Promoting Digitalization Without Subsidies

The U.K. Small Business Digital Capacity Programme Challenge Fund 2014 aimed at disseminating information and training about the use of digital technologies among SMEs. Using a novel firm-level dataset of web technologies, our matched differences-test strategy shows that, following the implementation of the program, treated SMEs were more likely to increase their web presence, adopted more sophisticated web technologies, and enlarged their operating boundaries through e-commerce. The program reduced the digital divide between SMEs and large companies and enabled digitalization in more geographically remote locations. As a result, firms observed positive effects on revenue, labor outcomes, and likelihood of survival