Trailing in digital adoption
Europe lags the United States not just in the creation of digital technologies, but also in the adoption of existing digital technologies. By 2020, 37% of European firms had still not adopted any advanced digital technology, compared with 27% in the United States.
The failure to adopt recent digital technologies ultimately weighs on European firms’ competitiveness. Firms that have implemented advanced digital technologies tend to perform better than non-digital firms. In addition to innovating more, they also invest more, have better management practices, grow faster and create higher paying jobs. The gap with the United States is particularly marked for the construction and service sectors, and in the adoption of “internet of things.”
Smaller firms tend to have lower rates of digital adoption than larger firms. But the level of adoption for firms with less than 50 employees is particularly low in Europe, where firms tend to be smaller than in the United States. That’s a shame, because microenterprises and small and medium-sized enterprises are the backbone of the European economy. They represent 99% of all businesses and more than two-thirds of employment in the European Union, compared with slightly more than 40% of employment in the United States.