During COVID-19, firms experienced unprecedented shocks. Their supply chains were disrupted as were their relationships with customers and workers; demand plummeted, as no one knew what would happen next. The dual shocks pushed firms to look for new ways to stay afloat and navigate their businesses. But in some cases, the crisis became an opportunity for innovative businesses, especially those that increased the adoption of digital technologies. How widespread was the innovation? Will it be enough to foster a productivity-driven recovery?

An initial analysis of novel data collected between April 2020 and January 2021 from Bulgaria, Poland, and Romania, suggests that the pandemic triggered some innovation. Still, it was limited to low-hanging fruits and varied depending on firm size and previous technology investments. A mix of financial constraints and managerial capacities likely limited deeper and more widespread…

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