How to assess firms' digitalisation: a micro-level indicator

This paper introduces microDESI, a novel firm-level indicator designed to measure digitalisation readiness and diffusion across Italian firms. While the Digital Economy and Society Index (DESI) provides valuable country-level insights, our micro-founded approach offers granular information that can be fruitfully exploited for economic analysis and policy purposes. The indicator has been tested on two rounds of the Italian section of the Eurostat ICT survey (2018 and 2020) to ensure data comparability. By integrating survey data with Frame-SBS performance metrics and AIDA-Moody's financial records, we capture multiple dimensions affecting digital transformation outcomes and relate them to firm performance. The resulting indicator identifies firm-level determinants of successful digitalisation while enabling comparisons over time and across firm characteristics. Our analysis reveals significant regional and sectoral heterogeneities in digitalisation readiness across Italian firms that must be accounted for in policy design. In this respect, the indicator serves dual policy functions: as a targeting mechanism for ex-ante intervention design and as an evaluation tool for measuring the effectiveness of industrial digitalisation policies. As European economies pursue digital transformation through initiatives such as the EU Digital Decade programme, microDESI provides an essential analytical tool to support policymakers and monitor digitalisation dynamics at the firm level.