Organizational Innovation Alone Is No Longer Enough: Digital Integration as a Prerequisite for Firm Expansion in Transition Economies
DOI:
https://doi.org/10.1956/jge.v22i3.853Keywords:
digital transformation, organizational innovation, firm expansion, transition economies, platform business models, digital integration, post-COVID competitiveness, SMEs, Azerbaijan, Ukraine, GeorgiaAbstract
This article examines the shifting conditions of firm expansion in transition economies, focusing on Azerbaijan, Ukraine, and Georgia during the post-COVID period of 2020 to 2024. The study contends that organizational innovation — historically recognized as a primary mechanism of business growth — has become insufficient as a standalone strategy in the current competitive environment. Drawing on comparative secondary evidence and established innovation management literature, the article argues that digital integration, understood as the adoption of platform-based business models and digitally networked operational systems, has emerged as a structural prerequisite for sustained firm expansion. Firms in the three studied economies that maintained organizational restructuring as their principal growth mechanism faced persistent competitiveness gaps relative to digitally integrated competitors. The study contributes to the literature by situating this dynamic within the specific institutional and resource constraints of post-Soviet transition economies and by identifying the mechanisms — threshold effects in digital investment, network externalities, and absorptive capacity — through which the gap between organizational and digital innovation translates into differential firm performance. Policy and managerial implications are discussed.
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