Creative disruption: technology innovations during unexpected turmoil

Abstract The 2020 pandemic shock created both local and global turmoil, increasing uncertainty and decreasing production. Utilizing a new survey on Norwegian firms' digitalization and technology investments, linked to population‐wide register data, we show that the pandemic massively disrupted the technology investment plans of firms, in terms of both postponing investments and introducing new technologies. We find that more productive firms and firms with more knowledge capital innovated, while firms with less knowledge capital postponed their investments. In the short term, technology adopting firms were more likely to be acquired. Where firms avoided acquisition and continued to operate, they were more likely to grow and to increase the number of knowledge workers in the fields of science, technology, engineering and mathematics.