The Role of Innovative Entrepreneurship in Georgia’s Sustainable Economic Development

<p style="text-align: right;"><a href="https://search.crossref.org/search/works?q=10.52340%2Feab.2024.16.03.05&from_ui=yes">doi.org/10.52340/eab.2024.16.03.05</a> <p style="text-align: justify;">The paper explains the essence and importance of innovative entrepreneurship as the basis of economic development; Scientific views on innovation and entrepreneurship are systematized; The inadmissibility of using "innovation" and "invention", "innovative activity" and "innovative activity" as synonyms is shown; Classification of innovations according to object, process and intensity is given; There is a difference between the innovation cycle and the innovation life cycle; Facilitating and hindering factors for the activation of innovative activities have been identified; The stages of innovation process and innovative entrepreneurship are different from each other; The characteristics of "radical innovation" and "incremental innovation" are highlighted; Entrepreneurship is classified according to the degree of innovation: "business", "traditional entrepreneurship" and "innovative entrepreneurship. Such a separation is made only at the theoretical level, because it is impossible to do it in practice even due to the lack of statistical accounting data; It is argued that the innovative direction of entrepreneurial activity ensures the domestic and international competitiveness of business entities and the strengthening of their positions in the market; The unfavorable situation of innovative entrepreneurship in Georgia is analyzed and evaluated; Based on international and national experience, suggestions and recommendations are offered for the further improvement and development of innovative entrepreneurship in order to facilitate the economic growth and sustainable development of the country.<br />It is necessary to have a systematic approach to the challenges in the sector of innovative entrepreneurship and to eliminate the gaps. In particular:<br />• In order to promote innovation, research and development, first of all, it is necessary to raise awareness in enterprises about the essence and importance of innovative entrepreneurship. Because this or that idea will turn into a material force only when it takes over the consciousness of the masses;<br />• Usually, innovations are created where and when there is a demand for them. The main problem of Georgian economy is less demand for innovations. The reason for this is the low level of economic development, unhealthy competition, tendencies of monopolization and oligopolization of the economy, insufficient industries and low technological level of production. The low innovative activity of large enterprises is related to their monopoly position;<br />• In Georgia, due to the weak connections between science and business, the supply and demand for innovations sometimes miss each other, and in fact there is no commercialization of them. Therefore, intensive connections between scientific circles, research centers and the business sector are necessary so that the research conducted by research institutes and universities is in line with the needs of the real sector of the economy.<br />• 99.7% of enterprises in Georgia are small and medium. Small and medium-sized enterprises, due to limited financial resources, do not have the opportunity to invest in innovation, research and development, as well as in new technologies. The high cost of innovation and the lack of own funds limit the innovative activity of almost half of the existing innovators. however. Entrepreneurs who face limited resources can seek alternative sources of financing, such as government grants (a certain share of the profits from the success of innovations must also be returned to the state. This applies to innovations that were created as a result of significant investments made by the state), capital market, venture (risk ) capital or financially strong partners to obtain the resources needed for innovation;<br />• We often boast that Georgia is attractive to foreign investors because of its cheap labor force, and we forget that cheap labor force means low qualifications, low incomes, and low incomes mean low living standards and poverty. It should be emphasized that low-skilled labor force (cheap labor force) and innovations, advanced equipment and technologies are incompatible phenomena that naturally slow down progress and the construction of a knowledge-based economy. That is why it is necessary to improve the level of competence of personnel working in the industry, retrain them and equip them with modern practical knowledge. The problem of insufficient knowledge and lack of practice can be solved by business incubators, the experience of which has already been accumulated in Georgia;<br />• As for educational policy: imitation of existing technologies and invention of fundamentally new ones requires a different education. In the first case, the most important is secondary and applied engineering education. In the second case, fundamental science plays a much greater role. Therefore, countries at different stages of development must build their education systems accordingly;<br />• Before creating strong scientific and research bases in Georgia, it is better to import advanced technologies, besides, it should not be excluded to implement all stages of fundamental research and idea development on the ground. In this regard, the opening of new innovation centers in higher educational institutions seems to be an effective tool.<br />• For innovation, research and development, the infrastructure needs to be renewed, which will support the development of start-ups and small and medium-sized companies. In addition, the entrepreneur, in addition to the idea, should be able to produce an innovative product as quickly and efficiently as possible, as well as to sell it;<br />• In Georgia, the status of innovative startup should be determined by law, and companies with this status should be exempted from income and profit taxes for three years. Also, it is necessary to have preferential credit and tax government programs for innovative projects;<br />• It is necessary to take into account the specific indicators for which data cannot be collected to date. It is important to deepen cooperation with the mentioned sources and update outdated data;<br />• It is necessary to improve the legal and regulatory framework of intellectual property protection. Intellectual property protection is very important in innovative entrepreneurship. Entrepreneurs should consider obtaining patents, trademarks or copyrights to protect their innovative ideas, products or technologies. Seeking legal advice and implementing strict privacy measures can help entrepreneurs protect against intellectual property theft;<br />Finally, Georgia’s economy needs to develop sustainably to meet the needs of current generations without compromising its ability to meet the needs of future generations through resource depletion and environmental degradation. Sustainability and innovation business practices are closely linked. 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[Innovative Management, Textbook for Universities. - M.: ZAO "Business school" Intel-Synthesis ". - 600 p.] in Russian <br />• https://bm.ge/news/2023-tsels-bazarze-akhali-an-arsebitad-gaumjobesebuli-saqoneli-mkholod-satsarmoebis-68-ma shemoitana<br />• More than Half of EU Businesses Innovate. https://ec.europa.eu/eurostat/web/products-eurostat-news/-/ddn-2022 1118-2 <p style="text-align: justify;"><strong>Keywords:</strong> Innovation, invention, innovative entrepreneurship, stages of innovation, stages of innovative entrepreneurship, radical innovation, incremental innovation.<br /><strong>JEL Codes:</strong> L26, O30, O31

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