The effect of digital intensity on the financial performance of enterprises in Central and Eastern European countries

This study investigates the significance of information and communication technology (ICT) adoption, referred to as digital intensity (DI), and its impact on the financial performance of businesses in the manufacturing, utilities, and transportation sectors within Central and Eastern European (CEE) countries. The primary research question focuses on how DI and its components influence key financial indicators across these industries. This study uses data from the EUROSTAT, ENT2 (Comprehensive Enterprise Database), and EMIS (Emerging Markets Information Service) databases to examine financial and digital indicators for 2017–2022. The timeframe was selected to account for methodological changes in EUROSTAT and EMIS reporting. To explore these relationships, the study employs multiple factor analysis (MFA), which integrates interrelated variables from distinct blocks, including DI, profitability, indebtedness, and liquidity. Initially, separate principal component analyses (PCAs) were conducted on each variable block, followed by normalization. A global PCA was then performed on the balanced blocks to map variable relationships in a reduced-dimensional space. The MFA approach also facilitates the visualization of clusters and observations, offering insights into the diverse impacts of DI. The findings reveal that DI significantly affects financial metrics, such as profitability, indebtedness, and liquidity, with integration support systems playing a pivotal role in enhancing profitability and liquidity while mitigating debt. Furthermore, improvements in internet speed and accessibility are associated with enhanced financial performance. This empirical evidence underscores the potential of strategic investments in digital infrastructure and technology to enhance financial resilience and maintain competitive advantage in a digitalized economy. The study highlights a critical gap in the literature concerning the sector-specific effects of DI on financial performance in CEE industries and emphasizes the need for tailored digital strategies that account for the unique distribution channels and customer characteristics of each sector.