Effect of Digitalisation on Business Performance of Companies in the Manufacturing Industry in Hungary

The manufacturing industry in Hungary is responsible for 24,3% of the GDP. In overall Hungarian companies' labour productivity reaches only 70% of the EU average. This study shows that digitalisation may contribute to higher labour productivity. In this study a new index to measure digital business process integration (DBII) is introduced based on Porter's Value Chain model. Historic data from a questionnaire is used to categorize companies based on DBII. The association between DBII, organization IT capabilities and business performance indicators (labour productivity and profit per employee) is analysed with the help of cross tabulation and SPSS. It is also shown that higher DBII can be associated with higher labour productivity. Positive association between organization IT capabilities and labour productivity is also presented. A weaker but significant association between DBII and profit per employee suggests, that organizations still need to work out ways how digitalisation can help to harvest the gains from increased labour productivity.