Adoption Behaviour of Digital Technologies by Firms: Evidence from South Africa’s Manufacturing Sector

Abstract

The manufacturing industry is vital to the growth and development of most countries. This study investigates the adoption behaviour of digital technologies by manufacturing firms in South Africa. The study employs econometric model to analyze a total of 516 firms in the manufacturing sector. The probit results show that innovation of the firm and firm size have a significant effect on both the current and the expected adoption of digital technologies, whereas capital ownership correlate positively with the current adoption. Likewise, exports and digital-related infrastructure are found to correlate positively with the expected digital technology adoption for customer relations business function. Similarly, study results from the transition probability matrix reveals that a significant persistency pattern is prevalent in all the three business functions of the firms, namely, supplier relations, customer relations and product development. However, product development has considerably higher persistency compared to other types of the firm business functions. Several policies, including supporting business innovation, easy access to core digital tools by firms, developing institutional and systemic support mechanisms, are recommended to encourage firms to engage in digital technology activities.