The Impact of Digital Transformation Technology Adoption on Firm Performance in the General Machinery Industry

Sangsoo Park
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Sangsoo Park: Korea Institute for Industrial Economics and Trade

Industrial Economic Review from Korea Institute for Industrial Economics and Trade

Abstract: This study empirically examines how the adoption of digital transformation (DX) technologies affects firm performance in South Korea’s general machinery industry.

Drawing on six waves (2017-2022) of the national Survey of Business Activities (SBA) and applying a combined propensity-score matching and difference-in-differences (PSM-DID) design to a panel of 614 firms, the analysis estimates the average treatment effect on the treated (ATET) of overall DX adoption and conducts technology-specific analysis for the seven most widely adopted DX technologies. Aggregate DX adoption is associated with statistically significant increases in sales, employment, debt and other liabilities, and total assets. The effects, however, are heterogeneous across technologies: the adoption of IoT, robotics, and VR/AR technologies raise sales, while big data and 3D printing lead to higher employment and increases in paid-in capital.

The adoption of cloud and AI technologies were not found to have statistically significant effects on the financial indicators considered within the 2017-2022 observation window, suggesting that their effects on performance may take longer to materialize or require complementary investments.

These results suggest that DX policy for the general machinery industry should be differentiated by technology, with priority given to financial and workforce support measures that ease firm-level adoption frictions.

Keywords: digital transformation; DX; technology adoption; general machinery; tool and die; plant equipment; propesnity-score matching; difference-in-differences; Survey of Business Activities (search for similar items in EconPapers)
JEL-codes: C21 D22 L64 O33 O53 (search for similar items in EconPapers)
Date: 2026-06-30
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Published in KIET Industrial Economic Review Vol. 31, No. 3

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