FIRM AGILITY AND DIGITALISATION LESS HELPFUL THAN EXPECTED DURING THE COVID-19 PANDEMIC, BUT VALUABLE IN THE LONGER RUN

69 3, XXV, 2022 Business Adminis a ion and Managemen 10.15240/ ul/001/2022-3-005 FIRM AGILITY AND DIGITALISATION LESS HELPFUL THAN EXPECTED DURING THE COVID-19 PANDEMIC, BUT VALUABLE IN THE LONGER RUN Tjaša Redek1, Tomaž Ča e 2, Ba ba a Ča e 3, Ma ej Če ne4, Ma jaž Koman5 1 Uni e si y o Ljubljana, School o Economics and Business, Depa men o Economics, Slo enia, ORCID: 0000-0003-3100-7208, [email p o ec ed]; 2 Uni e si y o Ljubljana, School o Economics and Business, Depa men o Managemen and O ganisa ion, Slo enia, ORCID: 0000-0003-1256-4471, [email p o ec ed]; 3 Uni e si y o Ljubljana, School o Economics and Business, Depa men o Ma ke ing, Slo enia, ORCID: 0000-0003-0005-7288, [email p o ec ed]; 4 Uni e si y o Ljubljana, School o Economics and Business, Depa men o Managemen and O ganisa ion, Slo enia, ORCID: 0000-0001-5049-588X, [email p o ec ed]; 5 Uni e si y o Ljubljana, School o Economics and Business, Depa men o Economics, Slo enia, ORCID: 0000-0002-4164-9784, [email p o ec ed]. Abs ac : Fi ms’ pe o mance du ing exogenous c ises depends on se e al ac o s, om s a egic o esigh , inancial eadiness, and a numbe o i m-speci ic as well as sec o al aspec s, also including luck and go e nmen suppo . The aim o his pape is o in es iga e he ex en o which he ‘c isis eadiness’ o i ms, de ined by ac o s like a p oac i e s a egic app oach, digi alisa ion, and inancial cons ain s, as well as he eliance on o a ailabili y o go e nmen suppo , is esponsible o he ou come du ing he COVID-19 c isis compa ed o he long- un con ibu ion made by hese ac o s. The empi ical in es iga ion uses a unique combina ion o i m-le el balance shee da a and unique su ey da a conce ning he s a egic ocus and implemen a ion o Indus y 4.0. While he li e a u e sugges s ha digi alisa ion, a s a egic p oac i e app oach, and c isis eadiness (i sel depending on se e al ac o s) impac ed he i ms signi ican ly du ing he COVID-19 c isis, he esul s show i m pe o mance p ima ily depended on o he (sec o al) aspec s se ing as a majo exogenous ac o impac ing hei pe o mance. Du ing he c isis, digi alisa ion was addi ionally men ioned as an impo an adjus men ac o . Howe e , using i m-le el da a we show ha while companies we e able o mi iga e ce ain impac s o he supply and demand shocks igge ed by COVID-19 using hei in e nal esou ces and cha ac e is ics, including s a egic elemen s, he bigges explana o y ac o emains he sec o in ol ed. This leads o impo an manage ial and policy ecommenda ions, p incipally s essing he impo ance o p oac i i y and agili y o i ms’ long- un pe o mance, whe eas in he sho un he s a e mus help mi iga e he e ec s. Keywo ds: COVID-19, i m pe o mance, c isis eadiness, digi alisa ion, i m-le el e idence. JEL Classi ica ion: D22, E32, O32. APA S yle Ci a ion: Redek, T., Ča e , T., Ča e , B., Če ne, M., & Koman, M. (2022). Fi m Agili y and Digi aliza ion Less Help ul han Expec ed Du ing he COVID-19 Pandemic, bu Valuable in he Longe Run. E&M Economics and Managemen , 25(3), 69–87. h ps://doi.o g/10.15240/ ul/001/2022-3-005 EM_3_2022.indd 69 15.9.2022 13:49:23 70 2022, XXV, 3 Business Adminis a ion and Managemen In oduc ion The wo ld had only jus bounced back om he 2009 c isis when in 2020 COVID-19 igge ed one o he bigges c ises in almos a cen u y, acco ding o he OECD (2020b), causing a majo dis up ion o wo ld heal h, economic ac i i y, well-being, and jobs. Es ima ed GDP pe o mance in 2020 shows he 27 membe s o he Eu opean Union on a e age los 6.1% o GDP compa ed o 2019 and a ound 660,000 jobs, despi e subs an ial go e nmen suppo . The g ea es decline was seen in I aly, losing almos 11% o GDP o e 2019. Spain, G eece, and C oa ia los 8% o mo e o GDP, being hi la gely due o hei dependence on ou ism. CEE economies los be ween 2.7% (Poland) and 5.6% (Slo enia) o GDP (Eu os a , 2021). While agg ega e es ima es ha e been a ailable o a ew mon hs, e y li le e idence can be ound on he c isis’ impac on he i m le el and he con ibu ion made by a ious ac o s o di e ences in i m pe o mance in 2019. The unp eceden ed simul aneous supply and demand shock caugh many i ms o gua d. While in heo y c isis eadiness on he i m le el depends on se e al ac o s, om ma ke dynamism, he gene al unce ain y i ms ace in no mal condi ions, i m inancial and non- inancial pe o mance (Pa nell, 2021), i m s a egy and size as well as pe cei ed likelihood o a c isis (Baah e al., 2020; Golube a, 2021; Pa nell, 2021), hese elemen s a e insu icien o explain he ac ual di e ences be ween companies. Li e a u e also sugges s ha a highe le el o digi alisa ion was an ad an age due o he abili y o adjus as e , i.e., build digi al esis ance, and ha i would also widen he gap be ween leade s and lagga ds in he K-shaped eco e y (Bai e al., 2021; Bo e , 2021). While one can ind e idence ocussed on a ce ain sec o (e.g., ou ism, hospi ali y, heal h), li le gene al e idence is a ailable conce ning he impac o ex e nal, en i onmen al, in e nal, and i m-le el ac o s on coun y-le el o c oss- coun y i m pe o mance du ing he COVID-19 c isis. The aim o his pape is o in es iga e i m pe o mance du ing he c isis by s udying he de e minan s o sales and alue added. The key esea ch ques ion is o wha ex en did ‘c isis eadiness’, de ined by a p oac i e s a egic app oach, digi alisa ion, inancial cons ain s as well as eliance on o a ailabili y o go e nmen suppo (e.g., u lough schemes), con ibu ed o i ms’ ela i e pe o mance once he ex e nal ac o s a e con olled o , as la gely de e mined by indus y ype, i ms’ posi ion in he global alue chain, di e si ica ion o ma ke s. The analysis elies on a combina ion o h ee da ase s: (1) an adminis a i e i m- le el; popula ion-wide da abase o inancial s a emen s o 120,000 i ms pe yea , along wi h: (2) In e na ional Fede a ion Robo ics da a o include he digi alisa ion aspec on he sec o al le el. Fo a subpopula ion o i ms, (3) de ailed su ey da a on a i m’s p oac i e and eac i e app oaches, Indus y 4.0, and inancial and non- inancial obs acles a e used o complemen he analysis and acili a e a con as be ween i ms ha a e gene ally mo e o less ‘c isis- eady’ i ms. The analysis o e s se e al impo an insigh s in o he impac o he c isis on i ms. While a mo e p oac i e app oach is impo an in he long un and in ha ime ame mo e p oac i e i ms do ha e highe alue added pe employee, he analysis also shows ha in 2020 he e ec o di e en s a egies was no signi ican . The mos impo an ac o was he sec o al aspec . This holds impo an implica ions o bo h managemen and policymake s, s essing he alue o sec o - speci ic suppo . In he con inua ion, he pape i s p o ides he heo e ical backg ound, de ining he de e minan s o c isis eadiness and hei expec ed impac on i m pe o mance. Following a desc ip ion o he me hodology, he esul s a e p esen ed and discussed, including he limi a ions and sugges ions o u u e esea ch. 1. Theo e ical Backg ound and Hypo hesisDe elopmen 1.1 Fi mAgili y,Mo i a ion, Pe o mance,andC isisReadiness Fi m pe o mance depends on se e al ac o s, om ex e nal mac oeconomic, indus y and ma ke de e minan s as well as business en i onmen ac o s, bu also on se e al i m-le el de e minan s. We a e pa icula ly in e es ed in he i m’s in insic mo i a ion as a de e minan o i m pe o mance. Two se s o i m mo i es a e in es iga ed: p oac i e and eac i e. P oac i e mo i es include expec ed compe i i e ad an age, e enue, and u no e g ow h (Ča e e al., 2019), ma ke sha e inc ease, imp o ed p oduc i i y, speed and lexibili y, achie emen o economies o scale, EM_3_2022.indd 70 15.9.2022 13:49:23 71 3, XXV, 2022 Business Adminis a ion and Managemen e iciency and mo i a ion, decision-making, and o he s (Zimme man & Bly he, 2013). Reac i e mo i es e lec i ms’ eac ions o changes in he en i onmen (Alonso-Almeida e al., 2015) and a e also impo an o i m pe o mance. These include p essu es om he compe i ion, buye s and supplie s, he equi emen s o pa ne s wi hin global alue chains (e.g., equi emen s o ho izon al and e ical in eg a ion), and eac ion o equi emen s om a mo e compe i i e business en i onmen , such as egula o y changes and o he p essu es om he ou side. Companies wi h s onge p oac i e mo i a ion and a s onge eac i e d i e can be expec ed o pe o m be e . We call hese companies mo e agile. Empi ical esea ch shows ha he ‘business as usual’ app oach leads o compa a i ely wo se long- e m esul s. Fo example, in Slo enia, lagga d i ms ha e been cha ac e ised by he ‘business as usual’ app oach and, despi e hem acknowledging he lag, ha e no adjus ed hei s a egy (P ašnika , 2010). On he con a y, he bes i ms we e highly mo i a ed by bo h in e nal desi es o g ow, inno a e, and s eng hen hei compe i i e posi ions. They also abso bed he a ailable in o ma ion om he en i onmen and eac ed quickly o p essu es om supplie s and buye s. No mally, hey also ope a ed in mo e dynamic en i onmen s, which equi ed quick eac ions o main ain hei long- e m compe i i e posi ion (P ašnika , 2010; P ašnika e al., 2017). Mo i es a e no impo an jus o he achie emen o he i m’s be e pe o mance bu also in ela ion o o he b oade goals. Fo example, P ajogo (2011) es ablishes a posi i e ela ionship be ween mo i a ion, ope a ional pe o mance and implemen a ion and b oade en i onmen al goals (gene al ela ionships). 1.2 C isisPe o manceandC isis Readiness In Ma ch 2020, he COVID-19 ou b eak was decla ed a pandemic. By hen, he economic impac was al eady ob ious. COVID-19 in luenced economies and companies ia h ee key channels: con ainmen measu es, supply-side in luences, and demand-side e ec s (OECD, 2020a). The ini ial con ainmen eac ions by go e nmen s e e ed o qua an ine, a el bans, and es ic ions and closu es o public places. These es ic ions placed se ious s ain on he supply side, hampe ing he no mal o ganisa ion o p oduc ion and business p ocesses in bo h manu ac u ing and se ices and dis up ing p ocesses in global alue chains and in e na ional ade. Some ac o ies empo a ily closed due o bo h heal h issues and supply- ela ed p oblems (supply chain and p o ision o se ices). The demand side was also a ec ed. The g ea e unce ain y, con ainmen measu es, and changed li es yles ( emo e wo k, home-schooling) impac ed pa e ns o demand and he s uc u e o consump ion, no ably in some se ice sec o s ( e ail, hospi ali y, pe sonal se ices) (Domadenik e al., 2020). The Eu opean economy was signi ican ly a ec ed by he i us. O e all, he 2020 da a show ha GDP declined ac oss he EU-27 (2020) by 6.1%, and in Slo enia by 5.5%. While in 2020 he COVID-19 c isis was milde han he impac o he 2009 c isis, he e ec is s ill expec ed o be mo e ully e ealed in he nex ew yea s. Mo e de ailed da a show ha in Slo enia o he se ices (NACE R, S, T) espec i ely declined by 29%, 31% and 17% in he i s and hi d qua e s o 2020 and i s qua e o 2021. Hospi ali y los 21% in he i s qua e o 2020 and p o essional se ices 19%. In con as , manu ac u ing ‘only’ los 15.3% in he same qua e (S a is ical O ice o he Republic o Slo enia, 2021). The decline is e y p onounced in e enue gene a ion and alue added, while employmen was mode a ely a ec ed, declining om 76.4% o 75.6%, whe eas he unemploymen a e ose om 4.5% o 5% (Eu os a , 2021). In he longe un, Baldwin and di Mau o Wede (2020) poin o “ he accumula ion o ‘economic sca issue’”, which e e s o he long- e m channels o in luence and hei endu ing e ec s. These e e o he lowe angible and in angible (including echnological) in es men and loss o po en ial ou pu , los compe i i eness, loss o i m-speci ic in angible capi al, loss o human capi al, de e io a ion o skills, which a e pa icula ly dange ous amid he echnological ans o ma ion and inc eased global compe i ion, impac ing bo h i m g ow h and he abili y o su i e (Be iol e al., 2019; Pe eshybkina e al., 2017; Picca ozzi e al., 2018; Po es, 2020). Howe e , he e ec s o hese aspec s emain o be obse ed. C isis eadiness on he i m le el is ano he i al aspec . C isis eadiness e e s o p epa ing a i m o add ess c isis e en s p oac i ely, a e , o mi iga e he e ec s o a c isis (Pa nell, EM_3_2022.indd 71 15.9.2022 13:49:24 72 2022, XXV, 3 Business Adminis a ion and Managemen 2021). O cou se, whe he his in ol es c isis managemen o no depends on he i m’s size, dynamics o he en i onmen , e c. I can be obse ed om an in e nal pe spec i e, a manage ial pe spec i e and also om a inancial pe spec i e because i ms wi h mo e cash esou ces and a e less indeb ed a e likely o o e come he c isis be e . Empi ical e idence sugges s ha accumula ed deb in an unce ain en i onmen can cause he ampli ica ion o he c isis and a se ies o ailed i ms due o a c edi c unch (Bole e al., 2018). F om he manage ial and o ganisa ional pe spec i e, c isis eadiness also e e s o de eloping a ce ain s uc u e, cul u e, eac i eness o agili y. Mills and Ke emah (2020) a gue ha agili y ma e s, while Dykes e al. (2020) belie e ha bo h speed and agili y ma e . Following Pa nell (2021), we con end ha i ms ope a ing in mo e dynamic ma ke s (including hose unde g ea e p essu e om compe i o s, buye s, e c) b inging a highe le el o unce ain y will lead he i m o become mo e agile and mo e p epa ed o ace changes. In addi ion, in e nal p oac i e mo i es can be expec ed o con ibu e posi i ely o c isis eadiness. S ill, gi en he ex en o he COVID-19 c isis and he simul aneous and unp eceden ed supply and demand shocks, he ques ion is whe he a i m’s eadiness was able o signi ican ly impac i s pe o mance amid such hea y ex e nal es ic ions. 1.3 Implemen a iono New Technologies, Indus y 4.0, Digi alisa ion, and COVID-19 Indus y 4.0 o he 4 h Indus ial Re olu ion has been changing he na u e o p oduc ion and doing business gene ally. Wi h key echnologies anging om digi al p ocess managemen sys em (e.g., ERP, CRM, RFID) o obo isa ion, sma ac o ies, a i icial in elligence as well as ‘simple’ echnologies, he na u e o doing business has been changing apidly. Companies implemen new echnologies wi h many mo i es, bu p ima ily due o he expec ed long- e m s a egic bene i s o e sho - e m e iciency (e.g., cos sa ings and lexibili y) (Če ne e al., 2017). Al hough echnology enhances pe o mance, i can b ing addi ional social cos s (Chiacchio e al., 2018; G ae z & Michaels, 2018; Rüßmann e al., 2015; Thoben e al., 2017). Du ing he COVID-19 c isis, he expec a ion ollowing he lockdowns was ha he mo e echnologically ad anced i ms, i ms ha could he e o e mo e easily swi ch o e o emo e wo k o pu many o hei p ocesses on- line (e.g., e-comme ce), we e less a ec ed by he shock o be e e ained hei compe i i e posi ion in he pandemic (Be iol e al., 2019; Bo e , 2021; Golube a, 2021). Howe e , e idence is sca ce and ails o ully inco po a e aspec s o he sec o al pe spec i e. 1.4 Fi mPe o mance Fi m pe o mance is a mul idimensional concep (Fe nández-Temp ano & Teje ina-Gai e, 2020; Golube a, 2021) measu ed by he e u n on asse s, e u n on in es men , e u n on equi y, bu also i m goals like sus ainabili y (Zabka & Redek, 2020). While any comp ehensi e assessmen o i m pe o mance should also be mul idimensional, elying on a se o inancial and non- inancial indica o s (Lebas & Euske, 2002), empi ical analyses ocus on ei he measu ing he achie emen o long- e m s a egic goals, alue added, p o i abili y, i m g ow h (using alue added, ROA, ROI, sales g ow h, p o i abili y g ow h, also co po a e epu a ion, cus ome loyal y, e c) and moni o ing hei sho - e m e iciency and measu emen o he achie emen o ope a ional goals (cos s, sales, quali y, e c) (Ča e e al., 2019). S udies ha e employed ei he alue added (Iazzolino & Laise, 2013; Lang o d & Haynes, 2015; Shubi a, 2019), e u n on asse s, in es men s o equi y o a combina ion o hese (Giudici & Bona en u a, 2018; Naka ani, 2019; Pa k e al., 2019; Sewchu an e al., 2019; Viscon i, 2020; Yanagi, 2018) as indica o s o longe - e m i m pe o mance. The alue added app oach is he mos es ablished in economics (A ellano & Bond, 1991; Le insohn & Pe in, 2003; Olley & Pakes, 1996; Ro iga i & Mollisi, 2018) o measu ing i m pe o mance in he longe e m. In he sho un, especially in a c isis like COVID-19, o he measu es o pe o mance a e impo an , chie ly e enue, in es men , and employmen elas ici y o demand. We ocus on e enue in he analysis as such da a a e cu en ly he mos eliable and ollowing Bachas e al. (2020), who a gue ha COVID-19 c ea ed a e enue shock. They added ha he analysis p edic ed ha less han hal o he i ms would emain p o i able by he end o 2020, abou 5–10% o he o mal agg ega e annual pay oll would be los , and i m exi a es would double. In he USA as well, he da a show ha COVID-19 had a signi ican nega i e sales impac . This EM_3_2022.indd 72 15.9.2022 13:49:24 73 3, XXV, 2022 Business Adminis a ion and Managemen was mos p ominen in he 2nd qua e o 2020, wi h an a e age loss o 29% seen in sales (Bloom e al., 2021). Ye , he o e all p onounced nega i e e ec e eals signi ican he e ogenei y, “wi h o e 40% o i ms epo ing ze o o a posi i e impac , while almos a qua e epo losses o mo e han 50%” (Bloom e al., 2021). In Slo enia, some indus ies, among hem cons uc ion, inance and insu ance, in pa in o ma ion and communica ion echnology and some b anches o manu ac u ing, ha e eco ded a signi ican inc ease (S a is ical O ice o he Republic o Slo enia, 2021; see also Oblak, 2021; Čehajić & Košak, 2021). The EU and na ional go e nmen s helped he hea ily a ec ed economy (Dau i & Elezi, 2022; Milano ić & S amenko ić, 2022) and jobs du ing he pandemic wi h conside able suppo p og ammes du ing he lockdowns, ocused on e aining employmen and job u lough schemes (Republic o Slo enia, 2021b), and an ambi ious eco e y plan o Eu ope concen a ed on boos ing pos -COVID-19 g ow h wi h R&D, he g een ansi ion, and inc easing gene al esilience (Eu opean Commission, 2021). Following he li e a u e, we a gue ha p oac i e i ms a e on a e age mo e success ul han eac i e ones and achie e highe alue added pe employee in he longe un. H1: Mo e agile i ms achie e highe e enue g ow h pe employee o e he long un. H2: Mo e agile i ms a e on a e age mo e success ul han less agile ones and achie e highe alue added pe employee o e he longe un. H3: Expo s has a posi i e impac on alue added and mo e agile i ms a e mo e expo - o ien ed. On he con a y, gi en he sudden unexpec ed supply- and demand-side (OECD, 2020) shocks, we hypo hesise ha he 2020 pe o mance was a ec ed mo e by ex e nal ac o s han i m-le el de e minan s. H4: Du ing he COVID-19 pe iod in 2020, di e ences in pe o mance among i ms did no depend on agili y, bu p ima ily depended on in e nal ac o s ela ed o liquidi y as well as he indus y and o he ex e nal ac o s (including expo o ien a ion, access o c edi ). H5: Digi alisa ion and he use o new echnologies posi i ely impac ed he pe o mance o i ms du ing he c isis. H6: Go e nmen suppo had a posi i e impac on i ms’ pe o mance. 2. Resea ch Me hodology 2.1 Da a The analysis elies on a combina ion o h ee da ase s. The i s is he popula ion da ase wi h balance shee and income s a emen da a o all i ms in Slo enia (in o al, a ound 120,000 pe yea ). These da a a e o be used while analysing he inancial pe o mance o i ms in he sample. This da ase allows us o also p esen he sample in compa ison o he gene al Slo enian popula ion o i ms. Second, we use da a om a as su ey conduc ed among Slo enian companies in 2018/2019 wi h a ocus on Indus y 4.0. The su ey ques ionnai e comp ised 29 ques ion se s wi h sub-ques ions. I in es iga ed: (1) he use o new echnologies, in en ion o use, and unde s anding o he need o u u e use; (2) mo i es o he implemen a ion and use o new echnologies (p oac i e and eac i e mo i es o i ms o in es men s and o he mo i es (use ulness, ease o use, abso p i e capaci y, e c); (3) obs acles o implemen a ion ( inancial and non- inancial, pe cei ed isks); (4) he ac ual use o echnologies (which p ocesses, in ensi y o use, in en ion o u u e use); (5) i m pe o mance, Indus y 4.0 esul s and impac s on i m pe o mance (e iciency, s a egic goals); and (6) i m demog aphics. The su ey was comple ed by 218 manage s, mainly o la ge companies. Thi d, In e na ional Fede a ion o Robo ics da a a e used o con ol o he gene al use o echnology in he sec o . The sample o i ms s udied in he su ey comp ised a o al o 218 companies. Da a we e collec ed in 2018 and 2019. Mos companies (41.7%) we e medium (50–249 employees), 14% o i ms we e la ge, he es we e small. All companies we e en e p ises – he g oup comp ised no sole-p op ie o s. Manu ac u ing (NACE C) was he sec o o 168 companies, while he es came om di e en se ices wi h wholesale and e ail ade (NACE G) and p o essional and scien i ic se ices (NACE M) domina ing. We in es iga e he pe o mance o companies be ween 2017 and 2020, assuming ha he companies we e ope a ing in a simila in e nal and ex e nal en i onmen al eady 1 yea p io o he su ey. In addi ion, we assume ha in 2020 he companies we e as agile as hey we e in 2019 when he da a we e collec ed, i.e., he in e nal en i onmen has no changed since 2019 (when he da a collec ion ended) and ha he ( inancial) esul s in 2020 EM_3_2022.indd 73 15.9.2022 13:49:24 74 2022, XXV, 3 Business Adminis a ion and Managemen also e lec he eadiness o i ms de eloped in 2018–2019. 2.2 Me hodology A combina ion o s a is ical and econome ic app oaches was used o s udy he con ibu ion o a i m’s s a egic beha iou o i s pe o mance in he sho e m in bo h 2020 and he longe e m. Su ey Da a and Empi ical Es ima ion The key a iables o di iding i ms in o mo e and less agile i ms we e based on he su ey. Scales o measu ing he in ensi y and impo ance o p oac i e and eac i e mo i es ha shape i m beha iou we e buil using es ablished scales om he li e a u e (Tab. 1 wi h a ele an e e ence o each ac o ). Each mo i e was measu ed using a se o ou s a emen s e alua ed on a 7-poin Like scale (Tab. 1). P oac i e and eac i e mo i es push companies o adjus mo e quickly o he ma ke o o d i e he change hemsel es. We assume ha companies which a e mo e d i en by ei he p oac i e o eac i e mo i es a e mo e agile. To es ima e he le el o p oac i e o eac i e beha iou , he a e age alue o all p oac i e o eac i e mo i es was calcula ed. The co ela ion (0.96; sig. 0.000) shows ha he i ms which a e mo e eac i e a e also mo e p oac i e. Bo h a e hus conside ed as an indica o o agili y. Fi ms we e hus di ided in o wo g oups based on he median alue o he sum o bo h p oac i e and eac i e ac o s o disc imina e be ween hose unde g ea e p essu e om ou side ac o s as well as hei p oac i e d i e and a e he eby Reac i e P oac i e Supplie p essu e (Obal, 2017); Buye p essu e (Obal, 2017); Compe i o p essu e (Obal, 2017); En i onmen compe i i eness (Dill, 1958; Volbe da & an B uggen, 1997) Expec ed compe i i e ad an age (Obal, 2017); Expec ed e iciency imp o emen s (Weiss e al., 1999); Fi m epu a ion (Weiss e al., 1999) Minimum sco e 4; maximum sco e 28 Minimum sco e 3; maximum sco e 21 Sou ce: own Tab. 1: Fi m mo i es o change Fig. 1: A e age alue o eac i e and p oac i e mo i es in he wo g oups Sou ce: own EM_3_2022.indd 74 15.9.2022 13:49:26 75 3, XXV, 2022 Business Adminis a ion and Managemen mo e agile han hose ha a e less eac i e and less p oac i e in o al. Fi ms in he mo e agile g oup had bo h he sum o he p oac i e ac o s and he sum o eac i e ac o s abo e hei espec i e median alues. In o al, among he 218 i ms, 82 i ms we e no highly mo i a ed, while 136 we e in he highly mo i a ed, mo e agile g oup. Fig. 1 summa ises hei p oac i e and eac i e mo i es. Su ey da a we e used o es ima e selec ed di e ences be ween i ms, bu also as an inpu o he p oduc ion unc ion es ima ion. 2.3 Empi icalApp oach oEs ima ing he P oduc ion Func ion In he longe un, we ollow he s anda d app oach o es ima ing p oduc i i y by explaining he elas ici y o alue added o a se ies o explana o y a iables. The p oduc ion unc ion es ima ion was done using he p odes module, elying on he Le insohn- Pe in es ima o s (Le insohn & Pe in, 2003), wi h he Acke be g-Ca es-F aze co ec ion in he empi ical es ima ion (Ro iga i & Mollisi, 2018). Reg ession analysis was unde aken o es ima e he impo ance o in angible capi al o i m p oduc i i y in he longe un. The eg essions ollowed he s anda d app oach. In o de o explo e he impac o in angible asse s on i m pe o mance, we ocus on explo ing he co ela ion be ween i m p oduc i i y and in angible asse s. We es ima e a ela i ely pa simonious p oduc ion unc ion: ln ( alue added)i = α + β1ln(capi al)i + + β2 ln(employ)i + δAi + β3j Xj + γI + δT + εi (1) whe e alue addedi , capi ali and employi a e alue added (as he di e ence be ween sales and ma e ials and se ices cos s), ixed asse s, while employi is he a e age numbe o ull- ime employees. We also conside he impo ance o inancial indica o s (cash a ailabili y, sho - e m deb ), digi alisa ion (numbe o di e en Indus y 4.0 echnologies used, numbe o digi alised p ocesses), expo -o ien a ion (sha e o expo s in o al sales) and i m agili y (A). We u he con ol o ime (T) and indus y (I) ixed e ec s in all speci ica ions. εi is he e o e m. In he sho un, we a e especially in e es ed in sales. While i ms canno impac ixed cos s in he sho un e y much, he impac on alue added would be unde he conside able in luence o he cos s uc u e. On he o he hand, sales exhibi he e ec o he c isis mo e di ec ly. In addi ion, i is mo e unde he in luence o he i m’s agili y o i s abili y o make he igh decisions. We also look a he inancial indica o s as abo e since hey a e e y impo an in he e y sho un (e.g., abili y o pay ma e ials), and a he indus y. We also include among he o he explana o y echnological aspec s, as men ioned abo e. Due o he limi ed numbe o obse a ions, OLS is applied. Desc ip i e s a is ics a e p o ided in Tab. A1 in he Appendix. ln(sales)i = α + β1ln(capi al)i + + β2ln(ma e ial_cos s)i + + β3ln(employ)i + δAi + β3j Xj + γI + εi (2) 3. Resea ch Resul s 3.1 Compa a i ePe o manceo Fi ms in he Longe Run Fi ms ha a e mo e d i en by ex e nal eac i e mo i es o in e nal p oac i e mo i es o bo h pe o m be e in he longe un. This is es ed using bo h pe cei ed pe o mance as well as he i ms’ inancial s a emen s da a. Sales pe employee in he mo e agile g oup was mo e han wice he le el han in he less agile g oup, €327,000 compa ed o €149,000. In bo h cases, he dis ibu ions o sales pe employee (Fig. 2) a e skewed, al hough he mo e agile g oup has a s onge igh ail. Simila is seen o he dis ibu ion o alue added pe employee. In he mo e agile g oup, alue added pe employee in he p e-COVID-19 pe iod was €522,000 pe employee compa ed o €451,000 in he less agile g oup. Mo eo e , he median alues o bo h sales and alue added pe employee show he mo e agile g oup pe o med s a is ically signi ican ly be e (Fig. 2, Tab. 2). The mo e agile companies a e on a e age bigge , wi h 195 employees in compa ison o 164 employees, ye he di e ences a e no s a is ically signi ican (p = 0.1113). The mo e agile companies a e also mo e expo -o ien ed, wi h o al expo s on a e age ep esen ing 57% o all sales compa ed o ‘jus ’ 48.6% in he less agile g oup, wi h he di e ence being highly s a is ically signi ican . The Slo enian economy is highly expo -o ien ed wi h expo s a a ound 80% o GDP, anging o example om 2016 o 2020 be ween 77.6% and 84.8% o GDP (S a is ical O ice o he Republic o Slo enia, 2021).The mos expo -o ien ed company e en EM_3_2022.indd 75 15.9.2022 13:49:26 76 2022, XXV, 3 Business Adminis a ion and Managemen expo ed all o i s p oduc s and was in he mo e agile g oup. The mo e agile g oup was also signi ican ly mo e digi alised. On a 4-poin sel -e alua ion scale o he in ensi y o digi alisa ion (no ice, pa ially digi alised, ad anced, digi al champion), 45% o he less agile g oup we e no ices and ano he 46% pa ially digi alised. In he mo e agile g oup, 16% in o al we e ei he digi al champions o ad anced use s, and only 31% we e no ices. F om he 16 a ailable Indus y 4.0 echnologies (see Fig. 3), on a e age he mo e agile g oup used 5.4 di e en echnologies, while he less agile one jus 2.9 (signi icance 0.000). When compa ing he numbe o digi alised business p ocesses, he mo e agile had on a e age 3.31 p ocesses digi alised, while he less agile had only 0.79. Among he mo e agile i ms, e en 50% had in place digi alised inance and accoun ing and 49.3% business planning. Mo e han 40% o he agile i ms had digi alised pu chasing and p oduc ion. The si ua ion is comple ely di e en in he less agile g oup. A me e 13.4% o he g oup digi alised accoun ing and inance – and his was also he business p ocess ha was he mos digi alised. As sel - epo ed, he mo e agile g oup was also mo e likely o excel abo e he indus y a e age han he less agile one (Fig. 4). The di e ences we e s a is ically signi ican in sales and p o i g ow h, ma ke sha e g ow h, in success wi h he in oduc ion o new p oduc s and se ices, and ( he mos highly signi ican ) Fig. 2: Dis ibu ion o e enue pe employee, alue added pe employee, and employmen Sou ce: own Mean Median p5 p95 S d. de . Min Max N Value added pe employee** (in €) Less agile 45,147 37,608 19,367 86,931 27,719 1,870 218,501 249 Mo e agile 52,190 39,487 17,998 104,527 58,011 −1,874 733,774 409 Re enue pe employee** (in €) Less agile 148,714 111,872 49,776 296,859 154,309 20,794 1,432,748 249 Mo e agile 326,946 125,186 45,186 491,194 1,558,217 18,407 19,900,000 409 Ne e u n on asse s Less agile 7.03% 4.86% 0.00% 20.32% 7.94% −3.11% 58.05% 252 Mo e agile 6.02% 5.02% 0.00% 16.19% 5.65% −4.06% 41.97% 409 Numbe o employees Less agile 164.0 63.7 11.4 734.1 306.0 0.0 1,928.6 249 Mo e agile 195.1 73.6 12.3 781.0 437.6 0.0 4,390.7 409 Expo s sha e*** Less agile 48.61% 48.72% 0.00% 98.67% 35.84% 0.00% 99.98% 249 Mo e agile 57.00% 67.19% 0.74% 98.74% 34.79% 0.00% 100.00% 409 Sou ce: Agency o he Republic o Slo enia o Public Legal Reco ds and Rela ed Se ices (2021) No e: Signi ican di e ences: * 5%; ** 1%; *** 0.1%. Tab. 2: Compa ison o i m pe o mance be ween 2017 and 2019 EM_3_2022.indd 76 15.9.2022 13:49:27 77 3, XXV, 2022 Business Adminis a ion and Managemen in he i m’s epu a ion. The di e ence in alue added as he mos impo an indica o o a i m’s pe o mance is s a is ically signi ican no only be ween he wo g oups, bu also when compa ed o he indus y a e age, con i ming he alidi y o he sel -assessmen . To es he impo ance o a i m’s agili y om he pe spec i e o i s pe o mance in he longe un, he Olley-Pakes es ima ion me hod wi h an ACF co ec ion employing he p odes S a a module was used, es ima ing he elas ici y o alue added o a s anda d se o p oduc i i y de e minan s wi h addi ional con ols, he i s including agili y, hen he le el o echnological ad ancemen being measu ed by he numbe o di e en Indus y 4.0 echnologies used in Fig. 3: Sha e o all i ms in he g oup wi h digi alised p ocesses Sou ce: Su ey o he Agency o he Republic o Slo enia o Public Legal Reco ds and Rela ed Se ices (2021) Fig. 4: Pe cei ed ela i e assessmen o i ms compa ed o he indus y a e age* (le ) and alue added pe employee om inancial s a emen da a o manu ac u ing (NACE C) ( igh ) Sou ce: Su ey o he Agency o he Republic o Slo enia o Public Legal Reco ds and Rela ed Se ices (2021) No e: Like scale: 1 = much wo se han indus y a e age; 7 = much be e han indus y a e age. 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Min Max Value added pe employee 879 49,233.99 51,672.26 −1,873.681 837,373.5 Re enue pe employee 879 256,652 1,228,867 18,406.59 1.99e+07 Subsidies om he s a e 883 5,877.148 22,438.83 0.00 216,549 Employmen 883 181.67 395.67 0.00 4,429.14 Sha e o expo s in e enue 879 0.53 0.35 0.00 1.00 Supplie p essu e 724 3.07 1.26 0.75 6.25 Buye p essu e 720 3.32 1.39 1.00 6.5 Compe i o p essu e 720 3.99 1.46 1.00 6.75 En i onmen compe i i eness 681 5.44 1.33 1.00 7.00 Expec ed compe i i e ad an age 681 4.83 1.23 1.00 7.00 Expec ed e iciency 681 5.13 1.21 0.75 7.00 Expec ed epu a ion 681 5.58 1.39 1.00 7.00 Numbe o echnologies used 883 4.45 3.44 0.00 16.00 Numbe o digi alised p ocesses 883 2.35 2.79 0.00 9.00 Sou ce: Agency o he Republic o Slo enia o Public Legal Reco ds and Rela ed Se ices (2021) Tab. A1: Desc ip i e s a is ics o key a iables EM_3_2022.indd 87 15.9.2022 13:49:36