Digital Technology Integration Among Eastern European Companies, Based on Digital Economy and Society Index

Interdisciplinary Description of Complex Systems 21(5), 421-440, 2023 DIGITAL TECHNOLOGY INTEGRATION AMONG EASTERN EUROPEAN COMPANIES, BASED ON DIGITAL ECONOMY AND SOCIETY INDEX Tünde Zita Kovács*, András Nábrádi and Beáta Bittner University of Debrecen Debrecen, Hungary DOI: 10.7906/ indecs.21.5.1 Regular article Received: 12 February 2023. Accepted: 2 July 2023. ABSTRACT The European Commission has given special attention to the digital evolution of the European economy and society since the early 2000s. Starting with 2014, the Digital Economy and Society Index has become a key monitoring and assessment instrument. In 2021, the main indicators of the Digital Economy and Society Index were matched with the Digital Agenda 2030 targets, which encompass four dimensions: human capital, connectivity, digital technology integration, and digital public services. The article aims to verify the convergence amongst Member States in integrating digital technologies, which is the third dimension of the Digital Economy and Society Index yearly database. The σ-convergence analysis assessed decreased disparities in digital technology integration between Member States over time. The β-convergence analysis was used to evaluate the pace of catch-up from the initial development level. The σ- and β-convergence were not confirmed. The specific digital technology integration indicators (11) are studied to identify crucial areas that must be addressed in the future to guarantee that digital inclusion is as widespread as feasible. The present research is concentrated on the member countries that joined the EU during the Eastern enlargements. All individual indicator performance is typically behind the EU average, and as the β-convergence study indicates, the average catch-up rate is not encouraging. KEYWORDS convergences, digital transformation, SMEs, EU enlargements CLASSIFICATION JEL: M15, O14 *Corresponding author, : ; +3652508444/86930; *University of Debrecen, Egyetem tér 1, HU – 4032, Debrecen, Hungary T.Z. Kovács, A. Nábrádi and B. Bittner INTRODUCTION For the European Union, the knowledge-based economy serves as the foundation for the development of human resources, and ongoing research and development (R&D) in information and communication technologies is directly related to the EU’s competitiveness [1]. In order to accelerate their development and make them strong, resilient, efficient, and independent contributors to the national economy, micro, small, and medium-sized enterprises (MSMEs) need to be encouraged and strengthened [2, 3]. All of these were intentionally developed at the EU level beginning in 2000 with the Lisbon Strategy, followed in 2010 by the EU 2020 Strategy, which, for the first time, outlined the crucial role of ICT in accomplishing European goals. The Digital Agenda was enhanced further in 2015 by the European Digital Single Market Strategy, which also laid out specific guidelines based on three pillars to establish a just, open, and secure digital environment: • improving access to digital goods and services for consumers and businesses across Europe, • increasing the growth potential of the digital economy. Three primary digital goals were the focus of the second five-year Digital Agenda, “Shaping Europe’s Digital Future” in 2020: • technology for people, • fair and competitive economy, • an open, democratic and sustainable society. The Digital Agenda for Europe serves as the vehicle for these strategies to advance digital technology in Europe. The European Commission (EC) developed the Digital Economy and Society Index (DESI), which has been released annually since 2014 [4, 5] to gauge and track progress. The DESI last underwent a substantial reorganisation and methodological revision in 2021. The European Commission presented the Path to the Digital Decade, a program to aid in the digital transformation of the European economy and society, the same year the European Parliament adopted the Digital Agenda 2030: A European Method to accomplish the Digital Decade [6]. Currently, the DESI index ranks the EU Member States and tracks their development using 33 distinct and four main indicators. The four key areas are as follows: • • • • desi_1 Digital skills and competencies of human capital, desi_2 Internet coverage and quality of access, desi_3 Digital technologies in the enterprise, desi_4 The penetration of digital public services. A recent study investigated whether member-state convergence could be identified using the annual databases of the DESI [7]. We discovered statistical evidence of convergence between the EU27 Member States for the DESI overall index using the σ- and β-convergence tests. One can wonder, though, if the convergence for the core indicators (desi_1, desi_2, desi_3, desi_4) can be shown independently [8-10]. The third dimension of the DESI index, which gauges the level of digital technology adoption in EU Member States, is the topic of this study. As shown in Table 1, the core indicator desi_3 consists of 11 individual indicators and three sub-dimensions: The weighted value of the desi_3 subdimensions 15-70-15 % determines the degree of digital technology integration ranking: desi_3a × 0,15 + desi_3b × 0,75 + desi_3c × 0,15. 422 Digital technology integration among Eastern European companies, based on the... Table 1. The desi_3 core indicator’s structure. desi_3 subdimensions Digital intensity (desi_3a) Individual indicators SMEs with at least a basic level of digital intensity Electronic information sharing Social media Big data Digital technologies for businesses (desi_3b) Cloud AI ICT for environmental sustainability e-Invoices SMEs selling online e-Commerce (desi_3c) e-Commerce turnover Selling online crossborder The article aims to verify the convergence amongst Member States in integrating digital technologies, which is the third dimension of the DESI yearly database. Convergence calculations are used to track the level of cohesiveness in various sectors. The convergence of the development of the Member States that joined the European Union (EU) during the 2004-2007-2013 enlargements (Eastern European enlargements) and the old EU Member States is a priority. The article emphasises two different types of convergence. The average relative deviation of the DESI index values from the mean, presented as a percentage, is the first, also known as the relative standard deviation or σ-convergence. There is a convergence when the development levels’ dispersion decreases with time. β-convergence is another wellknown convergence indicator [11, 12]. The neoclassical growth theories of Ramsey [13], Solow [14] and Koopmans [15] are the foundation for this growth indicator. The Solow-based and endogenous growth theories asserted that national economic policies and nation-specific features are significant predictors of a country’s catching-up performance from the 1980s onward. Foreign capital inflows speed up growth, which ev (...truncated)