2

Kofinti, R. E., Orkoh, E., Frempong, R. B., & Annim, S.

K. (2023). Firms' digital investment and resilience to
shocks: Evidence from the COVID‐19 pandemic in
Ghana. Journal of International Development.
https://onlinelibrary.wiley.com/doi/10.1002/jid.3769

*Corresponding Author
(Scopus/Q2/ Web of Science Emerging Sources Citation Index)
Received: 14 August 2022 Revised: 6 December 2022 Accepted: 1 February 2023

DOI: 10.1002/jid.3769

RESEARCH ARTICLE

Firms' digital investment and resilience to shocks:

Evidence from the COVID-19 pandemic in Ghana

Raymond Elikplim Kofinti1 | Emmanuel Orkoh2 |

Raymond Boadi Frempong3 | Samuel Kobina Annim4

1
School of Economics, University of Cape
Coast, Cape Coast, Ghana Abstract
2
Faculty of Economic and Management This paper examines the effect of digital investment on
Sciences, North-West University, North West,
South Africa
firm performance amid the COVID-19 pandemic in Ghana.
3
Cluster of Excellence—Africa Multiple, Applying a difference-in-difference estimator to a panel of
Deutsche Forschungsgemeinschaft (DFG, 7548 firm-year observations from 2019 to 2020, we find
German Research Foundation) under
Germany's Excellence Strategy—EXC a positive relationship between digital investment and firm
2052/1–390713894, University of Bayreuth, performance. While these findings are robust to differ-
Bayreuth, Germany
ent estimation techniques, the complementarity of mobile
Ghana Statistical Service, Accra, Ghana
4

money platforms and internet services yields a significant

Correspondence
Raymond Elikplim Kofinti, School of
Economics, University of Cape Coast, Cape
Coast, Ghana.
Email: rkofinti@ucc.edu.gh
impact on firm performance than using either exclusively.
We identify hiring new workers, downsizing and work-
ing from home as potential channels through which digi-
tal investment could influence firms' resilience amid the
pandemic.

KEYWORDS
COVID-19, digital investment, firm performance, shocks

J E L C L A S S I F I C AT I O N
O310, O320, M210

1 | INTRODUCTION

Classical, neoclassical and evolutionary economists have long emphasized the relevance of innovation for firms'
performance and growth (Kaya, 2015). They provide frameworks that outline how investment in technologies impacts
firm performance through innovation (Anderson et al., 2009). For instance, Schumpeter's work on innovation and
entrepreneurship argues that dynamic entrepreneurs who innovate through technological adoption can stimulate
competitiveness, economic dynamics and profit (Anderson et al., 2009). These economic paradigms have profoundly
influenced the empirical literature on technological adoption, utilization, innovation and economic development
(Freeman, 2018; Nelson, 2008). While some studies have focused on the adoption, utilization and impacts of digital

J. Int. Dev. 2023;1–20. wileyonlinelibrary.com/journal/jid © 2023 John Wiley & Sons Ltd. 1
2 KOFINTI et al.

technologies for individuals, households, firms and the economy (Dengler & Matthes, 2018; Orkoh & Viviers, 2021;
Orkoh, Viviers, & Jansen van Rensburg, 2021; Pick et al., 2013), other studies have assessed the implications of digital
technologies for tax revenue mobilization, educational and labour market outcomes and healthcare delivery (Orkoh &
Viviers, 2021; Pagani et al., 2016). Yet another strand of the literature suggests that digitization generally encourages
entrepreneurship and improves the performance1 of firms (Chege et al., 2020).
Predominantly, existing empirical studies suggest a positive association between digital technologies and various
firm outcomes across the globe. For developing countries, Cusolito et al. (2020) concluded that adopting digital tech-
nology improves revenue-based total factor productivity and factor demand, and it is capital augmenting. Similarly,
Cariolle (2020) found that adopting email and websites by small and micro enterprises (SMEs) in sub-Saharan Africa
improves their sales, exports and employment. Further findings demonstrate a positive spillover effect (improved reve-
nue, labour productivity, exports and employment) of internet technologies diffusion but a negative spillover effect of
mobile money diffusion on sales and employment. Evidence from developed countries also suggests that companies
that had higher levels of digital technology implementation (breadth and depth) could introduce more radical prod-
uct and service innovations (Blichfeldt & Faullant, 2021). Additional findings show that such companies were able to
make significantly greater use of their implemented technology potential and realized higher returns on sales. Using
resource-based view (RBV) framework to examine the mediating effects of digital transformation in the relationship
between information technology (IT) capability and firm performance in the United States, Nwankpa and Roumani (2016)
found that the positive influence of IT capability on firm performance is mediated by digital transformation.
In the same measure, Martínez-Caro et al. (2020) also conclude in their study on the nexus between digital
technologies and the innovation performance of large-scale firms in the European Union that businesses that were
digitized and prioritized digital organization culture had the potential to boost the development of value activities.
Also, in China, Guo and Xu (2021) conclude in their analysis of the impact of digital transformation on the opera-
tional and financial performance of 2254 manufacturing firms for the period 2010–2022 that the intensity of digital
transformation has a positive correlation with process-based operating performance and a U-shaped correlation with
profit-oriented financial performance.
These studies provide evidence of a compelling drive towards the utilization of digital technologies as an
important medium through which firms could stay competitive, lower the levels of decision-making process, cut
down supervisory cost and stay connected for collaborative operations that spur economies of scale and growth
(Bayo-Moriones et al., 2013; Orkoh & Viviers, 2021; Spanos et al., 2002). However, the disruptive impact of COVID-
19 on demand and supply has necessitated further research into how digitization helps firms to remain resilient
to shocks and uncertainties. It is imperative that the discourse on digital technology-firm outcome nexus extends
beyond impact to the resilience of such impacts during shocks and uncertainties.
There is evidence that the COVID-19 pandemic has had a devastating impact on the performance of firms all
over the world (Bailey & Breslin, 2021). Shen et al. (2020) found that China's pandemic had negatively impacted
corporate performance (proxied by firms' profit return rate). Mirza et al. (2020) made a similar observation in the
European Union that the pandemic had contributed to the deterioration of the solvency profile of all firms. The
authors indicated that the manufacturing, mining and retail sectors were most vulnerable to market capitalization
and sales revenue decline. In the United States, Fairlie (2020) observed that the pandemic contributed to a signifi-
cant plummet in the number of active business owners by 3.3 million (22%) over the crucial 2-month window from
February to April 2020. The study further found that the impact was heterogeneous, with the African American
(41%), Latinx (32%) and Asian (26%) business owner activity being the hardest hit.
The literature on the impact of the pandemic on the performance of firms within the African continent
further suggests devastating effects, albeit limited firm data continue to characterize the highly informal African

1
The term performance has been contextually defined in the literature and the variant definitions have different implications for the effect of digital
technology adoption and utilization. While some refer to performance as firms' sales (Blichfeldt & Faullant, 2021), productivity, financial (revenue,
profitability and market value) (Guo & Xu, 2021), others consider it to be innovation (Usai et al., 2021). In this study, we define performance as firms' sales
within the period of the COVID-19 and lockdown. Similar to the firm performance, there is no consensus on what constitutes digital technologies.
KOFINTI et al. 3

economies (Medina et al., 2017). A study of firms in 38 African countries reveal that the impact of the disease
was more pronounced in sub-Saharan Africa than in other regions. But the impact depends on the develop-
ment level (Aga & Maemir, 2021). Although businesses in sub-Saharan Africa were more likely to adjust their
operations or products and services to adapt to COVID-19-related shocks than those in other regions they
lagged in leveraging digital technologies, remote working and e-commerce compared to other regions (Aga &
Maemir, 2021). Recent studies from other developing worlds further attest to the adverse effects of the COVID-
19 pandemic: Camino-Mogro and Armijos (2022) analysed the short-term effects of the COVID-19 lockdown
on foreign direct investment (FDI). They observed an overall significant decrease in FDI inflows on Ecuadorian
firms. In another study on the short-term effect of COVID-19 lockdown on the creation of new firms and their
capital, Camino-Mogro et al. (2022) also found a significant drop in the creation of new formal firms (−73%) and
a decrease in the total amount of initial capital coming from the new formal firms (−40%) in Ecuadorian firms
during the COVID-19.
A review of the literature and personal insights on COVID-19 digitization lessons for the sustainable devel-
opment of micro and small enterprises (MSEs) emphasized digital payments, especially mobile money, as a critical
digital transformation priority for MSEs in the post-pandemic (Bai et al., 2021). The study underscored the need for
institutions to support MSEs resources and capabilities to adopt digital transformation for business continuity and
sustainable production and consumption. Based on the findings and conclusions of Bai et al. (2021), we assess the
extent to which firms' investment in digital technologies could bolster their performances and resilience to shocks
and uncertainties. More importantly, the outbreak of the COVID-19 and its associated disruptive effects on produc-
tion and supply chain has highlighted the essence of further research on how digital technologies could reduce the
impact of similar global shocks on firms' performance in the future.
This paper fills this gap in the literature by assessing how the performances of firms that invested in digital tech-
nologies before the outbreak of COVID-19 were impacted during the period of the lockdown in Ghana. The paper
argues that firms that were more digitized before the COVID-19 lockdowns performed better than those that were
not digitized or less digitized. Our discourse on firms' investment in digital technologies transcends impact to the
resilience of such impact during shocks and uncertainties. It is also expected to stimulate further discourse on firms'
resilience as a policy tool to engender acceptance of the ‘new normal’ and to enable firms to stay afloat in the event
of other future pandemics.
The analysis of a panel of 7548 firm-year observations for 2019–2020 revealed that firms that invested in
digital technologies before the pandemic had higher sales than those that did not or made a limited investment in
digital technologies. The findings, which are robust to different estimation techniques but sensitive to size, gender of
managers and age of firms, confirm the earlier proposition by Bai et al. (2021) that firms need to use mobile money
platforms and internet services complementarily to have a significant impact on their performances. We identify
hiring new workers, downsizing (laying off workers), reducing workers' salaries and working at home as the poten-
tial channels through which digital investment influences firm resilience amidst the COVID-19 pandemic. The next
section of the paper describes the data and variables used in the analysis. This is followed by a detailed explanation
of the estimation techniques used to address the paper's objectives and a discussion of the results. The final section
concludes the paper with some policy recommendations.

2 | DATA AND VARIABLES

The data used for the analysis of this study were sourced from a balanced panel of the COVID-19 Business Tracker
Survey conducted by the Ghana Statistical Service in 2020. The survey aimed to measure the impact of COVID-19
on operational business status, labour force, business turnover, business outlook and critical mitigation measures
adopted by businesses. Adopting a two-stage stratified sampling with a replacement approach, Ghana Statistical
Service selected non-household businesses from the Integrated Business Establishment Survey (IBES) and house-
4 KOFINTI et al.

hold businesses from the Ghana Living Standard Survey Round 7 (GLSS7). The first stage of the process involved a
stratification based on the distribution of enterprises across the 16 regions of the country, the size of the firms (micro,
small, medium and large size) and sectors (manufacturing, other industry and agriculture, wholesale and retail trade,
food and accommodation and other services). The second stage involved the selection of the firms from each stratum
using a simple random sampling approach.2
The initial objective was to conduct monthly interviews of 5000 enterprises through Computer Assisted Tele-
phone Interviews (CATI) system for 6 months. However, the final sample covered was 4311 firms (86.2% response
rate) consisting of 2718, 1344, 202 and 47 micro, small, medium and large firms, respectively.
The survey collected information on firms' sales during the COVID-19 incidence in 2020. The firms provided
retrospective information on their sales before COVID-19. We focus on firms that recorded sales value for 2020 and
2019 and have information on the adoption of internet/online and mobile money platforms for sales. As a result,
the sample was reduced to 3774 firms on which information was collected over the 2019 and 2020 survey periods,
thus, before the COVID-19 incidence in 2019 and during the COVID-19 incidence in 2020. Hence, we finally had a
balanced panel of 7548 firm-year observations from 2019 to 2020.
The main outcome variable is firm performance which can be measured using several indicators as evident in
the literature. According to Whetten (1987), the growth in the number of employees indicates firm performance as
it signifies a firm's ability to increase its size. On the other hand, Glick et al. (2005) posit profit as a measure of firm
performance because it demonstrates firms' propensity to generate returns. Likewise, Combs et al. (2005) argue for
market value as a dimension of firm performance, given its conceptual linkage to firms' financial performance. Other
measures of firm performance include customer satisfaction, employee satisfaction, environmental audit and corpo-
rate governance (Selvam et al., 2016). The current study measured firm performance using the value of sales reported
by firms for the years 2020 during the COVID-19 pandemic and 2019 before the COVID-19 incidence in the country.
Consistent with extant studies (Glick et al., 2005; Whetten, 1987), we argue that sales indicate firm performance as
it is directly related to firms' revenue flow.
Generally, the main independent variable, digital investment, may assume different and varied forms given the
lack of consensus on the definition of digital investment in the literature. This study conceptualizes firm digitization
as firms that use online/internet services and mobile money platforms for sales. This measure is consistent with the
definition in existing studies (see Bai et al., 2021). Regarding the control variables, their choices were dictated by
their identification as covariates of firm performance in extant studies (Adams & Funk, 2012; Alam et al., 2019; Atif
et al., 2021; Nyeadi et al., 2021; Qian, 2016; Smith et al., 2006). Table 1 presents the descriptive statistics on all the
variables used in the study, including the control variables.
From Table 1, Panel A suggests an average sale of GH₵57,358.4. The digital investment with the sub-sample
had sales of GH₵70,154.540, and the corresponding sales for those without digital were GH₵47,364.320. A simi-
lar observation was recorded for the log of sales values (8.033 vs. 6.967). These differences are significant at 10%
and 1% significance levels for the raw sales value and the log of sales value, respectively. Panel B shows that the
information is evenly distributed between 2019 (before COVID-19) and 2019 (during COVID-19). Further, the panel
suggests that 43.9% of the firms have digital investments. The remaining 56.1% of the firms do not have any digital
investment. Panel C shows firm characteristics and locational dummies (location of firms). About 5% of the firms
has majority female managers and 7.5% of owners have a disability condition. Manufacturing, hospitality and food,
agriculture and other industry and trade firms constitute 36.9%, 5.4%, 4.4% and 6.3%, respectively. Medium or large
firms comprise 6.3%, and young firms are 8.4%. About 64% of the firms are formal (duly registered). Sole proprie-
tor, limited liability and NGO firms constitute 81%, 9.1% and 2.4% of firms, respectively. Almost all the firms are
Ghanaian-owned (98.4%), and only 7.9% are exporting firms.

2
The weighting and replacement process and the distribution of the initial and final samples across the 16 regions have been explained in detail in the
main report of the COVID-19 Business Tracker (Ghana Statistical Service, 2020).
KOFINTI et al. 5

TA B L E 1 Descriptive characteristics.

Without digital With digital

Full sample investment investment

N = 7548 n = 4238 (56.15%) n = 3310 (43.85%)

P
Variables Mean Std. Dev Mean Mean Mean Diff value
Panel A: Firm performance
lnsales 7.435 3.092 6.967 8.033 −1.066 0.000
Sales value 57,358.4 53,2304.6 47,364.320 70,154.540 −22,790.220 0.065
Panel B: Year dummy and digital investment
COVID-19 year 0.500 0.500 0.500 0.500 0.000 1.000
Digital investment 0.439 0.496 N/A N/A N/A N/A
Panel C: Firm characteristics and location dummies
Women managers 0.0501 0.218 0.045 0.056 −0.011 0.031
Disabled owners 0.0750 0.263 0.080 0.068 0.012 0.050
Manufacturing firm 0.369 0.482 0.377 0.358 0.018 0.102
Hospitality and food 0.0538 0.226 0.051 0.057 −0.005 0.306
firms
Agriculture and other 0.0440 0.205 0.049 0.038 0.011 0.027
firms
Trade firms 0.323 0.468 0.316 0.331 −0.015 0.169
Medium and large 0.0633 0.244 0.050 0.081 −0.031 0.000
firms
Young firm 0.0835 0.277 0.089 0.077 0.012 0.062
Registered firm 0.639 0.480 0.580 0.715 −0.134 0.000
Sole proprietor 0.811 0.391 0.824 0.795 0.029 0.001
Limited liability 0.0919 0.289 0.079 0.108 −0.029 0.000
NGO 0.0241 0.153 0.023 0.025 −0.002 0.527
Ghanaian firm 0.984 0.127 0.983 0.984 −0.000 0.945
Exporting firm 0.0792 0.270 0.088 0.068 0.019 0.002
Coastal zone 0.331 0.471 0.334 0.327 0.007 0.508
Forest zone 0.451 0.498 0.447 0.456 −0.009 0.421
Panel D: Potential channel indicators
Hired new workers 0.0344 0.182 0.029 0.042 −0.013 0.002
Laid off workers 0.0450 0.207 0.038 0.054 −0.016 0.001
Salaries reduced 0.372 0.483 0.347 0.404 −0.056 0.000
Reduced hours 0.318 0.466 0.272 0.376 −0.104 0.000
worked
Worked at home 0.0734 0.261 0.058 0.093 −0.035 0.000
Open during 0.467 0.499 0.479 0.450 0.029 0.011
lockdown
6 KOFINTI et al.

3 | ESTIMATION TECHNIQUE

The discourse on firms' digital investment and resilience to shocks during the COVID-19 pandemic is under-
scored by the study's central hypothesis: firms that have digital investment prior to the COVID-19 pandemic
perform better than their counterparts without digital investment during the pandemic. We estimate baseline
and main models using pooled ordinary least square (OLS) and difference-in-difference (DID) estimator to test
this hypothesis. The baseline model generally teases out the respective associations between digital investment,
the pandemic year and firm performance. The main model using the DID estimator directly tests the central
hypothesis.
Using the DID estimator, we constructed a treatment group of firms with digital investment before the
COVID-19 pandemic in 2019 and during the pandemic in 2020. On the other hand, the control group comprises
firms without digital investment before the COVID-19 pandemic in 2019 and during the pandemic in 2020.
Hence, the performance of these two groups during the pandemic allows us to draw a conclusion on whether
firms that had digital investment before COVID-19 performed better than their counterparts without digital
investment during the pandemic. The specifications underlying the baseline and main models are presented in
Sections 3.1 and 3.2.

3.1 | Pooled OLS technique

The baseline model, namely, pooled OLS, is specified in Equation (1):

(1)
lnsales = α + β1t Year + β2t DI + Ψit Firmcharacteristics + ϵi ,

where
A lnsales is the firm performance
A and Year is the year dummy with one (1) denoting 2020 (COVID year) and zero
(0) denoting 2019 where no COVID case was recorded in the country.
A DI is the digital investment dummy for the
firms: It assumes one (1) when firms have digital investment and zero (0), otherwise.
A Firm Characteristics is a vector
of firm attributes such as size, sector of operation and age of firms. The parameter
A β1t measures the link between the
COVID year and firm performance, whereas
A β2t measures the association between digital investment and firm perfor-
mance. In the same vein, the parameter
A Ψit is the vector of the coefficients of other firm characteristics included in
the model (see Table 1). The subscript t represents the time (year) of the survey, while i represents the individual firms.

3.2 | DID approach

The pooled OLS may give some idea about the potential effect of digital investment on firm performance. But the
estimates may be biased because of the potential omission of the between-group cross-sectional differences in
measuring the effect of digital investment on firm performance across the two survey periods, 2019 and 2020.
To overcome the bias, we employ DID to capture the between-group cross-sectional differences and within-group
time-series differences in the effects of digital investment on firm performance.
The DID approach is specified in Equation (2) as follows:

(2)
lnsales = α + β1t Year + β2t DI + B3t Year∗ DI + Ψit Firmcharacteristics + ϵi .

The coefficient of interest in EquationA(2) isAB3t . If B3t is significant and positive, then the treatment group (firms
that had digital investment before the COVID-19 pandemic in 2019 and during the pandemic in 2020) have a better
performance compared to the control group (firms without digital investment before the COVID-19 pandemic in
2019 and during the pandemic in 2020).
KOFINTI et al. 7

4 | ROBUSTNESS CHECK APPROACHES

We subject our estimates to further robustness checks using two-stage instrumental variable (IV) and propensity
score matching (PSM) techniques, presented in Sections 4.1 and 4.2, respectively.

4.1 | Two-stage IV model

The coefficient
A B3t in Equation (2) may be biased by a possible bi-directional relationship between firm performance and
digital investment in a COVID year. For example, it can be argued that firm performance could influence digital invest-
ment tendencies among firms against shocks. This possible simultaneity could bias the estimated
A B3t if we do not deal
with the endogeneity problem. We solve this problem using the IV technique. Specifically, we employ the Lewbel (2012)
internally generated heteroscedastic adjusted instruments. Without valid external instruments, this technique has
proven to provide consistent estimates (Lewbel, 2012). Moreover, its implementation is evident in several recent empir-
ical studies (Frempong et al., 2021; Kofinti et al., 2022; Koomson & Afoakwah, 2023; Koomson & Danquah, 2021).

4.2 | PSM technique

For robustness checks, the study employs the PSM method to demonstrate the resilience of firms amid the COVID-
19 pandemic in Ghana. Hence, for the PSM analyses, we focused only on the COVID-19 year (2020) information on
firms to establish their resilience from the perspectives of firm performance during the pandemic. In this regard, our
treatment variable for the PSM robustness check is digital investment during the COVID-19 year, which generates an
average treatment effect on firm performance during the pandemic. The technique produces an estimate to measure
digital investment's counterfactual effect on firm performance during the pandemic. The average treatment is esti-
mated as in Equations (3)–(5):

(3)
Π = E{θ1 − θ0 |D = 1},

(4)
= E{E{θ1 − θ0 |D = 1, p(W)}},

(5)

= E E{θ1 |D = 1, p(W) − E{θ0 |D = 0, p(W)}|D = 1},

where
A Π is the average treatment effect,
A D is a binary variable equal to one if the firm has digital investment and zero
if otherwise, θ is firm performance outcome in the pandemic year,
A and W is a vector of firm characteristics signifying
relevant covariates. The propensity score, p(W) captures the probability of firm performance given firm characteris-
tics (W). To engender veracity in the findings, we use four matching techniques: radius, nearest neighbour, kernel and
local linear regression.

5 | RESULTS AND DISCUSSIONS

5.1 | Digital investment and firm performance in Ghana

We precede the regression analysis with a description of digital investment distribution and firms' sales value before
and after COVID-19 in Figure 1. In the left panel of Figure 1, firms with digital investment registered higher average
sales in the pre-COVID-19 year (GH₵98,672.30) than their counterparts without digital investment (GH₵63,245.71).
Though average sales generally shrunk in the COVID-19 year in 2020, digitalized firms registered relatively higher
average sales (GH₵62,920.10) than the latter non-digitalized firms (GH₵43,450.06). The right panel consists of the
pooled sample. It shows that firms with digital investments have higher average sales of GH₵27,448.32 compared
8 KOFINTI et al.

FIGURE 1 Average sales across pre-COVID-19 (2019) and COVID-19 (2020) years.

to firms without digital investments. Figure 1 largely points to the observation that firms with digital investment
performed relatively better in sales.

5.2 | Digital investment and firm mitigation actions in Ghana

Figure 2 explores the relationship between digital investment and the mitigation actions taken by firms. These actions
are hiring new workers, reducing work hours, working from home and opening during the partial lockdown. The figure
shows that firms with digital investment have marginally hired new workers compared to their counterparts without
digital investment. This observation is also true for reducing work hours and working from home. These mitigation
actions have implications on the resilience of firms to COVID-19 disruptions. However, 48.8% of firms without digital
investment were operational (opened) during the partial lockdown period compared to 45.9% with digital investment.

5.3 | Baseline results

Table 2 reports the results of the baseline regressions using unstandardized and standardized coefficients for the
pooled OLS estimates in Columns (1a) and (1b), respectively. The unstandardized and standardized coefficients for
the 2019 OLS models are presented in Columns (2a) and (2b). Also, the unstandardized and standardized coefficients
for the 2020 OLS models are presented using Columns (3a) and (3b), respectively. We interpret standardized coeffi-
cients because they can easily be compared across different estimation models.
In Column (1b), we observe that an increase in digital investment by one standard deviation is linked to an
increase in firm performance by 0.142 standard deviations. In Columns (2b) and (3b), an increase in digital investment
by one standard deviation is linked to an increase in firm performance by 0.127 and 0.162 standard deviations. This
 KOFINTI et al.

FIGURE 2 Digital investment and firm mitigation actions.

9
10 KOFINTI et al.

TA B L E 2 Pooled OLS and OLS results of digital investment on firm performance.

Pooled OLS OLS OLS

(1a) (1b) (2a) (2b) (3a) (3b)

All All 2019 2019 2020 2020

COVID-19 year −1.397*** −0.219***
(0.087) (0.087)
Digital investment 0.915*** 0.142*** 0.746*** 0.127*** 1.085*** 0.162***
(0.089) (0.089) (0.121) (0.121) (0.131) (0.131)
Manufacturing firm 0.908*** 0.135*** 0.881*** 0.144*** 0.936*** 0.134***
(0.113) (0.113) (0.145) (0.145) (0.173) (0.173)
Hospitality and food firms 0.633*** 0.042*** 0.576** 0.042** 0.690** 0.045**
(0.214) (0.214) (0.290) (0.290) (0.316) (0.316)
Agriculture and other firms 0.992*** 0.088*** 0.839** 0.082** 1.145*** 0.098***
(0.296) (0.296) (0.419) (0.419) (0.416) (0.416)
Trade firms 1.149*** 0.163*** 1.001*** 0.156*** 1.296*** 0.177***
(0.124) (0.124) (0.164) (0.164) (0.186) (0.186)
Medium and large firms 1.067*** 0.087*** 1.008*** 0.090*** 1.127*** 0.088***
(0.274) (0.274) (0.377) (0.377) (0.399) (0.399)
Young firm −0.297** −0.027** −0.272 −0.027 −0.322 −0.028
(0.144) (0.144) (0.187) (0.187) (0.219) (0.219)
Registered firm 0.763*** 0.115*** 0.781*** 0.130*** 0.745*** 0.108***
(0.083) (0.083) (0.111) (0.111) (0.124) (0.124)
Sole proprietor 0.213 0.027 0.279 0.039 0.147 0.018
(0.186) (0.186) (0.269) (0.269) (0.257) (0.257)
Limited liability 1.184*** 0.111*** 1.215*** 0.126*** 1.153*** 0.104***
(0.281) (0.281) (0.385) (0.385) (0.411) (0.411)
NGO 0.261 0.014 −0.020 −0.001 0.543 0.028
(0.362) (0.362) (0.498) (0.498) (0.525) (0.525)
Ghanaian firm −0.287 −0.011 −0.092 −0.004 −0.481 −0.018
(0.488) (0.488) (0.668) (0.668) (0.709) (0.709)
Women managers 0.472* 0.034* 0.492 0.039 0.451 0.032
(0.259) (0.259) (0.344) (0.344) (0.389) (0.389)
Disabled owners −0.467** −0.039** −0.690*** −0.064*** −0.244 −0.020
(0.184) (0.184) (0.263) (0.263) (0.257) (0.257)
Exporting firm −0.663*** −0.057*** −0.097 −0.009 −1.229*** −0.102***
(0.177) (0.177) (0.220) (0.220) (0.279) (0.279)
Coastal zone −0.009 −0.001 −0.059 −0.010 0.040 0.006
(0.110) (0.110) (0.148) (0.148) (0.163) (0.163)
Forest zone 0.061 0.010 0.051 0.009 0.071 0.011
(0.110) (0.110) (0.149) (0.149) (0.160) (0.160)
Constant 6.410*** 6.293*** 5.129***
(0.528) (0.726) (0.759)
KOFINTI et al. 11

TA B L E 2 (Continued)

Pooled OLS OLS OLS

(1a) (1b) (2a) (2b) (3a) (3b)

All All 2019 2019 2020 2020

Observations 7548 7548 3774 3774

R2 0.150 0.104 0.117
Note: Standard errors in parentheses. Columns (1b), (2b) and (3b) are the standardized coefficients.
*p < 0.1.
**p < 0.05.
***p < 0.01.

suggests that the results from the pooled data are consistent with those estimated from the 2019 and 2020 data.
Overall, these results indicate that digital investment is associated with increases in firm performance. A scrutiny
of the results from the perspective of the pooled OLS using the magnitudes of the coefficients revealed that the
effects of digital investment on firm performance is relatively larger than those of manufacturing firms, hospitality
and food firms, young firm, registered firm, sole proprietor status, NGO firms and women managers. These results
are consistent with existing studies that allude to the firm performance-enhancing effect of digitization (Blichfeldt &
Faullant, 2021; Cariolle, 2020; Glick et al., 2005; Martínez-Caro et al., 2020; Nwankpa & Roumani, 2016).

5.4 | DID estimates

This section tests the study's central hypothesis: Firms that had digital investment before the COVID-19 pandemic
perform better than their counterparts without digital investment during the pandemic. The results using the DID
approach are presented in Table 3. Columns (1a) and (1b) report the unstandardized and standardized coefficients
of the DID estimator without controlling for firm characteristics and regional fixed effects. Columns (2a) and (2b)
report the unstandardized and standardized coefficients of the DID estimator after controlling for firm characteristics
and regional fixed effects. Column (1b) indicates that an increase in digital investment by one standard deviation is
linked to an increase in firm performance by 0.040 standard deviations. By controlling for fixed effects, Column (2b)
indicates that an increase in digital investment by one standard deviation is linked to an increase in firm performance
by 0.046 standard deviations. Comparing the coefficients without fixed effects with those having fixed effects, the
latter yield larger coefficients. However, both consistently indicate a positive effect of digital investment deploy-
ment on firm performance during the pandemic. These results are consistent with the conclusions of earlier studies
(Martínez-Caro et al., 2020; Nwankpa & Roumani, 2016) who found that firms that invest in or prioritize digital tech-
nologies in their operation perform better.

5.5 | Robustness and sensitivity checks

In this subsection, additional robustness checks are performed using alternative quasi-experimental approaches (IV
estimates and PSM), and the sensitivity of the DID estimates is assessed across firm characteristics.

5.5.1 | Endogenous corrected results using IV

First, IV estimates are presented using the Lewbel (2012) internally generated heteroscedastic adjusted instruments.
The results are presented in Table 4. Columns (1a) and (1b) show the unstandardized and standardized coefficients.
In Column (1b), we observe that an increase in digital investment by one standard deviation is linked to an increase
12 KOFINTI et al.

TA B L E 3 DID estimates of the effect of digital investment on firm performance.

Variables (1a) (1b) (2a) (2b)

COVID-19 year −1.570*** −0.254*** −1.551*** −0.243***
(0.094) (0.094) (0.111) (0.111)
Digital investment 0.916*** 0.147*** 0.736*** 0.114***
(0.089) (0.089) (0.122) (0.122)
COVID-19 year # Digital 0.300** 0.040** 0.359** 0.046**
investment (0.136) (0.136) (0.177) (0.177)
Firm characteristics No No Yes Yes
Regional dummies No No Yes Yes
Observations 7548 7548 7548 7548
R2 0.084 0.084 0.150 0.150
Note: Standard errors in parentheses. Column (1b) and (2b) provide standardized coefficients.
*p < 0.1.
**p < 0.05.
***p < 0.01.

TA B L E 4 Effect of digitization on firm performance (Lewbel-TSLS results).

Variables (1a) (1b)

COVID-19 year −1.551** −0.243***
(0.111) (0.111)
Digital investment 0.735*** 0.114***
0.121 (0.122)
COVID-19 year # Digital investment 0.359** 0.046**
(0.177) (0.177)
Firm characteristics Yes Yes
Regional dummies Yes Yes
Hansen J statistic 6.092 6.092
[0.987] [0.987]
Observations 7548 7548
R 2
0.149
Note: Standard errors in parentheses. Column (1b) provides standardized coefficients. P values of Hansen J statistics in
square bracket.
*p < 0.1.
**p < 0.05.
***p < 0.01.

in firm performance by 0.046 standard deviations during the pandemic. The Hansen J statistic in the table indicates
that the internally generated heteroscedastic adjusted instruments are valid.

5.5.2 | PSM technique estimates

We checked the resilience of firms who have invested in digital investment with five variants of PSM techniques—
nearest neighbour (1:1), nearest neighbour (1:5), radius, kernel and local linear regression matching methods in Table 5.
Figure A1 evaluates the quality of the propensities. The graph indicates that the observable firm characteristics used
KOFINTI et al. 13

TA B L E 5 Effect of digital investment on firm performance in COVID-19 year (2020) [PSM results].

(1) (2) (3) (4) (5)

Matching techniques Nearest neighbour (1) Nearest neighbour (5) Radius Kernel Local linear regression
Digital investment 1.271** 1.271** 1.216*** 1.024*** 1.027***
(0.536) (0.576) (0.095) (0.11) (0.115)
Firm characteristics Yes Yes Yes Yes Yes
Regional dummies Yes Yes Yes Yes Yes
Observations 3774 3774 3774 3774 3774
Note: Bootstrap standard errors in parentheses. Table A1 evaluates the observable characteristics used to construct the
PSM estimator.
*p < 0.1.
**p < 0.05.
***p < 0.01.

for calculating the propensities are sufficient for matching firms that have digital investment and those without
digital investment in the COVID-19 year. Additionally, Table A1 shows that the observable firm characteristics used
for matching do not have significant biases, as shown by the t-statistics in the last column. Across all matching
techniques in Table 5, the average treatment effect on the treated (ATT) for the effect of digital investment on firm
performance ranges from 1.024 to 1.271. This indicates a positive effect of digital investment on firm performance.
The PSM results provide a basis to conclude that digital investment is an important policy option in ensuring the
resilience of firms during shocks and uncertainties such as the COVID-19.

5.5.3 | Sensitivity of results to firm characteristics

Subsequently, we investigate the relationship between digital investment and firm performance for different firm
characteristics, namely, the size of the firm, sector of operation, gender of management, age and firm formality status
using standardized coefficients.
Table 6 shows the sensitivity of firm performance to digital investment across sectors. The DID estimator is not
significant for any of the sectors. Table 7, on the other hand, shows that the DID estimator is significant for small
firms, albeit with a weak level of significance of 10%. This finding implies that digital investment significantly affects
the resilience of small firms (firms with 5–30 employees) during shocks.
Table 8 shows the sensitivity of firm performance to digital investment across gender of firm managers. The DID
estimator is significant for firms with at least half male managers at a 1% significance level. This indicates that firms
managed by males made significantly higher gains in firm performance by leveraging digital investment during the
pandemic. This finding suggests that gender heterogeneities are important in digital investment–firm performance
nexus during shocks and uncertainties.
Table 9 shows the sensitivity of firm performance to digital investment across age and formality status of firms.
The DID estimator is significant for established firms. Implying that established firms (more than 15 years in exist-
ence) that invested in digitization will be more resilient during shocks than young firms (less than 5 years in existence).

5.5.4 | Sensitivity of results to mobile money and internet usage

We further test the sensitivity of the DID estimator to each of the two components of digital investment, namely, the
use of mobile money and the internet exclusively. It can be observed from Table 10 that the DID estimates for mobile
money usage (0.044) is weakly significant, whereas that of internet usage (0.027) is not significant. The results imply
that firms need to use the two digital platforms complementarily to be resilient amid adverse shocks.
14 KOFINTI et al.

TA B L E 6 Sensitivity of firm performance across sectors (DID results).

(1) (2) (3) (4)

Variables Manufacturing Hospitality and food Agriculture and others Trade

COVID-19 year −0.293*** −0.202*** −0.191*** −0.228***
(0.144) (0.421) (0.568) (0.189)
Digital investment 0.141*** 0.135* −0.036 0.140***
(0.126) (0.524) (0.791) (0.187)
COVID-19 year # Digital 0.037 −0.026 0.087 0.051
investment (0.201) (0.728) (1.070) (0.274)
Firm characteristics Yes Yes Yes Yes
Regional dummies Yes Yes Yes Yes
Observation 2782 406 332 2436
R2 0.161 0.168 0.238 0.138
Note: Standardized coefficients; standard errors in parentheses.
*p < 0.1.
**p < 0.05.
***p < 0.01.

TA B L E 7 Sensitivity of firm performance across size of operation (DID results).

(1) (2)

Variables Medium or Large Small

COVID-19 year −0.169** −0.259***
(0.803) (0.105)
Digital investment 0.185*** 0.113***
(0.677) (0.118)
COVID-19 year # Digital investment 0.072 0.044*
Firm characteristics Yes Yes
Regional dummies Yes Yes
Observation 478 7070
R 2
0.218 0.135
Note: Standardized coefficients; standard errors in parentheses.
*p < 0.1.
**p < 0.05.
***p < 0.01.

6 | POTENTIAL CHANNEL ANALYSES

Finally, we explore the possible channels through which digital investment could affect firm performance. The survey
includes questions on the number of new workers hired, number of new workers laid off, number of workers that
had their salaries reduced, number of workers that had their hours of work reduced, number of workers that were
working from home and number of firms that were opened during the lockdown. We use these six variables to tease
out the potential channels underpinning the findings in this study, as summarized in Table 11. Column (1) shows that
digitized firms are more likely to hire new workers even during the COVID year. However, Column (2) shows that
digitized firms are more likely to lay off workers. Reconciling the findings in Columns (1) and (2) could imply that firms
KOFINTI et al. 15

TA B L E 8 Sensitivity of firm performance across gender of manager (DID results).

(1) (2)

Variables Women managers Male managers

COVID-19 year −0.155** −0.250***
(0.528) (0.113)
Digital investment 0.098 0.113***
(0.495) (0.125)
COVID-19 year # Digital investment −0.033 0.052**
(0.730) (0.182)
Firm characteristics Yes Yes
Regional dummies Yes Yes
Observations 378 7170
R2 0.283 0.141
Note: Standardized coefficients; standard errors in parentheses.
*p < 0.1.
**p < 0.05.
***p < 0.01.

TA B L E 9 Sensitivity of firm performance across age of firm and formality (DID results).

(1) (2) (3) (4)

Variables Young Established Formal Informal

COVID-19 year −0.241*** −0.243*** −0.232*** −0.277***
(0.320) (0.118) (0.157) (0.147)
Digital investment 0.100* 0.113*** 0.107*** 0.138***
(0.331) (0.128) (0.163) (0.166)
COVID-19 year # Digital 0.005 0.050** 0.045 0.049
investment (0.507) (0.186) (0.234) (0.248)
Firm characteristics Yes Yes Yes Yes
Regional dummies Yes Yes Yes Yes
Observations 630 6918 4826 2722
R 2
0.216 0.151 0.128 0.152
Note: Standardized coefficients; standard errors in parentheses.
*p < 0.1.
**p < 0.05.
***p < 0.01.

are changing the expertise of their human resource: probably hiring more IT specialists and laying off others who are
not IT inclined.
Further, Column (4) indicates that firms with digitized investments are more likely to work from home compared
to those that do not have any digitized investments. Finally, Column (5) indicates that firms with digitized invest-
ments are less likely to remain open during the COVID-19 pandemic. Reconciling the results in Columns (4) and (5)
suggests that firms with digitized investments may close down physically during the lockdown but are likely to work
from home.
16 KOFINTI et al.

TA B L E 1 0 Effects of mobile money and internet usage on firm performance (DID results).

(1) (2)

lnsales lnsales
COVID-19 year −0.241*** −0.225***
(0.111) (0.090)
Mobile money usage 0.123***
(0.122)
Internet usage 0.065***
(0.223)
COVID-19 year # Mobile money usage 0.044*
(0.178)
COVID-19 year # Internet usage 0.027
(0.330)
Firm characteristics Yes Yes
locational dummies Yes Yes
N 7548 7548
R2 0.153 0.137
Note: Standardized coefficients; standard errors in parentheses.
*p < 0.1.
**p < 0.05.
***p < 0.01.

TA B L E 1 1 Potential resilience attributes of digitized firms.

(1) (2) (3) (4) (5)

Hired new workers Lay off workers Decrease salary Work at home Open during lockdown
Digital investment 0.033** 0.032** 0.058*** 0.050*** −0.038***
(0.005) (0.007) (0.014) (0.007) (0.014)
Firm characteristics Yes Yes Yes Yes Yes
Regional dummies Yes Yes Yes Yes Yes
Year effect Yes Yes Yes Yes Yes
Observations 7548 7548 7548 7548 7548
R2 0.012 0.021 0.025 0.059 0.067
Note: Standardized beta coefficients; standard errors in parentheses.
*p < 0.1.
**p < 0.05.
***p < 0.01.

7 | CONCLUSION

There is increasing attention to identify resilient pathways businesses can adopt to recover from the adverse effect
of the COVID-19 pandemic. This study makes a case for the role of digital investment with evidence from Ghanaian
firms. The few existing studies generally addressed the role of digitization on firm performance in normal times, and
others largely from a theoretical perspective, focusing mainly on developed countries. To contribute with empirical
evidence within the confines of developing countries, data were sourced from the Ghana 2020 COVID-19 Business
Tracker Survey with retrospective information on firm performance in 2019 before the first incidence of COVID-19
KOFINTI et al. 17

in 2020. We adjusted for possible endogeneity and captured the year-fixed effects within a DID framework. Further
robustness tests were implemented using Lewbel (2012) internally generated heteroscedastic adjusted instruments
and the PSM techniques.
We also explore the potential channels through which digital investment transmits to firm performance.
Overall, we find that digital investment positively affects firm performance and this finding is robust to alterna-
tive quasi-experimental methods. Further, the sensitivity of our results was carried out across firm characteristics,
namely, sectors, size of the firm, gender of managers, age and formality status of firms. The results largely indicate a
statistically significant positive effect of digital investment on firm performance. The DID estimator is sensitive to the
firm's size, age and gender of the manager. We identify hiring new workers, downsizing (laying off workers), reducing
workers' salaries and working from home as the potential channels through which digital investment affects firm
performance. The policy implication of these results is that digital investment may positively impact firms differently
depending on their sizes, the gender structure of their managements and their experience of operation during shocks
and uncertainty.
These findings underscore the need for firms to increase digital investment and diffuse digital platforms into
their operations to complement the efforts of governments and development partners towards resilience and recov-
ery of their economies. A policy option is for the National Board of Small-Scale Enterprises in Ghana to put in place
the necessary structures and systems to advance the digitization agenda of firms across the country to engender
the recovery of firms from the woes of the pandemic, especially among small and young firms. However, one of the
factors identified in the literature as an obstacle to the use of digital technologies by firms in developing countries is
the cost of internet data and reliable electricity (Orkoh & Viviers, 2021). This study recommends that in formulating
policies to promote digital technologies, these factors must be prioritized.
The government's policies on digital transformation must be targeted at building the capacity of small and
medium-sized firms that lack both human and material resources to effectively adopt and use digital technologies in
their business activities. Such policies must make provisions for the potential adverse effects of digital investment on
employment and employees' welfare in the labour market. Although the results and recommendations of this study
provide enough grounds for policy action to enable firms to leverage the benefits of digital investment, future studies
must endeavour to use high-frequency data that would help capture the dynamics and reliability of these findings
over a longer period.

ACKNOWLE DG E ME NTS
We are grateful to Monica Opoku, Collins Baffour Kyei and Iddrisu Salifu for proofreading the revised draft of this
manuscript.

CO N FLI CT OF I NTE RE ST STATE M E N T

The authors declare no conflict of interest.

DATA AVAI LABI LI TY STATE M E N T

The data that support the findings of this study are available from the corresponding author upon reasonable request.

R EF ERE NCE S
Adams, R. B., & Funk, P. (2012). Beyond the glass ceiling: Does gender matter? Management Science, 58(2), 219–235. https://
doi.org/10.1287/mnsc.1110.1452
Aga, G., & Maemir, H. (2021). COVID-19 and African firms impact and coping strategies. Policy Research Working Paper; No. 9642.
World Bank. https://openknowledge.worldbank.org/handle/10986/35519 License: CC BY 3.0 IGO
Alam, M. S., Atif, M., Chien-Chi, C., & Soytaş, U. (2019). Does corporate R&D investment affect firm environmental perfor-
mance? Evidence from G-6 countries. Energy Economics, 78, 401–411. https://doi.org/10.1016/j.eneco.2018.11.031
Anderson, A., Wahab, K. A., Amin, H., & Chong, R. (2009). Firm performance: An analysis from the theory of innovation. Austral-
ian Graduate School Entrepreneurship.
18 KOFINTI et al.

Atif, M., Hossain, M., Alam, M. S., & Goergen, M. (2021). Does board gender diversity affect renewable energy consumption?
Journal of Corporate Finance, 66, 101665. https://doi.org/10.1016/j.jcorpfin.2020.101665
Bai, C., Quayson, M., & Sarkis, J. (2021). COVID-19 pandemic digitization lessons for sustainable development of micro-and
small-enterprises. Sustainable Production and Consumption, 27, 1989–2001. https://doi.org/10.1016/j.spc.2021.04.035
Bailey, K., & Breslin, D. (2021). The COVID-19 pandemic: What can we learn from past research in organizations and manage-
ment? International Journal of Management Reviews, 23(1), 3–6. https://doi.org/10.1111/ijmr.12237
Bayo-Moriones, A., Billón, M., & Lera-López, F. (2013). Perceived performance effects of ICT in manufacturing SMEs. Indus-
trial Management & Data Systems, 113(1), 117–135. https://doi.org/10.1108/02635571311289700
Blichfeldt, H., & Faullant, R. (2021). Performance effects of digital technology adoption and product & service innovation—A
process-industry perspective. Technovation, 105, 102275. https://doi.org/10.1016/j.technovation.2021.102275
Camino-Mogro, S., & Armijos, M. (2022). Short-term effects of COVID-19 lockdown on foreign direct investment: Evidence
from Ecuadorian firms. Journal of International Development, 34(4), 715–736. https://doi.org/10.1002/jid.3598
Camino-Mogro, S., Marcos, G. C., & Solano, J. (2022). Turbulence in start-ups: Short-term effect of COVID-19 lockdown on
creation of new firms and its capital. Journal of Entrepreneurship in Emerging Economies, (ahead-of-print). https://doi.
org/10.1108/JEEE-02-2022-0058
Cariolle, J. (2020). Digital spillovers and SMEs' performance in Sub-Saharan Africa. In FERDI Notes brèves/Policy briefs. FERDI.
Chege, S. M., Wang, D., & Suntu, S. L. (2020). Impact of information technology innovation on firm performance in Kenya.
Information Technology for Development, 26(2), 316–345. https://doi.org/10.1080/02681102.2019.1573717
Combs, J. G., Crook, T. R., & Shook, C. L. (2005). The dimensionality of organizational performance and its implications
for strategic management research. In Research methodology in strategy and management. Emerald Group Publishing
Limited. https://doi.org/10.1016/S1479-8387(05)02011-4
Cusolito, A. P., Lederman, D., & Peña, J. (2020). The effects of digital-technology adoption on productivity and factor demand.
World Bank.
Dengler, K., & Matthes, B. (2018). The impacts of digital transformation on the labour market: Substitution potentials of
occupations in Germany. Technological Forecasting and Social Change, 137, 304–316. https://doi.org/10.1016/j.
techfore.2018.09.024
Fairlie, R. (2020). The impact of COVID-19 on small business owners: Evidence from the first three months after widespread
social-distancing restrictions. Journal of Economics and Management Strategy, 29(4), 727–740. https://doi.org/10.1111/
jems.12400
Freeman, C. (2018). The role of technical change in national economic development 1. In Technological change, industrial
restructuring and regional development (pp. 100–114). Routledge. https://doi.org/10.4324/9781315149295-5
Frempong, R. B., Orkoh, E., & Kofinti, R. E. (2021). Household's use of cooking gasand Children's learning outcomes in rural
Ghana. Energy Economics, 103, 105617.
Ghana Statistical Service. (2020). COVID-19 Business Tracker Survey. Main Report Wave 1. Ghana Statistical Service. Retrieved
from https://statsghana.gov.gh/covidtracker/COVID-19%20BUSINESS%20TRACKER%20WAVE%201%20MAIN%20
REPORT.pdf
Glick, W. H., Washburn, N. T., & Miller, C. C. (2005). The myth of firm performance. In Proceedings of the Annual Meet-
ing of American Academy of Management (pp. 159–171). Organization Science-PubsOnline. Retrieved from https://doi.
org/10.1287/orsc.1120.0762
Guo, L., & Xu, L. (2021). The effects of digital transformation on firm performance: Evidence from China's manufacturing
sector. Sustainability, 13(22), 12844. https://doi.org/10.3390/su132212844
Kaya, P. H. (2015). Joseph A. Schumpeter's perspective on innovation. International Journal of Economics, Commerce and
Management, 3(8), 25–37.
Kofinti, R. E., Koomson, I., Paintsil, J. A., & Ameyaw, E. K. (2022). Reducing children's malnutrition by increasing mothers'
health insurance coverage: A focus on stunting and underweight across 32 sub-Saharan African countries. Economic
Modelling, 117, 106049. https://doi.org/10.1016/j.econmod.2022.106049
Koomson, I., & Afoakwah, C. (2023). Can financial inclusion improve children's learning outcomes and late school enrolment
in a developing country? Applied Economics, 55(3), 237–254.
Koomson, I., & Danquah, M. (2021). Financial inclusion and energy poverty: Empirical evidence from Ghana. Energy Econom-
ics, 94, 105085. https://doi.org/10.1016/j.eneco.2020.105085
Lewbel, A. (2012). Using heteroscedasticity to identify and estimate mismeasured and endogenous regressor models. Journal
of Business & Economic Statistics, 30(1), 67–80. https://doi.org/10.1080/07350015.2012.643126
Martínez-Caro, E., Cegarra-Navarro, J. G., & Alfonso-Ruiz, F. J. (2020). Digital technologies and firm performance: The role
of digital organisational culture. Technological Forecasting and Social Change, 154, 119962. https://doi.org/10.1016/j.
techfore.2020.119962
Medina, L., Jonelis, M. A. W., & Cangul, M. (2017). The informal economy in Sub-Saharan Africa: Size and determinants. Interna-
tional Monetary Fund.
KOFINTI et al. 19

Mirza, N., Rahat, B., Naqvi, B., & Rizvi, S. K. A. (2020). Impact of COVID-19 on corporate solvency and possible policy
responses in the EU. The Quarterly Review of Economics and Finance, 87, 181–190.
Nelson, R. R. (2008). Economic development from the perspective of evolutionary economic theory. Oxford Development
Studies, 36(1), 9–21. https://doi.org/10.1080/13600810701848037
Nwankpa, J. K., & Roumani, Y. (2016). IT capability and digital transformation: A firm performance perspective.
Nyeadi, J. D., Kamasa, K., & Kpinpuo, S. (2021). Female in top management and firm performance nexus: Empirical evidence
from Ghana. Cogent Economics & Finance, 9(1), 1921323. https://doi.org/10.1080/23322039.2021.1921323
Orkoh, E., & Viviers, W. (2021). Gender composition of ownership and management of firms and the gender digital divide in
Africa. South African Journal of Business Management, 52(1), 14. https://doi.org/10.4102/sajbm.v52i1.2227
Orkoh, E., Viviers, W., & Jansen van Rensburg, S. J. (2021). ‘Candigital trade promote greater employment? Empirical evidence
from Sub-SaharanAfrica’. In W. Viviers, A. Parry & S. J. Jansen van Rensburg (Eds.), Africa’s digital future: From theory
to action (The future of internationaltrade and development Volume 1), (pp. 67–100). AOSIS. https://doi.org/10.4102/
aosis.2021.BK199.03
Pagani, L., Argentin, G., Gui, M., & Stanca, L. (2016). The impact of digital skills on educational outcomes: Evidence from
performance tests. Educational Studies, 42(2), 137–162. https://doi.org/10.1080/03055698.2016.1148588
Pick, J., Nishida, T., & Zhang, X. (2013). Determinants of China's technology availability and utilization 2006–2009: A spatial
analysis. The Information Society, 29(1), 26–48. https://doi.org/10.1080/01972243.2012.739266
Qian, M. (2016). Women's leadership and corporate performance. Asian Development Bank Economics Working Paper Series
No. 472, https://doi.org/10.2139/ssrn.2737833
Selvam, M., Gayathri, J., Vasanth, V., Lingaraja, K., & Marxiaoli, S. (2016). Determinants of firm performance: A subjective
model. International Journal of Social Science Studies, 4, 90. https://doi.org/10.11114/ijsss.v4i7.1662
Shen, H., Fu, M., Pan, H., Yu, Z., & Chen, Y. (2020). The impact of the COVID-19 pandemic on firm performance. Emerging
Markets Finance and Trade, 56(10), 2213–2230. https://doi.org/10.1080/1540496X.2020.1785863
Smith, N., Smith, V., & Verner, M. (2006). Do women in top management affect firm performance? A panel study of
2,500 Danish firms. International Journal of Productivity and Performance Management, 55, 569–593. https://doi.
org/10.1108/17410400610702160
Spanos, Y. E., Prastacos, G. P., & Poulymenakou, A. (2002). The relationship between information and communication
technologies adoption and management. Information & Management, 39(8), 659–675. https://doi.org/10.1016/
S0378-7206(01)00141-0
Usai, A., Fiano, F., Petruzzelli, A. M., Paoloni, P., Briamonte, M. F., & Orlando, B. (2021). Unveiling the impact of the adop-
tion of digital technologies on firms' innovation performance. Journal of Business Research, 133, 327–336. https://doi.
org/10.1016/j.jbusres.2021.04.035
Whetten, D. A. (1987). Organizational growth and decline processes. Annual Review of Sociology, 13, 335–358. https://doi.
org/10.1146/annurev.so.13.080187.002003

How to cite this article: Kofinti, R. E., Orkoh, E., Frempong, R. B., & Annim, S. K. (2023). Firms' digital
investment and resilience to shocks: Evidence from the COVID-19 pandemic in Ghana. Journal of
International Development, 1–20. https://doi.org/10.1002/jid.3769

A P P ENDI X A

TA B L E A 1 Extent of matching bias across observable firm characteristics.

Mean

Observable characteristics Digital investment No digital investment Bias t-statistics

Manufacturing firm 0.358 0.364 −1.3 −0.36
Hospitality and food firms 0.057 0.053 1.9 0.54
Agriculture and other firms 0.038 0.034 1.8 0.56
Trade firms 0.331 0.329 0.4 0.11
Medium and large firms 0.081 0.075 2.5 0.65

(Continues)
20 KOFINTI et al.

TA B L E A 1 (Continued)

Mean

Observable characteristics Digital investment No digital investment Bias t-statistics

Registered firm 0.715 0.715 −0.1 −0.04

Limited liability 0.108 0.099 3.1 0.86
NGO 0.025 0.029 −2.4 −0.64
Disabled owners 0.068 0.063 1.8 0.56
Exporting firm 0.068 0.063 1.8 0.56
Coastal zone 0.327 0.329 −0.5 −0.15
Forest zone 0.456 0.458 −0.4 −0.1

FIGURE A1 Region of common support for PSM.