Digital Determinants of SME Efficiency: Evidence from the European Union

The current paper aims to calculate the efficiency of EU SMEs and investigate which digital determinants may impact the efficiency scores.The research was conducted in two stages.First, the output-oriented VRS model was employed to compute the technical efficiency of SMEs in the EU at the country level.Then, in the second stage, the efficiency scores were regressed against a set of digital determinants that may affect the efficiency.For that issue, Simar-Wilson bootstrap regression was used.The research covered the years from 2021 to 2023, and only one country was efficient during the entire periodthe Netherlands.Moreover, the results showed that online sales have a positive influence on SMEs' inefficiency, while e-commerce turnover turned out to be insignificant.Moreover, the regression revealed that a higher level of economic development is associated with lower inefficiency.These findings provide valuable insights for policymakers seeking to design more targeted strategies for SMEs in their respective countries.