KISDI Finds Companies Using Digital Technologies Show Faster Growth Trends (detail)

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KISDI Basic Research (25-11): _An Analysis of the Impact of Digital Technology Utilization on Business Performance and Its Policy Implications

KISDI Finds Companies Using Digital Technologies Show Faster Growth Trends
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- Companies utilizing digital technologies recorded higher employment and sales growth.
- Entry into new business activities and business restructuring contributed to improved performance.
- The positive effects of digital technology utilization were more pronounced among SMEs.
- The combined use of multiple digital technologies had a positive impact on business growth.

The Korea Information Society Development Institute (KISDI, President Sangkyu Rhee) recently published its Basic Research Report (25-11), *An Analysis of the Impact of Digital Technology Utilization on Business Performance and Its Policy Implications*, which examines the relationship between digital technology adoption and business performance among Korean firms.

As digital transformation continues to expand, growing attention has been paid to whether firms' use of digital technologies translates into measurable business outcomes. To address this question, the study linked data from the National Statistics Business Activity Survey and the Business Register to analyze the relationship between digital technology utilization and key performance indicators, including employment and sales. The analysis was further extended using firm-establishment linked data to examine business growth mechanisms through structural changes such as the establishment of new business units and business restructuring.

The findings show that firms utilizing digital technologies achieved higher employment and sales growth than those that did not. The effects were particularly significant over a three-year period, suggesting that digital technology utilization is associated not only with short-term fluctuations but also with sustained business growth. These findings indicate that digital technology adoption can serve as an effective driver of business expansion.

The analysis also found that performance differences associated with digital technology utilization were more pronounced among service-sector firms, firms located in the Seoul metropolitan area, firms with fewer than 300 employees, and firms established within the past 20 years. In addition, the utilization of digital technologies such as artificial intelligence (AI), cloud computing, and big data was closely associated with improved business performance.

The firm-establishment linked analysis further showed that firms utilizing digital technologies were more active in establishing new business units and restructuring their business portfolios. Their growth was attributed not only to increased employment and sales generated by newly established business units but also to relatively smaller declines in the performance of existing businesses.

Son Nyeongseon, Research Fellow at KISDI, noted that the findings confirm a substantive relationship between digital technology utilization and improved business performance in Korea. She emphasized the need to recognize industrial digital transformation, supported by the effective use of digital technologies, as a key driver of economic growth. She also explained that the convergence of multiple digital technologies is becoming increasingly important and that the benefits of digital technology utilization are particularly significant for small and medium-sized enterprises (SMEs). Reflecting these trends, she suggested that future policy design should support broader and more effective digital technology adoption.

The report is available for download from the KISDI website (www.kisdi.re.kr).

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KISDI Finds Companies Using Digital Technologies Show Faster Growth Trends