THEORETICAL MODEL OF DIGITALIZATION OF DOMESTIC BUSINESS INNOVATIONS

Abstract

The article describes the tasks of the influence of digitalization on the productivity of domestic business innovations, that is, the application of digital technologies in different aspects of the business model. The key consequences of digitalization for business are determined: digitalization expands the scope of entrepreneurial opportunities, blurring different boundaries (surrounding products and services; defining industry sectors; which themselves define entrepreneurial opportunities); with digitalization, system products are becoming more and more modular, partly due to the general modularity of the product inherent in the combination of digital technologies. A theoretical model of digitalization of domestic business innovations has been developed and empirically verified, which provides for the proof of four hypotheses: M1 – wider application of digital technologies in business, which is associated with an increased tendency to experiment with innovations; M2 – increasing the intensity of experiments with business models associated with the best business indicators, taking into account that business efficiency will be the main goal of its activity and the tendency to focus on stakeholders in business, thanks to which innovative enterprises are created; M4 – the impact of the introduction of digital technologies on business efficiency and sustainability is partially mediated by the impact of the introduction of digital technologies on business innovation. We propose to test the effectiveness of the theoretical model by conducting a questionnaire interview consisting of five sections: 1) the history of the business and the entrepreneur; 2) business description; 3) business model and digitization; 4) stability indicators; 5) business performance. Hypotheses were tested using structural equation modeling using the "sem" command in Stata 12. Our analysis makes several important contributions to economic science. First, it is one of the relatively few studies to identify the links between digital technologies and business innovation, as well as performance and sustainability. The evidence provided in this study should inform the development of entrepreneurship and digitization policies. Secondly, the impact of digitalization on the effectiveness of domestic business has been proven. Third, we offer a theoretically grounded account of how and why digitalization should affect new business performance, thereby illuminating the mechanics of this important dynamic. Fourth, we introduce new and improved operational capabilities for business model experimentation, digital adoption of business models, and performance sustainability, facilitating further data collection in this area.