Digital transformation in business

Social media is a tool that allows consumers to interact with family, friends, and a wider social circle by sharing information and experiences in real time from their public and private lives. Massive reductions in the cost of information and communication technology and the proliferation of internet access have led social media to become an everyday tool for individuals and organisations across the globe. However, social media is only one element of a larger group of digital tools that firms around the world use to build or grow their businesses by connecting with customers, suppliers, and present and future employees.

In 2019, Copenhagen Economics was asked by the Facebook company to explore how digital tools contribute to society via impacts on business activity worldwide.

To explore these effects, we conducted a survey focusing on the role of social media, using Facebook apps and technologies as an example. Representatives from more than 15,000 businesses located in 30 countries and regions across six continents responded. The survey results suggest that digital technologies, like Facebook apps and technologies, facilitate business growth, trade, hiring and inclusion.


Digital technologies and connectivity can drive economic inclusion of all businesses.
Essentially, the wide group of mostly free digital tools from Facebook, combined with the worldwide expansion of the internet, afforded less-advantaged groups the ability to connect their products and services with customers around the world and serve a wider, and sometimes even global, economy in 2018-2019. In keeping with the UN Sustainable Development Goals, which highlight economic inclusion, we suggest that continued improved access to infrastructure and investments in digital skills for the regions and groups that currently have limited or no access to these resources would facilitate this economic activity and social advancement.

Digital technology can have a marked impact on hiring and jobs.
Digital tools allow employers to advertise job requirements for vacant positions quickly and at low cost, while giving applicants the ability to seek jobs in a wider geographical area, improving the overall functioning of the job market. In our survey, 29 per cent of firms using Facebook apps and technologies reported that they used the apps and technologies for hiring purposes in 2018-2019. In addition to making hiring easier, digital tools and associated reduced costs may enable companies to retain their headcount by helping to increase sales, exports, and profit margins.

Digital technology can help firms access markets abroad.
We find that digital tools have lowered trade costs and offered firms a larger base of potential customers in both near and distant markets. In our survey of businesses across 30 countries and regions, we find a higher propensity to export by businesses using Facebook apps and technologies (44 per cent), compared to businesses not using Facebook apps and technologies (26 per cent), in 2018-2019.

Digital technology can help decrease barriers to growth.
By lowering the costs of marketing and enabling wider customer reach, digital technologies — including, as an example, Facebook apps and technologies — can help businesses overcome barriers to growth. In our survey, 78 per cent of businesses that reported using Facebook apps and technologies used them for paid ads, free marketing, or finding new clients or customers in 2018-2019.

Note on timing of data collection: The research presented herein was designed and conducted in 2019, including a global survey that gathered information about businesses’ economic activity in the 12 months prior to Autumn 2019. The economic fundamentals underpinning the study results are informed by global trends up to 2019 and, accordingly, do not reflect economic and social impacts of the COVID-19 pandemic that have emerged in 2020.

A one-page summary about Copenhagen Economics is available here


Related work

Governments of Ireland, Denmark, Finland and the Czech Republic Making EU trade in services work for all
Bundesverband E-Commerce und Versandhandel (Bevh) The impact of e-commerce on the German economy