DIGITALIZATION AND INNOVATION AS A FACTOR IN INCREASING THE COMPETITIVENESS OF SMALL AND MEDIUM-SIZED ENTERPRISES

Abstract

The transformation of processes and systems in small and medium-sized enterprises into digital ones has been a major focus of global business over the past few years. Digitalization becomes mainline in terms of competition – the more innovation and technological upgrades a company integrates into its business, the more competitive advantages and response capabilities it acquires in dynamically changing challenges. SME’s were made to a number of economic and social changes brought about by the COVID-19 pandemic. They started digitalization organizations and innovating in production and production, so as not to lose their position on the market and receive income from loyal customers. Over the past few years, SME’s have been closely monitoring trends and technological developments, seeking to find more adequate and innovative solutions to existing processes, but also to open new horizons and find new applications of technology in business. The innovations accompanied by digitalization as key factors for increasing the competitiveness of small and medium-sized businesses. Digital transformation becomes more important if an organization wants to guarantee long-term prospects and competitiveness, especially against the background of the vague development of the situation around COVID-19 and the generally dynamic environment. Small and medium-sized enterprises are often characterized by a pragmatic corporate culture that is highly results-oriented. This often provides basic prerequisites for the development of an innovative culture. Innovation in small and medium-sized enterprises means, above all, the development of new ideas and their systematic management until success. Unlike large corporations, where work is often guided by regulated procedures, medium-sized companies are more improvised. Improvisation is not negative, but the ability to adapt existing knowledge to the situation and apply them in modified form. The dissemination of innovations throughout the company means using and strengthening the existing innovation culture. For specific tasks, such as certain projects, workgroups are often formed that dissolve after a certain time. Their own mid-business innovation management departments only make sense if they want to implement specific projects that are far from everyday business, for example, the development of digital innovation or radical product innovation, digital business transformation, etc. Innovation management is reserved not only for large corporations, but also a very good tool for driving innovation forward in competition. Digital transformation and innovation can also be well managed in medium-sized companies, increasing the competitive advantages and providing them for income and development. The digital transformation of SME’s proved vital long before the COVID-19 crisis and after its impact, this importance only became stronger and clearer to ensure the sustainability of SME businesses. This is a continuous process of renewing and innovating the current processes as technologies continue to evolve, and in order for SME’s to survive, it is necessary to constantly innovate in order to grow and thrive. The main objective of this report is to clarify the impact of digitalization and innovation as factors for increasing competitiveness and gaining competitive advantages among SME’s. The main research methods used in the development are contingent analysis, method of comparison, method of analysis and synthesis, intuitive and systematic approach.