How SMEs in Eastern Europe Respond to an Exogenous Shock: Enterprise Digitalization and Employment Resilience

Safi Ullah Khan

Eastern European Economics, 2025, vol. 63, issue 5, 707-738

Abstract: Amid the global trend of enterprise digital transformation (EDT), this study examines the employment effects of EDT under the economic challenges of exogenous shocks. Using World Bank enterprise survey data from nine Eastern European countries (2019–2021), we find that SMEs using remote work technologies, e-commerce, and digital platforms show greater employment resilience with fewer layoffs during crises, particularly female-dominated SMEs, SMEs with a higher ratio of technologically skilled labor, and non-manufacturing SMEs. We identify three mechanisms underlying the EDT-employment nexus: EDT promotes dynamic capabilities (innovation in products, services, and production processes); sustains operations during economic challenges; and enhances sales.

Date: 2025
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DOI: 10.1080/00128775.2025.2536015

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