Firms Used More Digital Tech During Pandemic—But Progress Was Uneven

July 11, 2023
Image of a person working from home on laptop

At a Glance 

The pandemic upended the global economy impacting workers, customers, and supplies alike. This triggered a digital revolution among emerging market companies as they adopted new technologies in response, narrowing the digital divide with advanced economies. But these gains were uneven, a new study finds.

  • 45%
    of businesses increased use of digital technologies
  • 28%
    of businesses invested in digital technologies

World Bank Group researchers analyzed data from three World Bank surveys conducted between May 2020 and November 2021. The goal was to assess how much businesses started using and investing in digital technologies during the pandemic. The study covered more than 65,000 small, medium, and large-sized firms from 57 (mostly developing) countries, spanning a range of economic sectors.

Nearly half of firms surveyed said that they increased their use of digital technologies in response to pandemic restrictions such as mandatory closures of businesses and manufacturing plants. About a quarter of the firms invested in new digital solutions.

The three surveys, serving as snapshots in time, reveal a pattern of progressive digitalization by enterprises. By the time the third survey was done, 45 percent of firms had increased their use of digital platforms, compared with only 32 percent indicating they had done so in the first survey. On the spending side, 28 percent of firms had made new investments in digital technologies by the time of the third survey, an increase of 8 percentage points from the first survey. 


The Pandemic Prompted Firms to Digitalize

How businesses responded:

Source: World Bank
Note: Digital technologies include internet, online social media, specialized apps, digital platforms, software, and equipment.


One promising finding was that low- and middle-income countries enjoyed a bigger uptake of digital technology by firms than high-income countries. For example, among European countries, the recorded increase went from 20 percent in the first survey to 30 percent in the third. By comparison, in Kenya the share of businesses that either started to use digital technologies or increased their use in response to COVID-19 pandemic rose from 50 to 80 percent over the same timeframe. And in El Salvador and Tunisia, the progressive increase in use was even more pronounced, jumping from 30 to 60 percent. Overall, the research suggests that the gaps in digitalization that existed between low- and high-income countries prior to the pandemic have narrowed, but that gaps remain.

Drilling down into individual sectors, financial services and information and communication technologies were the two industries that saw the highest percentage of firms—more than 60 percent—either starting or increasing use of digital technologies. In the accommodation, food services, and wholesale and retail trades, the uptick was between 47 and 51 percent. In agriculture, construction, manufacturing, and mining, the increase was a more modest 35 percent. Figures for new investments in digital technologies again show the financial services and information and communications sectors coming out on top, with 43 percent reporting having invested, compared to about 30 percent of firms in other sectors.


Some Sectors Digitalized More Than Others


Source: World Bank


In terms of bridging the digital divide, the findings were mixed and included some worrying trends. For instance, the larger the firm was, the more likely they were to digitalize. Fifty-two percent of large companies either started to use digital technologies or increased their use, compared to 43 percent for small firms. The study also finds a strong persistence in digitalization, with companies that were highly digitalized pre-pandemic around three times more likely to increase use of and investment in digital technologies, compared to those with low levels of digitalization pre-pandemic.


Smaller Firms Are Lagging on Digitalization


Source: World Bank


In terms of what business needs the technologies met, sales and marketing-related apps were the most popular. The most prevalent business functions for which companies increased the use of digital technologies, in response to COVID-19, were those that involved external relationships with customers and suppliers, such as marketing and sales. Of the firms that deployed digital technologies, 64 percent used them for marketing and 55 percent for sales, compared with 31 percent for managing supply chains, and 26 percent for production planning.


Digital Technologies Underused for Sourcing and Production

Business need served

Source: World Bank


Businesses operating in the hospitality, retail, and knowledge-intensive sectors were more likely to conduct online sales than manufacturers or agribusinesses. The analysis also identified a ‘winner takes all’ trend in online sales, with a small number of firms disproportionally benefiting from the spike in consumers moving to online purchases. For example, among businesses in Vietnam, the top fifth percentile of firms captured more than eighty percent of the online sales market. For every dollar the median-ranked firm sold online in Vietnam, the ninetieth percentile firm sold $24.4.  

IFC is conducting follow-up research that will offer further insight into how digital technologies are being used by businesses, with a particular focus on Africa and Latin America. An IFC-World Bank working paper published earlier in 2023 looked at how much microenterprises in Sub-Saharan Africa use digital technologies (see working paper).



Edgar Avalos (World Bank), Xavier Cirera (World Bank), Marcio Cruz (IFC), Leonardo Iacovone (World Bank), Denis Medvedev (IFC), Gaurav Nayyar (World Bank), and Santiago Reyes Ortega (IFC).