Peculiarities of the digital business environment in post-pandemic Georgia

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Gori State University, Gori, Georgia

Peculiarities of the digital business environment in post-pandemic Georgia

Tamar Makasarashvili

Doctor of Economics, Professor

Giuli Giguashvili

Doctor of Economics, Professor

Nino Orjonikidze

Doctor of Economics, Professor

Summary

digital business technology

The development of digital technologies is a modern challenge that has changed the world's economic processes, infrastructure, and business environment. Today, everyone uses ebusiness services in Georgia, and therefore the digital business environment consists of people with different backgrounds, education levels, views, and values. The development of digital technologies and the electronic market led to the emergence of new business models, contributed to the sustainability of the business environment, the creation of a digital economy, business dynamism, and increased competitiveness.

The paper aims to study the peculiarities of the digital business environment in Georgia and determine the possibilities for its improvement.

The research conducted within the given topic revealed that the development of private sector online service organizations in Georgia is conditioned by the growing segment of Internet users, global competitiveness, flexibility, and the production/presentation of products/services corresponding to global market requirements.

The article discusses the features of the digital business environment in Georgia today, the main challenges, and opportunities for its improvement.

Keywords: digital business environment, electronic business, online trade.

Introduction

Nowadays, in Georgia, as well as around the world, everyone uses e-business services. Thus, the digital business environment involves people with different backgrounds, education levels, views, and values. The internet environment in the country is free. It is easy to create a site and blog, publish posts, opinions, and views. Digital content in the Internet market is essential to be the driving force of consumer Internet perception. It represents the largest sector of the Internet market. In addition, digital media is an integral part of the business sector. Focusing on it creates a strong foundation for business activity. The media connection with technology has become a peculiar kind of epochal event and the harbinger of social, technological, and cultural changes.

The purpose and objectives of the research

The research purpose is to study the peculiarities of the digital business environment in Georgia and to determine the possibilities of its improvement in order to ensure sustainable economic growth.

Research methodology

The scientific article research methodology consists in finding and studying the relevant scientific literature, studies, and government decisions about the research topic. In the research process, the material and statistical data analysis were carried out, and certain conclusions, recommendations were developed.

Literature review

The crisis caused by the coronavirus accelerated the pace of digital transformation and forced businesses to include the introduction of remote work and the development of electronic services in the agenda. Neither the other side of the market, consumers remained without digital influence. For them, e- commerce replaced or complemented physical, and these changes took deeper roots in their behavior and persisted in the post-pandemic period. Consequently to the global pandemic, digital technologies implementation in all fields of activity, especially in the business field, has become a challenge for a completely civilized world. During the quarantine period, consumers staying at home tried to get various services and products through the Internet [1].

The pandemic has presented many challenges to the business sector. Including the negative impact of the pandemic; targeted regulation and support of the sector by the government; online decision-making; switch to remote working mode; the need for digital transformations; unstable national currency exchange rate; Oil price changes, and more. The practice has proven that technological adaptation is the leading way to save businesses in the face of the COVID-19 crisis. Unlike large businesses, which have undergone digital transformation, small businesses that have retained traditional strategies and failed to keep up with the pace of development have suffered greatly. However, small enterprises, using their dynamic capabilities, quickly implemented changes through various platforms (for example, Yandex, Alibaba, Amazon, and others) [2]. In the planning process of the anti-crisis strategy of the business sector, a number of uncertainties appeared, the study of which is of interest to many researchers around the world [3]. Slobodan Adzica and Jarrah Al-Mansour (2021) point to the uncertainty of risks caused by the pandemic and changes in the business environment [4]. Edmondson believes (2020) that in times of crisis, we should not hide the bad news and exclude the risks [5]. Business success requires rational and well-thought-out decisions. In many cases, it is data-based decisions that create conditions for avoiding or reducing significant risks [6].

In order to finally overcome the coronavirus pandemic, it is necessary to strengthen cooperation between competing businesses. Technology giants, and charities, must unite for a common purpose [7].

In studies presented in academic business journals throughout the world, authors discuss new opportunities for business in the post-pandemic period. The researchers' majority support the opinion that the covid crisis does not only cause problems but also creates opportunities [8, 9, 10, 11]. Based on the literature we studied, it is confirmed once again that one of the significant positive results of the pandemic is the digitalization of business: new opportunities, strategies, and communication channels.

In Georgia, like the rest of the world, the use of electronic business platforms is relevant in the post-pandemic period. The population has become accustomed to using various online sites, actively using such well-known ones as amazon.com, e- Bay.com, Alibaba.com, taobao.com, and other widespread international online websites involved in sales. In addition, a B2C platform for retail online sales has appeared on the local market, which offers existing trade businesses and start-ups the creation of a complete online store and catalogs, as well as a flexible payment system. The number of online stores in the Georgian market has increased significantly, the contributing factor of which is the consumers themselves, the advantages and reasons seen by them determine the high rate of growth of online trade [12].

Currently, more than 500 large and small online stores operate in Georgia. The number of self-employed people who independently sell subscribed or self-made products through various online platforms exceeds thousands. At present, a large part of the population of our country uses e-business services. Hence, the ebusiness environment unites citizens with different backgrounds, education levels, views, and values [13].

At the beginning of 2020, the Electronic Commerce Association was founded in Georgia. The organization's mission is to support and encourage the development of this direction in the country. The main goal is to receive and share information and knowledge among local, regional, and international market players [14].

Many businesses and banking sectors are actively involved in e-commerce development in Georgia. One of the latest activities is the B2B forum held on April 27, 2023, with the joint support of the USAID/Georgia Economic Security Program, Bank of Georgia Business, Gepra, and Kudos Georgia. Sixty small and medium business representatives participating in the forum had the opportunity to hold individual meetings with potential customers and establish business contacts. Tourism, light industry, intellectual services, creative industries, and waste management - from these sectors, 60 small and medium-sized businesses met potential partners, introduced their products, services, and laid the foundation for future partnerships. The Bank of Georgia, The USAID Economic Security Program, Gepra * Gepra, Kudos Georgia, and EFSE Entrepreneurship Academy [15] participated in the B2B forum implementation.

Access to the Internet is a necessary condition for a digital business environment. In 2018, the amendment to the Constitution of Georgia reflected the entry according to which "everyone has the right to access and use the Internet freely" [16]. That means that the state is obligated to make the Internet accessible to broad sections of society. Today, the Internet in Georgia is available to people of any background, education, and belief. The share of enterprises that had access to the Internet as of January 1 of the respective year looks like this:

It is noteworthy that until 2022, enterprise employees' access to the Internet for work purposes from home was considered as Internet access. From 2022, using the Internet only in the enterprise will be considered Internet access.The share of enterprises that had a website as of January 1 of the respective year is as follows:

Table 1. The share of enterprises that had access to the Internet by January 1st of the relevant year, %

Source: https://www.geostat.ge/ [17]

Table 2. The share of enterprises that had a webpage/website by January 1st of the relevant year, %

Source: https://www.geostat.ge/

The variation between the data in some cases is due to the changes made in the sampling methodology of the survey in 2018. In particular, starting from 2018, all the enterprises where hired labor is fixed are included in the survey. According to the old sampling methodology, all the enterprises where the hired workforce was ten people or more were included. Indicators by enterprise size are available from 2018.

The percentage is calculated only for those enterprises that had access to the Internet during the relevant period. The following table presents the use of social media by enterprises as of January 1 of the respective year:

Table 3. Distribution of social media use by enterprises by category

Source: https://www.geostat.ge/

Table 4. Distribution of social media use by small enterprises by category

Source: https://www.geostat.ge/

Table 5

Source: https://www.geostat.ge/

Table 6. Distribution of social media use by medium-sized enterprises by category

Source: https://www.geostat.ge/

Table 7. Distribution of social media use by large enterprises by category

Discussion/Results

As part of the research, we conducted a survey. It aimed to find out how much Georgian citizens use online services, including which age category uses e-commerce and for what purposes. The conducted research revealed that the development of private sector online service organizations in Georgia is determined by the growing segment of Internet users, global competitiveness, flexibility, and production of products corresponding to global market requirements.

More than 150 people participated in the research. 38% of the respondents are citizens aged 26 to 35, the share of respondents aged 18 to 25 is 41 %, and the rest of the share comes from older citizens. In terms of gender, 84% of the participants are women, and the remaining 16% are men.

When asked if they use e-commerce, 79% of the respondents answered yes. The following chart shows the time they spend browsing online pages:

Chart 1

The survey results were distributed as follows:

52% of respondents buy a product or service online at least once a month, 38% once a year, and 10% once a week;

55% spend from 1 to 100 GEL, 40% from 100 to 300 GEL, and 5% spend 300 GEL and more on goods and services purchased online.

-- For a large part of the respondents, online purchases are mainly clothes and accessories 58%;

75% are often satisfied with the expectation of a product or service purchased online, 20% rarely, and 5% have never been satisfied.

The chart shows the results of research on what factors influence consumers and why they prefer to buy products and services online:

Chart 2

The involvement of international organizations and the attraction of partners is significant for the digital business environment development. In the report, Global Services Location Index (GSLI) 2021, published by the international consulting organization Kearney, Georgia was included for the first time and took 19th place among advanced countries. The report reveals attractive investment locations in the business and technical services sector, with the initiative of the Enterprise Georgia agency [18] and the involvement of Georgia's Innovation and Technology Agency [19].

In preparing the report, Kearney evaluated 60 countries on 47 different dimensions from the following categories: financial attractiveness in relation to business operating costs, availability of qualified workforce, business environment, and digital resonance.

Georgia's successful debut in the mentioned report is positively evaluated by Kearney. It says: Georgia, located at the crossroads of Europe and Asia, has advanced positions in terms of financial attractiveness, workforce skills, and business environment.

The positioning of Georgia in the Global Services Location Index rating will further promote the interest of international investors in the direction of knowledge-based industries. The business services sector remains one of the significant sectors of the investment attraction strategy of the Enterprise Georgia agency, as it has great potential for creating new, high-paying jobs in the country and introducing modern technologies. With similar activities, the investment team of the agency actively continues to work to raise awareness of Georgia in the global arena (the report is available at the following link: https://www.kearney.com/digital-transformation/gsli) [20]

Conclusion

Thus, in a world of economic uncertainty, the long-term prospects for Georgia's digital business environment and e-commerce are truly excellent. Although e-business entrepreneurs have not been completely immune to health and economic crises, these crises have clearly accelerated the transition from traditional methods to digital. The Internet environment in the country is free and available. It is of no difficulty to create a site and blog, publish a post, or an opinion. Digital content is the driving force of consumer Internet perception and is the largest sector of the Internet market.

References

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14. Georgian E-Commerce Association. URL: https://www.marketer.ge/georgian-el-commerce-association/.

15. International Financisl Services Company (Kudos Georgia), URL: https://kudos.ge/.

16. Constitution of Georgia (1995). URL: https://matsne.gov.ge/ka/document/view/30346?publication=36.

17. National Statistics Office of Georgia. URL: https://www.geostat.ge/.

18. Enterprise Georgia agency. URL: https://www.enterprisegeorgia.gov.ge/en/home.

19. Innovation and Technology Agency. URL: https://gita.gov.ge/en.

20. Global Services Location Index (GSLI) 2021. URL: https://www.kearney.com/digital-transformation/gsli.

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