11 countries, 24 years of analysis: Digitalization is more effective than innovation in sustainable development

An international study involving Assoc. Prof. Mesut Öztırak, a faculty member at the School of Business and Management Sciences at Istanbul Medipol University, comparatively examined the contributions of digital transformation and technological innovation to the achievement of the Sustainable Development Goals.

Analyzing data from 11 countries that joined the European Union after 2004 between 2000 and 2023, the research demonstrated that digital transformation plays a stronger and more direct role than technological innovation in supporting sustainable development. The study further showed that investments in digital transformation generate greater benefits in countries with lower sustainability performance, while the impact of technological innovation increases substantially when supported by robust public policies, strong institutional capacity, and well-developed digital infrastructure.

The study, entitled "Do digitalization and technological innovation foster the achievement of the sustainable development goals? Evidence from EU's newer member states" was published in the Journal of Enterprise Information Management, one of the leading SSCI Q1 journals in the fields of social sciences and information management.

DATA FROM 11 COUNTRIES OVER 24 YEARS ANALYZED
The study employed advanced statistical methods to analyze data from 11 countries that joined the European Union after 2004, covering the period from 2000 to 2023. This approach enabled the researchers to evaluate the effects of digital transformation and technological innovation not only at an aggregate level but also across countries exhibiting low, medium, and high sustainability performance.

Digitalization was measured using internet usage rates, while technological innovation was assessed through patent applications. Countries' sustainable development performance was evaluated using the United Nations Sustainable Development Goals (SDG) Index. This methodology provided a detailed understanding of how these two factors produce varying effects depending on countries' levels of development.

DIGITAL TRANSFORMATION EMERGES AS THE STRONGEST DRIVER OF SUSTAINABLE DEVELOPMENT
The study's most significant finding was that digital transformation consistently produced a statistically significant and positive effect on sustainable development performance across all country groups. The expansion of internet usage, the strengthening of digital infrastructure, and investments in digital transformation directly supported countries in achieving their development objectives.

The analyses further demonstrated that this effect was particularly pronounced in countries with lower sustainability performance. Investments in digital infrastructure generated greater benefits in countries at the initial stages of development, while their marginal contribution gradually diminished as digitalization advanced. The researchers attributed this pattern to the natural decline in the incremental benefits of additional investments once digital transformation reaches a certain level of maturity.

The findings also showed that higher levels of digitalization are associated with improved performance on the Sustainable Development Goals Index.

TECHNOLOGICAL INNOVATION ALONE IS NOT SUFFICIENT
The study also confirmed that technological innovation contributes positively to sustainable development. However, this effect measured through patent applications was found to be more limited than that of digital transformation.

Particularly in countries with high sustainability performance, the impact of innovation weakened over time. The findings indicate that technological innovation alone is insufficient and contributes more effectively to sustainable development when supported by strong institutions, effective public policies, qualified human capital, research and development investments, and robust digital infrastructure.

The researchers emphasized that an increase in the number of patents should not be regarded as a success indicator in itself; rather, the decisive factor is whether the developed technologies generate tangible benefits for society, the environment, and the economy.

DIGITAL TRANSFORMATION DRIVES DEVELOPMENT
The causality analyses conducted within the study also produced noteworthy findings. The results revealed a strong, one-way causal relationship running from digital transformation to sustainable development. By contrast, no statistically significant evidence was found indicating that improvements in sustainable development performance directly accelerate either digitalization or technological innovation.

According to the study, while digital transformation and technological innovation serve as key drivers of sustainable development, progress in sustainability does not automatically accelerate these two processes.

GUIDING FINDINGS FOR TRANSITION ECONOMIES
All 11 countries examined in the study are transition economies that have experienced substantial changes in digital transformation, institutional alignment, and sustainability policies following their accession to the European Union. Variations in digital infrastructure, innovation capacity, and sustainability performance among these countries made it possible to identify the conditions under which digitalization delivers the greatest benefits.

RECOMMENDATIONS FOR POLICYMAKERS
The researchers argue that sustainable development policies should be designed according to countries' levels of digital development. In countries with weaker digital infrastructure, priority should be given to expanding broadband internet investments, improving digital literacy, and enhancing e-government services. For countries at more advanced stages of digital transformation, the study recommends supporting green technologies, strengthening sustainable innovation policies, aligning research and development investments with sustainability objectives, and expanding public-private partnerships.

The study demonstrates that digital transformation is not only a driver of economic growth but also a fundamental factor that strengthens environmental sustainability, social inclusion, and institutional capacity, while technological innovation serves as an important complementary instrument in this process. The findings suggest that placing digital transformation investments at the center of sustainable development policies could make a significant contribution to reducing development disparities among the European Union's newer member states.