era: opportunities and challenges. Journal of Social and Economic Statistic, 7(2), 7?31. doi: 10.1016/B978-0-12-820077-3.00002-X.

Misuraca, G., Broster, D., & Centeno C. (2012). Digital Europe 2030: designing scenarios for ICT in future governance and policy making. Government Information Quarterly, 29(1), 121?131. doi: 10.1016/j.giq.2011.08.006.

Naudé, W., Surdej, A., & Cameron, M. (2019). Ready for industry 4.0? The case of central and Eastern Europe. In M. Dastbaz & P. Cochrane (Eds.). Industry 4.0 and engineering for a sustainable future. Cham: Springer. doi: 10.1007/978-3-030-12953-8_10.

Novkovska, B., & Dumičić, K. (2019). Ordering goods and services online in South East European countries: comparison by cluster analysis. UTMS Journal of Economics, 10(2), 163?173.

Qin, X., Huang, G., Chakma, A., Nie, X., & Lin, Q. (2008). A MCDM-based expert system for climate-change impact assessment and adaptation planning ? a case study for the Georgia Basin, Canada. Expert Systems with Applications, 34(3), 2164?2179. doi: 10.1016/j.eswa.2007.02.024.

Peppard, J., & Ward, J. (2016). The strategic management of information systems: Building a digital strategy. Chichester: Wiley.

Piątkowski, M. J. (2020). Expectations and challenges in the labour market in the context of industrial revolution 4.0. The agglomeration method-based analysis for Poland and other EU member states. Sustainability, 12, 5437. doi: 10.3390 /su12135437.

Toffler, A (1980) The third wave. New York: William Morrow & Company.

Tzeng, G-H., & Huang, J-J., (2011). Multiple attribute decision making. Methods and applications. Boca Raton: Taylor & Francis Group.

Urbaniec, M., & Czaja, I. (2019). Digital exclusion in the labour market in European countries: causes and consequences. European Journal of Sustainable Development, 8(5), 324?336. doi: 10.14207/ejsd.2019.v8n5p324.

van Deursen, A., & van Dijk, J. (2011). Internet skills and the digital divide. New Media & Society, 13(6), 893?911. doi: 10.1177/1461444810386774.

van Deursen, A., van Dijk, J., & van Helsper, E. (2014). Investigating outcomes of online engagement. Media@LSE Working Paper, 28.

van Dijk, J. A. G. (2013). A theory of the digital divide. In M. Ragnedda & G. W. Muschert (Eds.). The digital divide: the internet and social inequality in international perspective. New York: Routledge.

Vartanian, T. P. (2011). Secondary data analysis. New York, NY: Oxford.

Westerman, G., Bonnet, D., & McAfee, A. (2014). Leading digital: turning technology into business transformation. Boston, Massachusetts: Harvard Business Review Press.

Yoon, K., & Hwang, C. L. (1981). Multiple attribute decision making methods and applications. A state-of-the-art survey. New York: Springer-Verlag.

Yoon, K. P., & Hwang, C. L. (1995), Multiple attribute decision making: an introduction. Thousand Oaks: CA Sage Pub.

Zaharia, M., & Bălăcescu, A. (2020). Digital economy and society. Comparative cluster analysis of EU states. Journal of Applied Computer Science & Mathematics, 14(1), 30?36. doi: 10.4316/JACSM.202001005.

Žmuk, B., & Mihajlović, I. (2018). Online booking for travel and accommodation influenced by economic and digital development level: position of the Western Balkan countries within Europe. Croatian Review of Economic, Business and Social Statistics, 4(2), 86?98. doi: 10.2478/crebss-2018-0016.

Downloads

Published

2021-06-30

How to Cite

Małkowska, A., Urbaniec, M., & Kosała, M. (2021). The impact of digital transformation on European countries: insights from a comparative analysis. Equilibrium. Quarterly Journal of Economics and Economic Policy, 16(2), 325–355. https://doi.org/10.24136/eq.2021.012

Issue

Section

Articles

Most read articles by the same author(s)