Building Resilience: Leveraging Advanced Technology in Public Emergencies

Public emergencies although will typically reduce the total social welfare, it may force enterprises to seek innovation. Based on a simple game-theoretic model, we argue that the motivation of accelerating the advanced technology adoption decreases with firms’ initial technology endowment, increases with firms’ exposure to public emergencies and is more significant for medium-sized firms. As an empirical justification, we consider firms’ digital acceleration during the COVID-19 pandemic. We construct a firm-level digital transformation index by textual analysis based on a multi-source media news database to empirically and objectively show that digital transformation can endow firms resilience by boosting capital market performance and real outcomes during a public emergency, hence firms would apply advanced technologies, especially for those medium-sized enterprises due to the costs and need for digital transformation. This research adds to the evidence that public emergencies can leverage the advanced technology adoption.