=Paper=
{{Paper
|id=Vol-2522/paper25
|storemode=property
|title=Diffusion of Innovation in the Digital Economy
|pdfUrl=https://ceur-ws.org/Vol-2522/paper25.pdf
|volume=Vol-2522
|authors=Marina V. Matyunina
}}
==Diffusion of Innovation in the Digital Economy==
https://ceur-ws.org/Vol-2522/paper25.pdf
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Diffusion of Innovation in the Digital Economy*
Marina V. Matyunina [0000-0003-3152-9073]
V.I. Vernadsky Crimean Federal University, Yalta, Russia
matjunina@ukr.net
Abstract. This article discusses the diffusion of innovation in the digital econ-
omy. The purpose and basic directions of the program "Digital economy of the
Russian Federation" and "Digital Crimea" are allocated. Approaches to modeling
the spread of innovations in the digital economy are characterized. The digital
economy of Russia, including the Crimea, is considered, examples of use are
given. The models of various options of "digitalization" in other countries, as
well as the main tasks of information exchange are analyzed.
Keywords: diffusion of innovations, digital economy, models, innovations, dis-
tribution of innovations, program.
1 Introduction
Recently there has appeared a large number of researches dedicated to innovation pro-
cesses and the digital economy. The scope of investigated theoretical and practical
questions is rather wide. The main problem that arises in such studies is how to define
the patterns or objective laws of development of such phenomena.
Diffusion of innovations or their distribution stays behind the spread or deployment
and corresponds to the phase when innovations developed by one or several pioneer
enterprises are adopted and come into use within other companies.
2 Related Works
There are several definitions of the concept of “digital economy” which may lead to
misinterpretation and vague understanding of its core idea.
According to E.M. Rodger’s definition [1]: «Diffusion process is the spreading or
deployment of a new idea from the initial source (developer) to the end-user or
adopter».
Ivanov V.V. – Dr.sc.oec, a member of the junior grade of the Russian Academy of
Sciences gives the following definition «Digital economy is a virtual environment com-
plementary to our real world» [8]. All our behaviors and doings within the virtual en-
vironment can be assigned to the production, distribution or consumption systems.
* Copyright 2019 for this paper by its authors. Use permitted under Creative Commons License
Attribution 4.0 International (CC BY 4.0).
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The other representative of RAS considers a dual approach to the concept of the
digital economy: the first – classical one - according to which “digital economy” is
defined as “economy based on digital technologies that cover mostly the sector of e-
services and e-goods”. The second - more enhanced approach - interprets digital econ-
omy as “production process based on the use of digital technologies”. [9].
The diffusion of innovations in the digital economy thus is described as a process by
which the innovation is spread via communication channels between the members of
the social system in a given period of time. The examples here are telemedicine, remote
e-learning programs, on-line sales of games, videos, mobile applications, films, taxi
aggregator programs, food delivery via electronic applications, mobile bank services,
booking services etc. All the abovementioned services become widely spread and used
in everyday life.
In other words, the diffusion of the digital economy is the spreading and develop-
ment of once used innovation to other spheres of life. This is the process of innovation
adaptation and applicability to end-users and its further deployment to the market. Bal-
anced management of group communication channels is a significant factor in the com-
mercial success of the innovation.
The term “digital economy” was officially recognized only in 2016, thus the “diffu-
sion of innovations” concept in Russia remains on the initial stage now.
3 Results
We will begin the study with the analysis of digitalization spread in the economy of the
Russian Federation.
Digital economy can be described as economic activity based on digital technologies
and divided into auxiliary infrastructure, online services and electronic commerce (e-
business). The development of a digitalized environment requires the maintenance of
existing digital platforms and the creation of new know-how technologies and software.
In 2017 the President of the Russian Federation signed a new National Program “De-
velopment of the digital economy in the Russian Federation 2024”. The main goal of
this program is the systematic development and introduction of digital technologies in
all spheres of life: industry, business, government, social life and urban economy,
which aims to increase the competitiveness and overall national security. The period
for program realization is set to 2024. Apart from those abovementioned, the program
includes statutory regulation of digital technology incorporation into educational pro-
grams thus aiming to increase the level of modern educational standards as well as into
health care projects and “smart city” concepts.
To manage the program and its results five basic scopes were defined [5]:
1. Statutory regulation, which aims to eliminate and reduce the legal and policy barriers
preventing digitalization deployment.
2. Human resources and education. For this sphere, the program targets the drastic en-
hancement of the educational system in Russia, including overall e-literacy. Suc-
cessful deployment of a digital economy is possible when people have enough
knowledge and experience to use their products.
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3. The creation of research competence pool and technical capacities. The allocation of
the support environment for national businesses that specialize in digital and other
cross-industry technologies. In this sense, technical capacities are the communities
or enterprises that create and apply cross-industry technologies.
4. IT infrastructure. The development of basic infrastructure, communication lines,
processing data centers covering all territory of the Russian Federation.
5. IT-security (cybersecurity). Detection of problem zones, verifying threat models
and finding solutions to eliminate them.
Below we will investigate the models for diffusion of innovations in the digital econ-
omy (fig. 1) [4].
Epidemic approach. At first, the diffusion was compared to epidemic decease when
the adoption of new technology imposes the necessity to be in contact with adopters.
The reason for adoption, in this case, is stipulated by the influence of the external en-
vironment.
Fig. 1. The approaches for modeling innovation diffusion in the digital economy [4].
The approach of partial equilibrium. According to economic performance indicators,
the enterprise adopts the innovations either now or later when the price of innovation
implementation is acceptable. This approach assumes pure market competitiveness,
free access to information about technologies and known enterprise management sys-
tem.
Strategic behavior – the interdependence of all decisions.
Technology competitiveness. Here the external conditioning mode is applied. The
enterprise adopts a standard most suitable pattern while the possibility to adopt new
technology remains.
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Satisfactory behavior. This approach exploits the role of inertness based on gained
experience and knowledge for decision making. Established technologies dominate the
rational choice of new technology to be applied.
Gosteva O.V. gives the example of different digitalization models for different
countries in her study “The problems of innovation transfer in the digital economy” [2]
(see table 1).
Table 1. Models of digital economy [2]
Asian model Implementation of new technol- Economy added value: 5-7
ogies, “internet of things”, big data, tln. RUR yearly
on-line medicine Lag in technology in com-
Examples: Asia-Pacific coun- parison with the market lead-
tries - PRC, Taiwan, etc. ers: less than 5 years
Middle East The increase in online market Economy added value:
model share 0,8-1,2 tln. RUR yearly
Examples: Middle East coun- Lag in technology in com-
tries, UAE, Saudi Arabia parison with the market lead-
ers: 8-10 years
Venezuela model Digital economy depression Economy added value:
Substantial lap in comparison 0,1-0,2 1,2 tln. RUR yearly
with the market leaders Lag in technology in com-
Example: Venezuela parison with the market lead-
ers: 15-20 years
According to the table above Russia follows the Venezuela model. Today Russia
falls behind the digital economy market leaders in many key criteria: the level of digi-
talization, the e-market share in GDP, average time lap in technologies adoption, etc.
The digital market share in Russia reaches only 3.9% which is twice or three times
lower in comparison with market leaders, although a number of positive trends are also
present. One of the key figures – the digital market volume has been increasing drasti-
cally in the last few years. Major market players, such as Yandex and Mail.ru, already
internationally known, started here in Russia as greenfield projects. Apart from them
“Tranzas” - manufacturer of offshore simulators and navigation systems, “Avito” –
online advertising service for individuals, social network “V Kontakte”, “Kaspersky
Lab” which specializes on cybersecurity, OJSC Sberbank and others. The major share
of this market belongs to electronic sales (e-commerce, e-services, online search). A
good example of a smart city concept is “Marino Smart District”, Rostov-Na-Donu”
city and Perm town. [5-7].
Recently the problem of The Republic of Crimea digitalization has also come in-
sight. At the present moment the project of governmental program “Digital Economy
of The Republic of Crimea” is being developed. The aim of this program is boosting
regional economic growth and improving living standards with the use of digital tech-
nologies as well as forming the basis for economic development.
Among the main directions of region digitalization are:
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1. The development of IT infrastructure for data collection and processing (data cen-
ters), development of digital platforms for social services, etc;
2. Provision of robust and secure functioning of IT infrastructure, i.e. the cybersecurity
issues;
3. The organization of research competence pool and introducing the platforms for ac-
cumulating such competence, development of technical capacities, boosting the de-
mand for digital economy products, increasing of overall digital literacy of the re-
gion;
4. The development of integrated service platforms:
─ Consolidation of existing and potential services, including those administered by
different operators on different platforms;
─ Personalization of service profile for each citizen or business representative on the
basis of their personal demand;
─ Constant communication and established feedback channels between users, devel-
opers and regulators;
─ Interaction of regional service platforms with federal and global service chains/net-
works [3].
The development of this program will allow solving problems of the touristic industry,
production sector, agricultural sphere, transport. According to the National Duma
Chairman for Financial markets Anatoly Aksakov, this program will also help local
market players to avoid European sectoral sanctions.
R.R. Timirgalieva and I.Y. Grishin in their co-study “Background and perspectives
of Russian south regions digital market development” [7] define the key factors proving
the necessity to establish and develop the digital market in the Republic of Crimea, such
as:
─ − absence of IT-infrastructure gives the possibility to create and develop a new
model based on “digital economy” principles;
─ − long-term growth of Crimea region: digital and economic;
─ − free economic zone;
─ − capabilities of regional development and building of satisfactory ecosystem;
─ − establishment of major universities
─ − presence of local human capital assets and the possibility to attract top-ranked
specialists;
─ − mild and comfortable climate conditions;
─ − sanction barrier which excludes western companies lobby and deployment of out-
dated business models, employed by western companies;
─ − approved financing programs for regional development.
One of the ways to change the situation is to adopt innovations in Russia. For innova-
tions introduction and deployment including micro- and medium-sized businesses it is
necessary to allocate technology diffusion. The main objectives of information ex-
change are [1]:
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─ Collection, processing, and provision of actual information regarding ready-to-use
technologies and products;
─ Market demand for these technologies and products;
─ Existence of potential users;
─ Availability of developers and competitors;
─ Availability and expectations of market upstream (sellers) and downstream (users);
─ Quality and pricing indicators for technology and products: consumer and opera-
tional characteristics;
─ Establishment of the market network: dealers, distributors, suppliers and contractors.
Digital technologies become a routine part of the economic, political and cultural life
of Russian business entities and the drive of modern society in general [6]. Russia is
part of the progressive development stage of the modern world, which is characterized
by the predominance of knowledge, science and information in all aspects of life.
4 Conclusion
For Russia digital economic development becomes an actual strategic goal. The digital
economy is an innovational type of economic relations covering all spheres of the na-
tional market which at present moment is developing drastically and in the nearest fu-
ture can become the leading form of goods-money exchange considering the galloping
spread of high-tech technologies. The digital economy penetrates into all spheres of
production and management activities, it is the practical aspect of the IT economy and
new system of informational society functioning.
Considering the international political situation and worldwide tendencies Russia
faces the problem of global competitiveness and national security. Here the develop-
ment of the digital economy becomes not a minor issue. Some elements of it have al-
ready been introduced and successfully function, i.e. countrywide transfer of public
services into digital platforms (e-services, digital signatures, digital documents etc.)
Therefore the digital economy develops not only in regional centers but also covers
remote areas and towns of Russia, which means the diffusion of the digital economy as
an innovation phenomenon.
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