The digital divide in firm resilience: New evidence from global crises

Global crises affect firms unevenly, with some remaining resilient while others contract or exit. This paper examines whether digitalization explains this divergence in performance gaps. Using balance sheet data for 1.8 million listed and non-listed firms across 53 countries, combined with OECD input–output linkages, we construct a comparable firm-level measure of digital input intensity and estimate dynamic responses to uncertainty shocks using state-dependent local projections. We find that digitalized firms adjust more resiliently with smaller declines in sales, while less-digitalized firms suffer deeper and more persistent contractions, particularly among SMEs and service firms. In emerging and developing economies, digital leaders even expand as laggards retreat. Digitalization thus acts as a form of insurance against crises. Because this capability is unevenly distributed, however, it also widens a digital divide. This points to a role of fiscal policies that broaden digital access alongside traditional crisis support.