| Summary: | Digitisation has raised concerns about how it can transform the growth of productivity in firms and its divergence around the world. Given that literature has focused mainly on confirming firm productivity gaps, research on the explanatory role of digital-based complementarities in productivity gaps has been scarce. This work aims to provide evidence on the digital divide and its causes in small and medium-sized enterprises (SME) and in large firms. Using a sample of 5,840 Spanish SMEs and large firms during the 1991–2016 period, results reflect a growing divergence in total factor productivity, both for SMEs and for large firms. Moreover, they also show that the productivity gap becomes more evident when firms develop digital-based complementarities, particularly those derived from ICT investment, R&D activities and product innovation. Firm strategies and policy implications of the results obtained are also discussed.
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