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Transformation of the Paradigm of the Economic Entities Development in Digital Economy

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Global digitization forces modern enterprises to respond to the rapid changes in the external environment and adapt to it. As a result, existing business models are being transformed in the areas of production, promotion, communication, calculations, interaction with partners and consumers. In this context, there is growing scientific interest in exploring theoretical and practical aspects of the economy digitization and its impact on the peculiarities of the economic entities functioning. Features of functioning of classical and digital economic entities on the basis of criterion approach have been investigated, using the following criteria: factors of production, form of business organization, location of workplace, production outcome, economic processes, connection with on-demand economy, methods of payment, relations with other enterprises, professions enhancing the image of the enterprise, communication method between employees, saving and processing of information, company promotion tools and consumer communication. The main statistical indicators of the digitalization impact on the activity of enterprises in the world and in Ukraine in 2018 have been analyzed. The feasibility of using digital economy tools has been outlined. Advantages and disadvantages of the impact of digital transformation space on the enterprise have been identified.
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Transformation of the Paradigm of the Economic Entities Development
in Digital Economy
SERHIY SHKARLET
Rector, the National University "Chernihiv Polytechnic",
Chernihiv, 14035, UKRAINE
MAKSYM DUBYNA
Department of Finance, Banking and Insurance, National University "Chernihiv Polytechnic",
Chernihiv, 14035, UKRAINE
KHRYSTYNA SHTYRKHUN
Department of Finance, Banking and Insurance, National University "Chernihiv Polytechnic",
Chernihiv, 14035, UKRAINE
LIUDMYLA VERBIVSKA
Department of Business, Trade and Stock Exchange Operations,
Yuriy Fedkovych Chernivtsi National University,
Chernivtsi, 58012, UKRAINE
Abstract: - Global digitization forces modern enterprises to respond to the rapid changes in the external
environment and adapt to it. As a result, existing business models are being transformed in the areas of
production, promotion, communication, calculations, interaction with partners and consumers. In this context,
there is growing scientific interest in exploring theoretical and practical aspects of the economy digitization and
its impact on the peculiarities of the economic entities functioning. Features of functioning of classical and
digital economic entities on the basis of criterion approach have been investigated, using the following criteria:
factors of production, form of business organization, location of workplace, production outcome, economic
processes, connection with on-demand economy, methods of payment, relations with other enterprises,
professions enhancing the image of the enterprise, communication method between employees, saving and
processing of information, company promotion tools and consumer communication. The main statistical
indicators of the digitalization impact on the activity of enterprises in the world and in Ukraine in 2018 have
been analyzed. The feasibility of using digital economy tools has been outlined. Advantages and disadvantages
of the impact of digital transformation space on the enterprise have been identified.
Key-Words: - economic entity, digitization, business model, digital economy, digital marketing, digital
enterprise.
Received: January 23, 2020. Revised: May 14, 2020. Accepted: May 29, 2020. Published: June 4, 2020.
1 Introduction
Today, under the influence of digitization, the
success of a company is measured not by the size of
its capital, its many years of existence, but by its
level of flexibility to respond to these changes and
adapt the business to a new environment. As noted
by a group of scientists [4], a modern enterprise is a
complex integrated organizational and production
system which components are constantly changing,
interacting with each other. Achieving these goals in
the context of increased competition among
enterprises leads to an increase in the volume and
complexity of the production processes, analysis,
planning, management, internal and external
relations with suppliers, intermediaries, etc. [6], [7],
[8], [9].
There is a transformation of existing business
models in the fields of production, communication,
calculations, interaction with partners, promotion of
goods and enhancement of the company's image.
Therefore, development of the information society
and introduction of the latest information and
computer technologies in all spheres of economy is
determined by one of the priority directions of the
state domestic policy [5] and research in this area is
extremely relevant.
The paper consists of several sections. In
particular, the second section provides a literature
review. Materials and methods have been used
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during the research are presented in section three,
while section four provides the results and
discussion of the research. The last section reflects
the conclusion.
2 Literature review
Sufficient attention among domestic scientists
(Gudz O. E., Kraus N. M., Matveeva N. M., Melnyk
S. V., Mykhailova K. V., Rudenko M. V.,
Shatokhina D. A., Tokmakova I. V.) was devoted to
the study of transformational processes of the
enterprise management under the influence of the
economy digitization. In the scientific works of
foreign scientists, in particular Trașcă D. L., et al.
[26], considerable attention is paid to the study of
the digitization impact on the economic
performance of the enterprise (business activity of
the enterprise, size of exports). Rauter R., et al. [15]
studied the impact of digitization on innovative
business models, changing company values, and
analyzed the challenges posed by business
digitalization. Reichstein C., et al. [16] conducted
the research of the digitization impact on the
innovation performance, data privacy, mobility and
new business models. The above scholars have
made a significant contribution to the development
of theoretical foundations of digitization; however,
there is still a need to systematize features of the
economic activity and managing businesses under
the influence of digitization. Therefore,
investigating the difference between the classic and
digital enterprise based on the criterion approach
requires more detailed scientific consideration.
The purpose of the article is to study the
transformation of economic entities under the
impact of the digital economy based on the criterion
approach.
3 Materials and Methods
Within the research, a variety of general scientific
and special economic methods is used. Among
general scientific methods, the authors have used
methods of observation, analysis and synthesis,
induction and deduction. Among special economic
methods, the following have been used:
– comparative method (to systematize features of
management of classical and digital enterprises on
the basis of the criterion approach under the
digitization influence);
– graphical visualization method (to represent
advantages and disadvantages of the impact of the
digital transformation space on the enterprise);
– economic and statistical (to analyze statistical
data on the digitization impact on the business
activity of the enterprises).
Note that the greatest attention will be paid to the
comparative method. The proposed systematization
of features of the economic activity and managing
businesses under the influence of digitization on the
basis of 12 specific criterions will allow us the
following:
- to explore comprehensively the difference
between the functioning of a classical and digital
enterprise;
- to emphasize the importance of implementation
of digital tools (including digital marketing);
- to identify the advantages and disadvantages of
the impact of digitalization on activities, including
business models of enterprises;
- to determine the level of effectiveness of the
impact of digitalization on the activities of
enterprises.
The analysis is based on the official statistical
databases available in open access. Official data of
the Forrester International Independent Analytical
Company, the International Data Group (IDG)
research company, and the Boston Consulting
Group are sources of the research findings on the
digitization impact on businesses worldwide.
Statistical data on the digitization impact on the
business activity of Ukrainian enterprises in 2018 is
represented based on the data of the State
Statistics Service of Ukraine.
4 Results and Discussion
Digitization implies significant development of
innovative technologies using artificial intelligence,
automation processes and digital platforms [18].
Using the Internet, you can save time and money on
goods delivery by using rich information flows to
streamline and optimize the flow of physical goods
in the supply chain [3], Experts of the Boston
Consulting Group say that by 2020, about 25% of
the global economy will be digitized, allowing the
state, business and society to function more
efficiently [23].
Digitization changes models of the enterprise
management and transforms the classic enterprise
into digital one – the enterprise that uses the
information technology as a competitive advantage
in all areas of its activity, changing product chains,
consumer relationships and marketing strategies;
causes the emergence of new products and
innovations; affects the provision of business
resources; reduces the cost of organization,
management and communication, as well as the cost
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Khrystyna Shtyrkhun, Liudmyla Verbivska
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of obtaining, processing and storing information,
etc.
The difference between the classic and digital
enterprise is presented in Table 1.
Table 1. Difference between the classic and
digital enterprise
Classic enter
p
rise Di
g
ital enter
p
rise
1 Production factors
Labor, capital, land,
entre
reneurial abilit
Information, science
2 Form of business or
g
anization
Mostly hired work Employment, self-
em
p
lo
y
men
t
3 Work
p
lace
Ph
y
sical work
p
lace Di
g
ital work
p
lace
4 Production out
p
ut
Goods and services
Integrated digital
technologies, products
and services
5 Economic
p
rocesses
High-volume
p
roduction Individual approach
6 On-demand interaction with econom
y
Limited access to
goods and services
Free access to goods and
services
7 Methods of settlements
Cash, bank and
traditional financial
institutions
Non-cash settlement,
digital services,
b
lockchain
8 Relations with other enter
p
rises
Com
p
etition Coo
p
etition
9 Professions to enhance the image of the
enter
p
rise
Classical
p
rofessions Di
g
ital
p
rofessions
10 Method of communication between
em
p
lo
y
ees
Email,
personal
communication,
telephone
communication
Email,
messengers Viber,
Telegram, WhatsApp,
Skype, Zoom, Whereby,
Discord
11 Savin
g
and
p
rocessin
g
of information
EOM computer
software, paper
medium
Electronic media, cloud
storage and cloud
com
p
utin
g
12 Tools for promoting the company and
communicatin
g
with consumers
Personal
communication,
classic marketing
and Public Relations
Digital marketing and
digital infrastructure
Sources: compiled by the authors
1. Production factors. Rapid development of the
digital economy is associated with widespread use
of digital-information and communication
technologies that have been able to transform a
traditional resource-consuming economy into a
resource-creating economy. Therefore, the emphasis
on traditional factors of production (labor, capital,
land and entrepreneurship) has shifted to
information (electronic and virtual data), providing
electronic communications with electronic devices,
tools and systems) and science (availability of
certain necessary knowledge, skills, individual
competencies of the employee, such as talents,
creativity, experience, etc.), and ways to access
them). With the development of science and
technology, physical work has been transformed
into brainwork. In addition, experts predict that in
the future, all tasks will be completed by robots.
Capital is no longer a determining factor in starting
your own business; now you can do it with minimal
investment. Land has ceased to be a major factor in
production, as new types of products (devices) that
do not need it have emerged. Entrepreneurial
capabilities (i.e., strategies for purely economic
effect - profit) are no longer working in pure form,
instead, businesses are investing in social projects,
which are first and foremost beneficial to the
population (provide useful information, the services
you need for free, and usually with environmental
concerns), thus providing social and environmental
effects that can eventually create an economic
impact for the company. For example, one company
that has been operating in the market for a long time
is ready to invest in the implementation of a specific
social action project, acting only as a sponsor of the
project. If the project is useful and gains popularity,
the sponsoring company’s rating can automatically
rise and increase the number of its clients. It is much
easier for digital enterprises than traditional
businesses to find co-organizers, volunteers,
material suppliers to implement such projects, and
invite a target audience for the event.
2. Form of business organization. As a result of
the society digitization, there is a tendency to
increase the number of self-employed persons,
including those engaged in entrepreneurship. At the
same time, one person can be the business owner,
the manager, and the executor of all stages of the
company’s operation. Internet development
provides unlimited opportunities for e-business
(business services, online sales, etc.), and this means
that business processes are carried out instantly
anywhere and in any direction. The purpose of this
virtual organizational form of business is to ensure
competition for scarce resources and finance to meet
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customer needs as quickly as possible [20, 21]. This
form of employment significantly reduces the cost
of starting and running a business; significantly
reduces time for communication with consumers;
does not depend on the location of the consumer;
gives the opportunity to cooperate with other
specialists; reduces significantly the cost of
premises, because many types of economic activity
can be carried out from home; allows you to plan
and organize your working hours independently;
accelerates order fulfillment [1].
3. Workplace. Transition to the digital economy
is accompanied by a change in the workplace from
physical (office, enterprise) to digital. Generally, the
term "digital workplace" was coined by Charles
Grentem and Larry Nichols back in 1993. It is
generally accepted that a digital workplace is the
virtual equivalent of a physical workplace, which
requires proper organization, use and management,
because it should be the key to improving
employees' efficiency and creating more favorable
working conditions for them. "The digital workplace
does not require a permanent employee to be in one
specific place and involves the use of information,
technology, processes and collaboration tools
between company employees to work on any device
and at any time [2]. Nowadays, the hub management
model, which implies that the company has many
employees who work remotely, even from different
parts of the world, but are fully involved in the team
and workflow and, if necessary, can take any
vacancy in the office, is extremely popular.
Benefits of this way of labor organization are
increase of the work efficiency, creation of more
favorable working conditions, provision of a
flexible working environment with appropriate
digital tools, technologies and access to digital
infrastructures. As this method of labor organization
is extremely attractive, it allows having a positive
impact on the employment market and promotes
retention of skilled workers, increased tax revenues
and social insurance contributions.
4. Production outcomes. Analysts say that by
2020, half of goods and services in consumer
markets will be innovative and automated, and
concepts such as "smart city", "smart home", "smart
car", "smart clothing" and so on will be used in
everyday life.
To date, businesses are already leveraging a
range of integrated digital technologies, products
and services, such as BioTech, NanoTech,
RetailTech, FinTech, LegalTech, InsurTech,
GovTech, BlockChain, to increase staff efficiency,
conserve resources and increase profits. Digital
marketing, CRM & BPM on bpm'online platform,
Grid technology, Digital insurance, ePrescription,
TeleHealth, etc. [12]. In addition, development of
big data, the Internet of things, cloud computing,
predictive analytics, and more, is in the future.
5. Economic processes. They are characterized
by the transition from the production of goods and
the provision of services for mass consumption to
the individual approach to each potential consumer.
Customers can even order products on their own
sketches. For example, if a business representative
goes to an advertising agency to develop the
material they need, they can adjust it by talking to
the designer online.
6. On-demand interaction with economy. In
today's environment, any consumer can place an
order from home, pay by bankcard online and
receive its order. Thus, benefits of an on-demand
economy for consumers are quick access to the
required product or service, lower cost of goods or
services due to fewer intermediaries, for businesses
- getting orders online and completing orders
offline, which simplifies communication with
customers and significantly reduces time spent [25].
One successful example is the Spanish fast
delivery service for anything (supermarket,
restaurant, cafe, pharmacy, etc.) via the Glovo
mobile app. In Ukraine, Glovo appeared in 2018,
and despite that quickly gained popularity. Thus,
development of this service in Ukraine compared to
other European countries was the highest in terms of
execution of 100 thousand orders per month. Thanks
to this service, Glovo-affiliated companies can save
on gasoline costs and staff salaries, which can
deliver food from the company itself.
7. Methods of settlements. Under to the opinion
of Gudz O.Ye., "increasing the number of users of
digital services from 5 million in 2016 to 15 million
in 2021 will allow 95% of all shops, salons, services
to make payments without cash. This will reduce the
cost of printing paper money and help put the
economy out of the shadows. Labor productivity
and income of the population will increase. The
level of corruption will be significantly reduced as
the vast majority of transactions will take place
electronically and automatically across multiple
registers" [10].
In the digital economy, functions of banks and
traditional financial institutions are gradually being
replaced by the new organizational structure of the
business - blockchain, which is a block chain
system. With this method of settlements, financial
transactions are anonymous and secure. With this
method of settlement, financial transactions are
anonymous and secure. The seller and the buyer are
participants in the financial business, and the miner
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is a kind of intermediary. Each has its own virtual
wallet and key. The advantage of blockchain is
decentralization, so thanks to its collective use; this
system allows payments to move quickly and
openly in the global space, it creates responsibility,
trust and transparency for all participants in the
process [14].
8. Interaction with other enterprises. One
element of digitization is the combination of
different technologies in new ways, as opposed to
the classic, already outdated way of simply
disseminating information technology. As a result,
companies are changing their forms and methods of
doing business and are able to deliver innovative
products in both existing and new market segments.
With the digitization development, there is a
gradual change in the forms of business cooperation
from competition to coopetition. Thus, former
competitors can easily become partners by pooling
their efforts on digital platforms and sharing them.
The term coopetition (from English terms
"cooperation" and "competition") was first used in
the 1980s by Ray Nord, the founder and CEO of
American IT Corporation Novell. Coopetition
makes possible share resources instead of competing
duplicates, which is observed by competition;
learning valuable partners’ know-how and skills
while protecting own core competency or
advantage; reduction costs, risks and uncertainties
associated with innovation or new product
development during global expansion; build better
customer relationships because companies that, on
the one hand, compete in the market by offering
different products and services, and on the other, by
working together to improve their productivity and
quality of goods and services, giving customers
greater customer value than if they were sold by one
company [19].
For example, one business may lack the capital,
some business knowledge and customer base in a
particular area, and another may have all that. At the
same time, another company may need specialists
who have digital skills to work with clients and is
able to respond quickly to their demand. Therefore,
in this case, enterprises can pool their resources in
order to implement jointly innovative projects.
However, in these circumstances, a new
phenomenon emerges as a competitive
breakthrough, due to the rapid development of
startups and emergence of young professionals with
innovative ideas and products, who have access to
global digital platforms for research and hands-on
digital marketing, high-speed sales and distribution
skills that businesses may lack.
9. Professions to enhance the image of the
enterprise. Digitization can create more than
400,000 new jobs in Ukraine [10]. For example,
professions involved in creating the image of the
enterprise and promoting its products (marketer, PR
manager) are replaced by new ones, which are
already in high demand: SMM Manager, SEO
Specialist, Brand Manager, Project Manager, Event
Manager, Community Manager, Video Blogger,
Content Manager, Mobile Marketer, Web Analyst,
Information Security Manager, and more.
Companies may have the required specialists in
their staff, however, at present, the lack of skilled
digital professionals is a major problem for
businesses. Therefore, there is a need to persistently
recruit, retain, develop and improve digital skills of
the available staff. Another solution to this problem
is to pay for the services of digital agencies that can
help to enhance the image of the company, promote
its products and services through the digital
environment.
In addition, an extremely important component
for a modern enterprise is the creation and rapid
implementation of effective projects, as opposed to
the routine activities of classic enterprises. This
requires continuous staff training through trainings,
master classes, workshops and online webinars.
10. Method of communication between
employees. Rapid development of technologies has
influenced the change of methods of information
transfer between employees from personal
communication, phone calls; email has become
increasingly used in daily life. In addition, the need
to save time caused the emergence of such
messengers as Viber, Telegram, WhatsApp. In order
to address important issues they conduct online
meetings via Skype (audio, video, and web
conferencing).
It is worth noting the widespread use of
specialized software to optimize internal
communication, in particular, ERP, electronic
document management, CRM, BMPS, UPE
performance management platform [10].
11. Saving and processing of information.
Initially, there was a transition from storing the
necessary data on paper to storing information on
the hard disk of a personal computer. However,
today this is not enough because of the enormous
amount of information and the need for more
efficient processing and use.
In today's context, engagement with colleagues
and partners implies an increase in the level of the
information openness. Therefore, network approach,
storing information on remote servers or in the
cloud is widely used. Advantages of this storage
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method include as follows: secure storage and
efficient data management, efficient use of
resources, increased ability to solve complex
business problems, improving the quality of
products, services and servicing, the ability to
increase the amount of information storage if
needed [10].
Unlike the traditional method of working with
software, which involves performing various
operations and calculations using programs, that are
installed on the computer, cloud computing services
are applications that are accessed via the Internet
through a browser. Advantages of this approach are
that cloud computing services are equipped with
new features, which simplify the process of work
and allow the processing of a large amount of
information; the user is not attached to its place of
work and can use any computer with Internet access
to complete the tasks; processed information is
protected against computer malfunction; this
reduces the cost of maintaining and upgrading the
software on your computer; allows you to share
easily and quickly the results of work with
colleagues and even work together.
According to the State Statistics Service of
Ukraine, in Ukraine, in 2018, businesses that had
access to the Internet used it for sending or
receiving email (98.7%); banking operations
(97.2%); receiving information on goods and
services (88.8%); receiving information from public
authorities (80.9%); transactions with state
authorities (except for receiving information)
(51.8%); use of instant messaging and electronic
bulletin board (48.9%); access to other financial
services (40.7%); making phone calls via Internet /
VoIP or video conferencing (31.6%).
12. Tools for promoting the company and
communicating with consumers. The classic
enterprise uses personal communication and tools of
classic marketing and Public Relations such as
exhibitions, fairs, advertising on television, radio,
billboards, newspapers, magazines, flyers and more.
At the same time, digitization does not include these
tools, but takes them to a new level of development
that is more accessible to everyone, the online level
to promote your business and its products and
services. Thus, if you include a QR code on your
billboard that you can use to access the company
website, then it is a digital marketing tool [13]. In
addition, digital marketing tools include the
following ones: Google Adwords Contextual
Advertising, Yandex Direct, Mobile Marketing;
email, social media marketing (SMM), social
network optimization (SMO), search engine
optimization (SEO), etc. [17].
Interactivity (direct interaction of the consumer
with the company); absence of territorial restrictions
by the implementation of marketing ideas; easy
access to the resource; the ability to find and quickly
reach your target audience; effectiveness evaluation
of the company’s activities should be related to the
advantages of digital marketing.
In addition, effectiveness of traditional marketing
activities is measured primarily by the statistics that
take some time to elapse between advertising
campaigns and consumer responses [17]. In
contrast, the advantage of digital media is that this
gap is narrowed several times because statistics are
received in real time (the number of times a post
was viewed, the number of people who liked it,
comments of users, and the ability to conduct polls
and get quick answers).
The modern enterprise actively uses e-mail,
Instagram mobile applications, Telegram, Facebook
social network, blogging, vlogging, community
development in social networks to invite a potential
client to the same offline event (exhibition, fair,
seminar, etc.). According to Forrester, an
international independent analytics comp any, email
is the most common customer service channel, as
54% of respondents used email to contact The
Forrester in 2018 [24].
In 2018, a quarter of Ukrainian businesses used
social media to promote their products, 18.7%
cooperated with their business partners and 18.3%
of enterprises maintained communication with their
existing and potential customers (Table 2), which
confirms the widespread use of social media for
doing business effectively.
Table 2. Purpose of the use of social media by
enterprises in 2018
Indicator
Value,
%
1
Presentation of the enterprise /
advertising of its goods, works and
services)
25.1
2 Cooperation with business
partners / other organizations 18.7
3 Receiving customer feedback /
answering their questions 18.3
4 Hiring workers 13.9
5 Exchange of views, opinions /
knowledge within the enterprise 12.4
6
Involvement of clients in the
development / innovation of goods
and services
11.6
Sources: compiled by the authors based on the
data of State Statistics Service of Ukraine [22]
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Khrystyna Shtyrkhun, Liudmyla Verbivska
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On the other hand, only 13.9% of enterprises
hired employees, 12.4% used social media to
exchange views / knowledge within the enterprise
and 11.6% - to engage customers in the
development / innovation of goods and services
[22].
In addition, creating communities on social
networks and mobile apps has become an effective
way to reach potential customers, since, in this case,
the content of the community is created not only by
specialists, but also by existing consumers of the
goods or services of the company, who leave their
reviews, photos, videos and other materials about
the products and can be important for potential
clients of the enterprise [13].
An extremely effective tool for advertising both
the enterprise as a whole and the goods and services
it sells is blogging and vlogging by the employees
of the enterprise, sometimes businesses even pay for
the services of popular bloggers as thought leaders
to promote and discuss the product. This tool is
particularly in demand among teenagers and young
people, and far outstrips cable TV.
In addition, the company website is also one of
the tools of communication and customer
engagement; however, the purpose of creating a
corporate site with a traditional enterprise and a
digital one is different. Previously, the task of the
site was to inform consumers about the company
and its products, now - personal communication
with customers, gathering contacts of potential
consumers and the ability to order goods online.
Thus, the use of digital tools gives unrestricted
access to product catalogs for Internet users, which
greatly reduces the time to search for necessary
goods and services, allows you to make the
purchase decisions and reduce the risk of buying a
substandard product based on the experience and
feedback of other users of the product, and allows
businesses to influence effectively, emotionally and
psychologically their target audience, enables them
to examine promptly the consumer demand and
respond to it based on the wishes of customers and
business partners.
So, in this article, we note the importance of the
use of the instruments of digital marketing to meet
the demands of a new world. Digital marketing
helps to create better interaction between an
economic entity and its target audience through
special instruments, in particular, the internet
(YouTube, social media, other applications, or web
pages) or search engines (SEO, SEM).
In 2018, the International Data Group (IDG)
conducted a survey of 702 organizations across
industries, including technology, financial services,
legal services, manufacturing, education, health,
public service, telecommunications and utilities,
retail and wholesale, and distribution who have
already digitized their business or are just planning
to do so. According to the survey, 38% of traditional
businesses have adopted a digital business strategy
in 2018. In addition, the main indicators of the
digitization impact on business activity in 2018 are
shown in Table 3.
Table 3. Key indicators of the digitization influence
the business activity in 2018
Features Share of
enterprises,
%
1
Increasing employee
productivity by automating
processes
58
2 Innovations introduction 57
3Increasing customer
satisfaction 52
4
Improving business
performance through
employees’ data sharing
49
5 Achieving high growth rates 46
6 Increase in revenue 35
7Improving the data
management strategy 20
Sources: compiled by the authors based on the
data of International Data Group [11]
In particular, more than half of enterprises due to
the transition to digital technologies increased
employee productivity by automating processes
(58%), introduced innovations (57%), increased
customer satisfaction (52%). In addition, 35% of
enterprises surveyed increased their revenues by
35%, which is an extremely important indicator for
enterprises. Thus, the above data indicate the
positive impact of digitalization and business
development, however, there are also some risks
and disadvantages to the impact of the digital
transformation space on the enterprise, which has
been systematized and reflected in Figure 1.
WSEAS TRANSACTIONS on ENVIRONMENT and DEVELOPMENT
DOI: 10.37394/232015.2020.16.41
Serhiy Shkarlet, Maksym Dubyna,
Khrystyna Shtyrkhun, Liudmyla Verbivska
E-ISSN: 2224-3496
419
Volume 16, 2020
Figure 1. Advantages and disadvantages of the
impact of digital transformation space on the
enterprise
Sources: compiled by the authors
5 Conclusion
Thus, digitization has a positive effect on
transformation processes in the activities of
economic entities. In particular, digitization results
in significant savings in financial resources, increase
of the activity efficiency of both the individual
employee and the activity of the enterprise as a
whole, improving communication with consumers
and significant development of on-demand
economy, development of financial services,
efficient organization of working hours, emergence
of new interesting professions, i.e. new jobs,
increase of labor productivity, expansion of sales
channels of products, etc.
On the other hand, there are some risks and
disadvantages posed by digitalization for
businesses: elimination of old professions leads to
an increase in the number of unemployed,
increasing dependence on leading companies in the
field of information and communication
technologies, total control of employees and their
operations, reducing corporate data security and
development of hacking and fraud, etc.
Expanding the use of blockchain and
cryptocurrency for payments with consumers and
suppliers; creation of business portals for placing
orders and offers; creation of innovative forms of
investment, crediting and insurance; investing in
new technologies such as artificial intelligence,
business intelligence and the best digital asset
management software solutions should be related to
the main directions of the digital economy
development.
It should be noted, this paper is mostly focused
on the investigation of the difference between the
classic and digital enterprise under the influence of
the digital economy based on the criterion approach
and reflects the advantages and disadvantages of the
impact of digital transformation space on the
enterprise. Therefore, in the framework of the
further research, there is a need to analyze in more
detail the impact of the transformation of traditional
enterprises into digital ones and the results of this
transformation (in particular, on the example of a
specific enterprise that was able to adapt to
requirements of the digital economy and began to
use digital technologies).
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Khrystyna Shtyrkhun, Liudmyla Verbivska
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Khrystyna Shtyrkhun, Liudmyla Verbivska
E-ISSN: 2224-3496
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