Digital transformation: how it changes organisations, performance and markets – a multi-level analysis

The project focused on understanding how digital transformation affects firms, markets and performance. Combining quantitative and qualitative methodologies, the research team examined adoption patterns of digital technologies, identified critical drivers for successful digital transformation and assessed the impact on productivity, innovation and competitiveness. The results were targeted to inform businesses and policymakers, addressing gaps in adoption and fostering sustainable transformation.

Digital transformation represents a significant shift in how businesses innovate, operate and compete. Despite its importance, there is considerable variation in the adoption of digital technologies and their contribution to value creation across firms and industries. This project investigated these disparities and explored the role of innovation capabilities, market dynamics and strategic aspects in shaping digital transformation outcomes. The work was built on firm-level surveys, indicators derived from large-scale web scraping, econometric analyses and in-depth case studies to provide an evidence-based foundation for decision-making.

The project aimed to:

1. Analyse the adoption and diffusion of digital technologies, including AI.
2. Investigate how digital transformation drives innovation, productivity and competitiveness.
3. Understand organisational strategies to overcome challenges in the digital transformation and technology adoption.
4. Provide actionable recommendations for firms and policymakers on how to leverage the potential of digital transformation.

For research: The findings provide a robust framework for studying digital transformation's multidimensional impacts, offering new methodologies for analysing adoption and performance outcomes of digital technologies.

For practice: Firms should align IT investments with innovation goals and leverage complementary networks to enhance competitiveness. Policymakers should address exclusivity in technology diffusion and ensure coherence between innovation and competition policies.

Three main messages

1. Overcome cluster effects in the diffusion of AI: The analysis revealed empirical evidence that the diffusion of AI technologies among Swiss companies is largely concentrated within exclusive clusters, both industry-specific and geographical. This pattern gives rise to concerns regarding the potential for disparities in economic and technological development since companies situated outside of these clusters may encounter obstacles to accessing AI knowhow. Such concentrations may contribute to exacerbating existing inequalities in the diffusion of innovation.
2. Ensure policy coherence: The research team points out the critical importance to strategically align IT investments with innovation capabilities. Contrary to initial assumptions that IT investments alone drive productivity, the project demonstrates that their efficacy is contingent upon complementarity with firms’ innovation capabilities and necessitates alignment with the competitive environment. Hence, it may therefore be advisable for policymakers to consider aligning innovation and competition policies to boost productivity through digitalisation.
3. Foster effective intellectual property protection and collaborative innovation ecosystems: The project highlights the critical role of digital technologies in enhancing firms’ innovation. IT facilitates external knowledge search and recombination, enabling firms to build deeper relationships with partners and enhance knowledge creation. However, the effectiveness of IT in fostering innovation is heavily influenced by a firm's ability to protect and appropriate the value of its innovation efforts. To address these challenges, policymakers should focus on fostering robust intellectual property protection mechanisms to promote firms’ collaborative innovation activities. Additionally, encouraging the development of collaborative platforms and trust-based partnerships within innovation ecosystems can further enhance innovation. These measures will help mitigate risks of knowledge leaks, support value appropriation and maximise the potential of digital technologies to promote innovation and economic value.

Digital transformation: how it changes organizations, performance, and markets – a multi-level analysis