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Digitalization of business processes: evolution, trends and prerequisites
Abstract
Introduction. Digitalization of business processes has prompted a shift from traditional management methods to digital ones, enhancing the efficiency of service provision and improving the quality of goods production. In light of global factors such as Industry 4.0 and 5.0, as well as the COVID-19 pandemic, researching their impact on the digitalization of business processes in the European Union (EU) and Ukraine becomes particularly relevant. Industry 4.0 and 5.0 define a new stage in economic development based on the integration of digital technologies into all spheres of enterprise activity. This includes the implementation of Internet of Things (IoT), artificial intelligence (AI), and innovative solutions for automating business processes, logistics, marketing, and management. As a result, businesses gain the ability to respond more quickly to market changes, optimize business processes, and forecast demand for goods and services. Additionally, the COVID-19 pandemic once again underscores the importance of digitalization for business processes, leading many companies to recognize the significance of investing in digital technologies to ensure business continuity under any circumstances. Ukraine, with its significant potential in the IT sector, is actively progressing towards digital transformation. The aim of the article is to analyze the impact of digital transformation on enterprise functioning in modern conditions, systematize the advantages, disadvantages, and opportunities arising from this transformation. Methods. The authors utilized methods of bibliographic analysis of publications from the SCOPUS database, trend research, and marketing analysis of internal and external factors. Results. Ukrainian companies successfully implement digital initiatives to optimize production processes, improve communication with clients and partners, and introduce new digital products and services. Secondly, the population is also becoming more digitally oriented. Households increasingly use digital tools for budget planning, online shopping, financial transactions, and managing household devices through mobile applications. Overall, digitalization of business processes is a response to modern market challenges and requirements, providing businesses with greater competitiveness, efficiency, and flexibility. It opens up new opportunities for enterprises in all sectors and contributes to societal development and improvement in quality of life for the population. The directions for further research in the field of business process digitalization include analyzing the impact of artificial intelligence and machine learning on automation and innovation, studying the economic and social consequences of digitalization, and researching cybersecurity issues and data protection. Special attention should be given to the integration of digital technologies into small and medium-sized businesses and studying international experiences to adapt best practices in Ukraine. An important aspect is also the study of the environmental benefits of digitalization for sustainable development.
... Their insights provide a framework for examining challenges in the article and offer recommendations for effective management. [6] scrutinized global trends, specifically highlighting challenges and opportunities for Ukrainian businesses. Their emphasis on the need for investment in digital technologies and adaptation of business processes aligns with the exploration of the transformative potential for businesses in the digital age. ...
... The results also complement previous research focusing on the peculiarities of digital transformation in Ukraine and Georgia. For example, Pimonenko, Serhii, et al. [6] analyzed global trends and prospects of digitizing business process management and identified significant issues and ways to address them in Ukraine. Pimonenko [6] explored the theoretical and methodological aspects of digitizing business process management, identifying its main advantages and disadvantages. ...
... For example, Pimonenko, Serhii, et al. [6] analyzed global trends and prospects of digitizing business process management and identified significant issues and ways to address them in Ukraine. Pimonenko [6] explored the theoretical and methodological aspects of digitizing business process management, identifying its main advantages and disadvantages. Ha, L. T et al. [8] examined the digitalization of business process management in the post-pandemic economy and identified key enterprise challenges and opportunities. ...
This article aims to analyze modern technologies' impact on business process management approaches in the context of digitization and innovative management. Drawing on an extensive literature review, the study explores key themes such as the role of digital technologies in transforming traditional business practices, fostering innovation, and addressing market demands. The problem under investigation centers on the evolving nature of business process management in response to rapid technological advancements and the need for innovative strategies. The research is guided by the hypothesis that digitization and innovative management are critical drivers of efficiency, productivity, and competitive advantage in the contemporary business environment. A mixed-methods approach was employed to test this hypothesis, combining statistical data analysis, case studies of leading global and Ukrainian enterprises (including Amazon, Nova Poshta, and SoftServe), and regression modeling. The study sample includes data from eight enterprises and insights from 15 managers representing various industries. The results indicate that adopting digital technologies, such as artificial intelligence, blockchain, and IoT, significantly enhances business process automation, customer interaction, and organizational efficiency. The findings highlight notable growth trends in digital transformation indicators, including profitability, innovation output, and market competitiveness. Companies prioritizing digital innovations experience higher financial performance and adaptability in a dynamic market environment. This study underscores the implications of digitization for business process management, providing actionable insights for managers aiming to develop effective strategies for integrating digital and innovative practices. The research contributes to the theoretical understanding of digital transformation and offers practical applications for businesses seeking sustained growth and competitive advantage.
The purpose of this study is to examine the impact of digital business on the ease of establishing new companies in 28 European countries from 2011 to 2019. A digital business can be described in terms of e-commerce, specifically e-commerce sales. Additionally, it encompasses e-business, with a focus on customer relationship management (CRM) usage. The study analyzes the digitalization-entrepreneurship nexus using the panel-corrected standard error (PCSE) model. Additionally, we employ the dynamic fixed-effects estimator (DFE) within the autoregressive distributed lag (ARDL) model to measure both short-run and long-run effects. Our findings suggest that digital business positively influences the density of entrepreneurship in a country. Our results remain robust when combining various econometric techniques with additional explanatory variables. However, the positive effects of digital business on the entrepreneurial sector become evident only in the long run. The use of digital business benefits the entrepreneurial sector by reducing the amount of time and money required to establish a new business.
The Internet of Things (IoT) was born from the fusion of virtual and physical space and became the initiator of many scientific fields. Economic sustainability is the key to further development and progress. To keep up with the changes, it is necessary to adapt economic models and concepts to meet the requirements of future smart environments. Today, the need for electronic commerce (e-commerce) has become an economic priority during the transition between Industry 4.0 and Industry 5.0. Unlike mass production in Industry 4.0, customized production in Industry 5.0 should gain additional benefits in vertical management and decision-making concepts. The authors’ research is focused on e-commerce in a three-layer vertical IoT environment. The vertical IoT concept is composed of edge, fog, and cloud layers. Given the ubiquity of artificial intelligence in data processing, economic analysis, and predictions, this paper presents a few state-of-the-art machine learning (ML) algorithms facilitating the transition from a flat to a vertical e-commerce concept. The authors also propose hands-on ML algorithms for a few e-commerce types: consumer–consumer and consumer–company–consumer relationships. These algorithms are mainly composed of convolutional neural networks (CNNs), natural language understanding (NLU), sequential pattern mining (SPM), reinforcement learning (RL for agent training), algorithms for clicking on the item prediction, consumer behavior learning, etc. All presented concepts, algorithms, and models are described in detail.
Digital transformation has already begun to play a significant role in helping EU countries to achieve sustainable values by promoting environmental, social and governance (ESG) efficiency. It is rapidly changing the economic landscape, which leads to changes in all sectors and at all levels. The European Union (EU) has set ambitious goals for sustainable development and climate change mitigation, such as the European Green Deal and the 2030 Agenda for Sustainable Development. The paper aims to test the spatial spillover effect of digitalization on ESG performance for EU countries for 2008–2020. The study applies the spatial Durbin model to check the research hypothesis. The empirical results revealed that the EU exhibits varying levels of ESG performance. Digital transformation has the potential to enhance ESG performance and has shown significant spatial spillover effects. The SDM estimates that a 1% increase in digital inclusion results in a minimal 0.001% increase in the ESG index. The statistically significant positive effects observed in key enablers, digital public services for businesses and citizens, highlight the contribution of digitalization to improving ESG performance. In addition, technological innovation serves as a critical conduit for transmitting digital transformation in the business and public sphere to ESG performance. Given these findings, policymakers are advised to strengthen digitalization efforts to narrow the digital divide, leveraging the digital economy as a potent instrument. Additionally, a dynamic and targeted strategy for digital economic development should be implemented to address ESG performance disparities effectively.
Small and medium-sized enterprises (SMEs) are a major contributor to economic growth and a potential source of growth and employment globally. This article employs a bibliometric analysis approach to examine 135 research articles focused on the barriers encountered by SMEs and their strategic responses during the COVID-19 pandemic. Through this analysis, we present a conceptual diagram that highlights prominent challenges, including organizational barriers (e.g., financial crisis, liquidity constraints, and reduced purchasing power), operational barriers (e.g., scarcity of skilled workforce and limited access to raw materials), technological barriers (e.g., digitalization and forecasting capabilities), and strategic restrictions (e.g., resource limitations and disruptions in supply chains). We further explore approaches to overcoming these barriers, such as entrepreneurial resilience and innovation. The findings of this review underscore the importance of government policies aimed at supporting SMEs and facilitating their survival in the aftermath of crises. Moreover, given the impact of COVID-19, policies should also prioritize the involvement of SMEs and business owners in decision-making processes related to policy responses and recovery strategies.
Present, as Manuel Castells (1996) notes, we live in the information age. Knowledge and the way it is acquired and processed are the driving forces of the economy, and information processing systems are the strength of economies. The aim of this article is to identify the key role of the information supply phenomenon in contemporary socio-economic processes. The initial part of the article will define such concepts as: information, infodemia, information market, in the further part examples of the use of information in the process of forming social behaviour in the market context will be presented. For this purpose, three major economic crises from the turn of the 20th and 21st century will be used cross-sectionally. The first will be described as the dot-com crisis, i.e. the first global Internet players, which led to the collapse or loss of value of many global Internet platforms through the creation and bursting of a speculative bubble. The second crisis described below was related to the collapse of Lehman Brothers, a leading US bank, and the US housing crisis. In the above case, both supply and concealment of information in the public sphere could be observed. The last crisis described is the crisis related to the SARS-COV2 pandemic, in which dis- and mis- information activities proved to be crucial.
COVID-19 is a major global crisis affecter, changing global norms and societal behavioral models. Many companies have faced existential crises, but on the other hand, businesses that were and are helping others to boost digitalization, ICT and software solutions deployment, remote communications integration, e-commerce & e-services, and so on, have boosted their businesses, as people shifted online during the global lockdown and international travel restrictions. Our work explores the trend of e-commerce and e-services utilization during the ease of restrictions and the social distancing period to forecast the trend continuation patterns after the pandemic. An online survey was conducted and targeted individuals in Saudi Arabia and Egypt, resulting in 155 participants. The data were analyzed from four perspectives: demographics, COVID-19 health impact, trend analysis, and regression analysis. The results indicate heavy utilization of e-commerce and e-services during the global movement restrictions and travel bans. This trend has, however, significantly reduced during the ease of restrictions and social distancing period. Utilizing e-commerce and e-services in Saudi Arabia and Egypt, based on the research data, is positively correlated to the outbreak conditions. On the other hand, current data still does not give clear indications, and this pattern is going to be mostly, partly, or not at all permanent now as societies are returning to mostly a free movement of people and marginally restricted social distancing times.
The development of the digital economy has become a new way to respond to the epidemic impact effectively. With the innovative breakthrough of information and communication technology, the digital and real economies are deeply integrated. The digital economy has become an important driving force for the transformation of economic momentum and development. Panel data from 31 provinces in China from 2010 to 2019 were selected for analysis. In the first stage, the study constructed the evaluation index system of digital economy development. Then, the quality development index of the digital economy is calculated by using the entropy method. Finally, the main factors of digital economy development are analysed by spatial measurement. The research results prove that: (1) the development of China’s digital economy in 2010–2019 has gradually increased; (2) the development of the digital economy has a positive correlation between regions and has a spatial spillover effect; (3) the level of economic development, urbanisation, government support, industrial structure, and the level of opening will promote the development of the digital economy.
The development and use of digital marketing strategies by entrepreneurs is a key element of success for innovative projects. Moreover, effective execution of marketing intervention in what is referred to as the digital customer journey is essential to achieving business success. Under this paradigm, the present study aims to identify the use of digital marketing activities by entrepreneurs in their projects at each phase of the customer journey. The research bridges a gap in in the existing literature, first by a systematic review of literature using the statistical approach known as Multiple Correspondence Analysis (MCA) under the homogeneity analysis of variance using alternating least squares (HOMALS) framework programmed in the R language. Based on the results of this analysis, 13 digital marketing techniques are identified along with their use across the five phases of the digital customer journey that are linked to technology transfer and adoption: awareness, engagement, conversion, loyalty, and advocacy. Furthermore, different applications of digital marketing techniques by entrepreneurs are discussed, and new applications for each phase are proposed. The results reveal that entrepreneurs lack knowledge about the customer journey, the use of the awareness phase, and the knowledge of Big Data tools to boost innovation. Finally, the main digital marketing strategies are appropriately classified for each phase of the customer journey, and 16 questions for future research in this research area are proposed.
In this paper, we develop a theoretical framework that explains how digital technologies can help small businesses generate competitive advantages for scaling. To gain and sustain competitive advantages, small businesses traditionally had to choose between cost leadership and differentiation strategies. Digital technologies enable small businesses to reduce their costs and at the same time enhance the value of their market offerings through differentiation. The aim of this paper is to explain the role of digital technologies in such hybrid strategies for small businesses. We first identify automation, individualization and interdisciplinarity as the three dimensions of digital technologies that together enable technology-driven firms to gain and sustain competitive advantages and to scale rapidly. Second, we integrate these three dimensions into a theoretical framework. Third, we test and confirm the theoretical framework in an explanatory case study and discuss the results. © 2022 The Author(s). Published with license by Taylor & Francis Group, LLC.
This paper analyzes the joint adoption of Industry 4.0 (I4.0) technologies and Total Productive Maintenance (TPM) practices in manufacturing firms. For that, we surveyed 335 practitioners from firms currently implementing TPM and I4.0, located in sixteen countries. The collected dataset was analyzed using sets of partial correlation analyses, obtained when controlling the effect of three contextual variables, all assessed at the firm level: (i) socio-economic context, (ii) technological intensity, and (iii) size. Pairs of TPM practices and I4.0 technologies with significant positive correlations in all partial correlation sets indicate positive trends in the adoption of elements in the pairs, regardless of context, and may be viewed as indicators of TPM practices and I4.0 technologies more prone to be integrated. Our results identified 67 pairs of I4.0 technologies and TPM practices meeting the significance criterion. Four TPM practices (fostering operator ownership, standardization of AM checks, setting 3M – machine/man/material – conditions, and constant search for next generation of technology) and two I4.0 technologies (Internet-of-Things, and big data) appeared in 26 of the 67 pairs. The study unveiled trends in the integration of I4.0 and TPM, pointing to pairs whose joint adoption are predominant and indicating pathways to the digitalization of maintenance.
Industry 4.0, an initiative from Germany, has become a globally adopted term in the past decade. Many countries have introduced similar strategic initiatives, and a considerable research effort has been spent on developing and implementing some of the Industry 4.0 technologies. At the ten-year mark of the introduction of Industry 4.0, the European Commission announced Industry 5.0. Industry 4.0 is considered to be technology-driven, whereas Industry 5.0 is value-driven. The coexistence of two Industrial Revolutions invites questions and hence demands discussions and clarifications. We have elected to use five of these questions to structure our arguments and tried to be unbiased for the selection of the sources of information and for the discussions around the key issues. It is our intention that this article will spark and encourage continued debate and discussion around these topics.
Digitalization offers unprecedented opportunities for entrepreneurial small and medium-sized enterprises (SMEs). However, many entrepreneurial SMEs lack resources and capabilities or suffer from inertia, which hampers these opportunities. This study investigates how entrepreneurial SMEs can enhance performance through digital platforms. Specifically, the study examines the effect of digital platform capability and network capability on entrepreneurial SMEs' financial performance. The study also examines how exploitation and exploration orientations moderate this relationship. Based on analysis of 230 entrepreneurial SMEs, the results indicate that digital platform capability has a positive indirect effect on entrepreneurial SMEs' performance via network capability. The study also shows that exploitation and exploration orientations negatively and positively moderate this effect, respectively. The results suggest that entrepreneurial SMEs can enhance their performance through digital platform capability by aligning this capability with their orientation. These findings thereby enrich the literature on entrepreneurial SMEs and capabilities.
Digital transformation has become a crucial driver of business development, reshaping industries and redefining how companies operate. This review analyzes the trends, challenges, and opportunities arising from this transformative process. Companies are increasingly adopting digital technologies such as cloud computing, AI, IoT, and big data analytics to streamline operations, improve customer experiences, and drive innovation. Digital transformation has led to a focus on understanding and meeting customer needs through personalized experiences and targeted marketing strategies. COVID-19 pandemic accelerated the adoption of remote work and digital collaboration tools, leading to new ways of working and collaborating across teams and organizations. Many organizations struggle with outdated legacy systems and infrastructure, making it challenging to integrate new digital technologies. As companies collect and analyze more data, ensuring data privacy and security has become a major concern. There is a growing demand for professionals with digital skills, but many organizations face challenges in finding and retaining talent. Digital transformation enables companies to collect and analyze vast amounts of data, providing valuable insights into customer behavior and preferences. Automation and digital technologies can streamline processes, reduce costs, and improve efficiency. Digital transformation opens up new opportunities for innovation and the development of new business models, enabling companies to stay competitive in a rapidly changing market. Digital transformation is reshaping business development strategies, driving innovation, and creating new opportunities for growth. However, it also presents challenges, such as legacy systems, data security, and skills gaps, that organizations must address to fully realize the benefits of digital transformation.
Transfer pricing has been impacted before by global (economic) crises, such as the bursting of the dot com bubble in the early 2000s, which disrupted the internet and technology sector. More recently, the banking/financial crisis, starting in 2008, had severe consequences for the world economy and the liquidity of many companies. Transfer pricing arrangements, and especially financial transactions, have been and will continue to be vulnerable to extreme circumstances impacting the overall economic environment. This article focuses on the impact of the COVID-19 pandemic on the transfer pricing of financial transactions, especially intercompany loans and guarantees, from an OECD and Dutch perspective.
Green investment and technological advances are often regarded as efficient tools for carbon neutralization since they improve clean output and energy efficiency. To this end, this study aims to investigate the impact of renewable energy supply, green energy investment, environmental tax, and economic growth on green technology innovation in selected six Association of Southeast Asian Nations (ASEAN-6) countries over the period of 1995–2018. Thus, present study employed the advanced panel approach which provides robust results under cross-sectional dependency and slope heterogeneity. Specifically, the long-run relationship is investigated by using Westerlund and Edgerton (2008) cointegration test, and the long and short-run estimations are analyzed with a robust CS-ARDL method. The empirical findings for both the long-run and short-run show that the impacts of green energy and green investment on green technology innovation are positive, yet stronger in the long run. Moreover, the results also confirm the positive effects of economic growth and environmental taxes on green technology innovation. Furthermore, the Augmented mean group (AMG) results are in line with the estimates of CS-ARDL analysis. To accelerate green technology innovation in ASEAN-6 countries, incorporating the regulatory policies fostering a continuous increase in the share of renewable energy supply and investments into the agenda of environmental technological progress is crucial.
In the age of digitalization, manufacturing companies are under increased pressure to change due to product complexity, growing customer requirements and digital business models. The increasing digitization of processes and products is opening up numerous opportunities for mechanical engineering companies to exploit the resulting potential for value creation. Subscription business is a new form of business model in the mechanical engineering industry, which aims to continuously increase customer benefit to align the interests of both companies and customers. Characterized by a permanent data exchange, databased learning about customer behavior, and the transfer into continuous innovations to increase customer value, subscription business helps to make Industry 4.0 profitable. The fact that machines and plants are connected to the internet and exchange large amounts of data results in critical information security risks. In addition, the loss of knowledge and control, data misuse and espionage, as well as the manipulation of transaction or production data in the context of subscription transactions are particularly high risks. Complementary to direct and obvious consequences such as loss of production, the attacks are increasingly shifting to non-transparent and creeping impairments of production or product quality, which are only apparent at a late stage, or the influencing of payment flows. A transparent presentation of possible risks and their scope, as well as their interrelationships, does not exist. This paper shows a research approach in which the structure of subscription models and their different manifestations based on their risks and vulnerabilities are characterized. This allows suitable cyber security measures to be taken at an early stage. From this basis, companies can secure existing or planned subscription business models and thus strengthen the trust of business partners and customers.
The fourth industrial revolution and the underlying digital transformation, known as Industry 4.0, is progressing exponentially. The digital revolution is reshaping the way individuals live and work fundamentally, and the public remains optimistic regarding the opportunities Industry 4.0 may offer for sustainability. The present study contributes to the sustainability literature by systematically identifying the sustainability functions of Industry 4.0. In doing so, the study first reviews the fundamental design principles and technology trends of Industry 4.0 and introduces the architectural design of Industry 4.0. The study further draws on the interpretive structural modelling technique to model the contextual relationships among the Industry 4.0 sustainability functions. Results indicate that sophisticated precedence relationships exist among various sustainability functions of Industry 4.0. ‘Matrice d’Impacts Croisés Multiplication Appliquée àun Classement’ (MICMAC) analysis reveals that economic sustainability functions such as production efficiency and business model innovation tend to be the more immediate outcome of Industry 4.0, which pays the way for development of more remote socioenvironmental sustainability functions of Industry 4.0 such as energy sustainability, harmful emission reduction, and social welfare improvement. This study can serve Industry 4.0 stakeholders – leaders in the public and private sectors, industrialists, and academicians – to better understand the opportunities that the digital revolution may offer for sustainability, and work together more closely to ensure that Industry 4.0 delivers the intended sustainability functions around the world as effectively, equally, and fairly as possible.
Pigovian taxation of externalities has limited appeal if the tortfeaser has insufficient resources to pay the damage when it occurs. To defend Pigovian taxation in the presence of judgement-proof agents, its proponents point at the many institutions extending liability to third parties. Yet little is known about the validity of Pigou's analysis in this context. The paper analyses the costs and benefits of extended liability and investigates whether full internalization is called for in the presence of agency costs between potential tortfeasers and providers of guarantees. Its contribution is two-fold. It first shows that the better the firms' corporate governance and the stronger their balance sheet, the more closely taxes should track the corresponding externality. It then develops the first analysis of extended liability when guarantors themselves may be judgement-proof, and the extension of liability may give rise to further externalities. Relatedly, it derives the curvature of the optimal taxation of externalities in a multi-plant firm. Copyright © 2009 The Review of Economic Studies Limited.
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The complex reality of modularization-towards an approach for a business-driven modularization of smart products
- P Koomsap