Digitalization Gaining Momentum at Hungarian Firms

The innovation activity of Hungarian companies has not changed in the past six months; K&H's index measuring this stagnated at 28 points on a scale of up to 100, which means that Hungary's gap with the largest innovator countries and the EU average has increased, but digitalization has strengthened, Balázs Németh, head of innovation at K&H, said at a press conference in Budapest on Thursday.

He pointed out that currently the lack of resources is the biggest obstacle for companies to start innovation activities, and even those with sufficient capital are waiting because of the uncertainty.

On a positive note, he said that more and more companies, including smaller ones, are recognizing the importance of digitalization: the digital innovation sub-index is improving steadily, with a 2-point increase in the first half of the year to 36 points. He noted that rising costs are not conducive to companies introducing new products and services, so they are trying to streamline their internal processes, which digitalization helps a lot.    

The expert also pointed out that the development of the infrastructure and the availability of the internet network in Hungary is outstandingly good, but that the way companies use the facilities is lagging behind the EU average.

According to Balázs Németh, the growth of R&D activity will depend on how quickly the negative factors in the economy can be "absorbed" and when the economy can overcome inflation.

János Bacher, senior partner at research firm Impetus Research, said that the sub-index of innovation realized had fallen marginally to 32% from 33% in the previous six months. A bigger change was seen in planned innovations, with the sub-index picking up by just 21 points, presumably due to the difficult economic situation, he added.

“Innovation strategy also scored two points lower, indicating that companies are now "distracted by other things", he said.

The research firm's expert pointed out that the largest companies are the most innovative, with those with revenues of more than HUF 4 billion scoring 38 points, followed by the HUF 2-4 billion category with 30 points, the HUF 1-2 billion with 29 points and those with revenues between HUF 300 million and HUF 1 billion with 26 points.