Barriers to Digital Business and Challenges of Social Innovations in Georgia

This research examines the impact of COVID-19 pandemic on the economies of Georgian regions, particularly with respect to disclosing to what extent digital tools were used for copying from the risks and sustainable development of the regions. According to the research findings, the impact of the pandemic on international tourism-oriented regions has been profound, and this has flowed into other fields through the supply chain, affecting tourism-related production significantly, despite of relatively well-equipped modern internet technologies for customer relations. Medium-sized enterprises proved to be relatively stable in the business sector, but, the decline in entrepreneurial activity in municipalities was partially caused due to insufficient resources available for remote business management and the weak usage of digital operational and marketing instruments. The pandemic had a particularly strong impact on small enterprises making labor-intensive products where digital tools have no usage. The paper defines the main barriers to the development of digital economy, partially a lack of collaboration between the business entities and IT, inability to collaborate quickly and a lack of interoperability, a lack of strategic planning culture and e-literacy, and a lack of financial resources. The research identified the effective mechanisms applied to combat the pandemic and proved that remote communication between customers and businesses requires further support in terms of resources and the development of strategic management based on the use of digital technologies, as well as it requires raising awareness among society. Supporting entrepreneurs through various institutional and organizational mechanisms (e.g. supporting projects, organizing conferences and trainings for entrepreneurs, attracting IT experts to develop the digital economy) from the central government and municipalities will promote introduction of anti-crisis management practices in businesses operating on local level. Moreover, the paper shows that alongside of development of digital economy the new challenge of Georgia is a formation of circular economy which in connection with digital technologies will increase sustainability and economic growth.