PROBLEMS OF SMALL AND MEDIUM-SIZED BUSINESSES IN THE TRANSITION TO A DIGITAL ECONOMY

ПРОБЛЕМЫ МАЛОГО И СРЕДНЕГО БИЗНЕСА В УСЛОВИЯХ ПЕРЕХОДА К ЦИФРОВОЙ ЭКОНОМИКЕ

Лагунов Иван Сергеевич

студент, Санкт-Петербургский государственный экономический университет,

Россия, Санкт-Петербург

ABSTRACT

This article examines the economic situation in small and medium business, which arises during the transition of society to digital format. The main aspects and problems of this issue are highlighted. The problems faced by small and medium-sized enterprises during the transition to digitalization during the period of coronavirus infection are discussed.

АННОТАЦИЯ

В данной статье рассматривается экономическая ситуация в малом и среднем бизнесе, которая возникает при переходе общества к цифровому формату. Выделены основные аспекты и проблемы данного вопроса. Затрагиваются проблемы, с которыми столкнулись малых и средних предприятий при переходе к цифровизации в период коронавирусной инфекции.

Keywords: digital economy, technological development, IT-infrastructure, development trends of organizations, threats, and risks to sustainable development.

Ключевые слова: цифровая экономика, технологическое развитие, ИТ-инфраструктура, тенденции развития организаций, угрозы и риски устойчивому развитию.

In the modern world, technologies are developing more and more rapidly. Every day there are new opportunities for communication, learning, recreation, shopping for various goods, from food to electronics, from anywhere in the world. This tells us that information technology and the Internet are having an increasing impact on every person, on any business and on the state. This influence also affects all spheres of public life, especially in the economy.

More recently, the concept of "digital economy" has appeared. The digital economy refers to the totality of all economic activities of people, including the development, promotion, sale, and provision of electronic or digital goods and services based on information and communication technologies, which allows people to interact remotely, that is, to purchase goods and receive services from anywhere in the world, regardless of from the distance of the distance between economic entities. But the fact that the concept of "digital economy" appeared and began to be used by people quite recently does not prevent it from developing at the same rapid pace as any sphere of life under the influence of digital technologies. And this rapid development of the digital economy leads to the fact that in the modern world it is possible to become an advanced company that determines the appearance and trends of any industry on the market, not because of a long history of development and growth, high asset value and company capitalization, but due to the ability adapt to constantly evolving technologies. And, as we know, digital technologies are developing at a very fast pace in our time, thereby changing the essence of business, transferring it to a digital environment and making it more democratized.

All these circumstances listed above are activating small and medium-sized businesses all over the world. Also, small, and medium-sized businesses have every opportunity to respond as quickly and flexibly as possible to changing market needs and business conditions due to technological development. But it is small and medium-sized businesses that are currently one of the main sectors of the economy. The composition of the gross national product of countries and the rate of economic growth depends on it. The TOP-5 leading countries in terms of the contribution of small and medium-sized businesses to GDP include Russia, China, the United States of America, India, and the EU countries (approximately to the same extent) (see pic. 1)

Picture 1. Contribution of small and medium-sized businesses to GDP, % [1]

Considering what was said above, we can clearly understand that technological development around the world is most manifested in small and medium-sized businesses, since it is they who have the greatest opportunity to transform production and service provision as quickly as possible using the latest technological advances. Large companies cannot transform so quickly, because their organization is quite complex, to introduce any technological innovations very quickly into it. Therefore, the use of the latest digital technologies and the related emergence of new business models allow entrepreneurs, small and medium-sized businesses to carry out their activities without creating an IT infrastructure and developing their own software, without warehousing (drop shipping), as well as without having at their disposal on the fact of tangible assets (co-sharing). [2]

From the above, we understand that there are certain trends associated with the transition of small and medium-sized enterprises to the digital economy. Taken together, all this provides enterprises with a certain opportunity to increase their activity in the development of innovative products and thereby increase their contribution to the development of the economy of both the country and the whole world. For example, over 10 years (from 2008 to 2018), the number of small and medium-sized businesses that apply the achievements of digital technologies, develop, and produce innovative products in the field of digital technologies, increased by almost 20%. (see pic. 2)

Picture 2. Distribution of innovatively active enterprises by size, % [3]

Thus, the following trends in the development of small and medium-sized businesses in the context of the transition to the digital economy can be identified. (see pic. 3)

Picture 3. Trends in small and medium-sized businesses in the transition to the digital economy [1]

You should also pay attention to the fact that new opportunities for small and medium-sized enterprises that arise due to the formation and development of the digital economy are associated with an increase in possible risks and the level of uncertainty in the development and adoption of strategic decisions due to rapid changes in technologies and market positions. However, these threats do little to diminish organizations' drive to try new digital technologies and from year to year small and medium-sized businesses are increasing investments in modern IT solutions. [1]

Nevertheless, in the transition to the digital economy, small and medium-sized businesses are faced with a certain set of problems that are associated with the vulnerability of data security both about the company itself, its funds, and about employees, with a lack of the necessary digital skills and specialists, with an insufficient budget. the enterprise and its interest in changes, considering the application of the latest technological advances.

Consider several negative consequences of the development of the digital economy:

- vulnerability of the emerging and developing digital infrastructure in terms of its technological security;

- the growth of cybercrime;

- increasing technological dependence on foreign suppliers and, consequently, reducing both economic and technological security of enterprises, small and medium-sized businesses, the entire country;

- the rapid development of technologies, leads to the fact that the technique is rapidly becoming obsolete due to the relative decrease in its technological capacity. As a result, the problem of environmentally correct disposal of equipment arises. Meanwhile, according to the UN, every year the world produces up to 100 million tons of "electronic waste", no more than 20% of this volume is recycled in accordance with environmental requirements. With the development of the digital economy, its environmental hazardous effects will increase. [4]

For the above problems of the formation and development of the digital economy, measures should be developed and taken to mitigate them. complex efforts of both private, state, and public resources. And therefore, there are certain tasks that set the direction for further activities in this area. (see pic. 4)

Picture 4. Priority tasks for solving the problems of digitalization of the economy [5]

One of the main and predominant forms of the transition of small and medium-sized businesses to the digital economy is the transition of organizations to online. This means the transfer of the functions of selling goods and providing services to the digital environment, that is, all this is done using the global Internet. Enterprises, going online, post information about themselves, their goods and services on certain Internet resources, sales contracts are concluded there, delivery and payment conditions are negotiated. All this together allows small and medium-sized businesses to reduce their costs. For example, these are the costs of renting, purchasing, maintaining premises. Also, the transition to online and the use of modern Internet resources make it possible to save on the maintenance of employees, since, for example, online stores do not require many employees, but only a couple of people to maintain the optimal operation of the online service. And on the one hand, the transition to online is a positive trend for small and medium-sized organizations, but on the other hand, there is a significant drawback because not all organizations are free to go online. And in 2020 we were convinced of this. [6]

The COVID-19 coronavirus pandemic caused by the SARS-CoV-2 coronavirus perfectly demonstrated to us the above-described disadvantage of the widespread transition of small and medium-sized businesses online. In the spring of 2020, when quarantine was introduced in Russia in connection with the pandemic, all organizations were closed except for pharmacies and stores with essential goods. And many businesses began to go online, because otherwise the business would simply stand idle, not generating any income. But not all businesses were able to go online, as they cannot do this due to their field of activity. One of these organizations include hairdressing salons, beauty salons. They could not move the provision of their services online, since this business involves personal interaction of employees with customers with using special, sometimes sufficient, large-sized equipment.

Also, such organizations that could not go online include gyms and gyms. They could not go online, because the gyms were created so that people could work out in them with certain equipment, interacting with professional trainers. And it simply cannot be translated online. Someone tried to create training courses for the home and sell them, but this was done to get at least a small amount of revenue. But it is impossible to completely replace classes in a specially equipped gym with any online training. And because of the pandemic and the inability to move their activities online, these organizations lost income, lost their own funds, which had to be paid for rent and maintenance of premises. Many did not open, after permission to return to normal operation, as they went bankrupt. [6]

Summing up all the work, I would like to note again that the digitalization of the economy, in general, is a positive phenomenon for small and medium-sized businesses. The use of the latest digital technologies for organizing their economic activities allows small and medium-sized businesses to go to the same level and compete with large enterprises and corporations. They can find customers, interact with them around the world, and reduce their costs using technological advances. But, on the other hand, the transition to the digital economy gives rise to several certain problems that are also associated with technologies, their rapid development, and a certain degree of vulnerability. The transition of enterprises completely online also, on the one hand, allows them to save on renting premises, staff salaries. But, on the other hand, under any extraordinary circumstances, not all organizations will be able to move their activities online, which can lead to the loss of their income, customers, and bankruptcy. In general, digitalization is a good and positive phenomenon, which also has certain shortcomings and problems that must be solved by the joint efforts of the whole society.

References:

1. Лукьянова А. В. Тенденции и возможности цифровизации малого и среднего бизнеса. [Электронный ресурс]. URL: https://esa-conference.ru/wp-content/uploads/files/pdf/Lukyanova-Anna-Vasilevna.pdf (дата обращения 19.10.2020)
2. ABE Level 3 Award in Digital Marketing Essentials for Small Businesses.: Your road to success. New Malden: Association of Business Executives, 2017.
3. Richmond, William; Rader, Scott; Lanier, Clinton The "digital divide" for rural small businesses // Journal of research in marketing and entrepreneurship. 2017; Volume 19: Issue 2: 94–104.
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5. Боркова Е.А. Организационные аспекты реализации государственной политики устойчивого развития // Креативная экономика. – 2020. – Том 14. – № 4. С. 431–444.
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