Technology and Business Strategy

This chapter analyzes the relevancy of new technological advantages, in agreement with the conclusions of various researchers, on new digital technologies providing a priority input into company leadership. The role of uncertainty in business has been showcased. It has been established that, until the present time, there have never been radical changes happening simultaneously—they instead had a rather fragmented industrial nature, taking the form of consecutive technological leaps. The aim of the chapter is to attempt to create an evolutionary cyclical model for reducing uncertainty in expert judgement on the advantages of the digital technologies of the future. System analysis, being multi-disciplinary and providing model-building opportunities, was used as a basic research methodology. The system analysis techniques and methods, relative to the objective reality, have also revealed that a unanimous opinion among researchers has been established by collecting all of the opinions in their cyclical development, as well as the contradictions that have provided us with variable thinking. The future of technology is presented in the form of a multi-component structure: a specialized executive apparatus and unlimited possibilities of the managing system. The adapted cyclical model implies that uncertainty in the future may be reduced by using the cyclical evolution of business models. The presented cyclical model may be practically applied.

The introduction of artificial intelligence allows the most successful companies in the world to advance the thesis on the predominant role of digital solutions in the achievements of leading companies. Based on the assertion of many experts about the growing gap between digital and non-digital businesses, a hypothesis emerges: to use artificial intelligence (first of all, the “weak” form), it is necessary to introduce it at the strategic level of management. This hypothesis is very useful for finding the answer to the question of what type of strategy is most applicable for the commercialization of digital products. It is shown that a generalized vision of three strategies (growth, cost reduction, and blue ocean) allows a comparative analysis of the possibility of strategizing digital solutions, which includes artificial intelligence.

It is noted that pilot projects risk making the attracted investments irrevocable if their scaling is not provided at the strategic level. Finally, recommendations on the choice of strategies for different areas of digitalization, combined with artificial intelligence, are given.

The chapter presents current issues in the innovative modernization of financial intermediation. Development of financial innovation has in recent years led to significant structural and functional changes in the system of financial intermediation. New technologies open broad prospects, allowing the radical reduction of the costs of information transmission and processing, while exacerbating competition and stimulating the emergence of new financial intermediaries. This chapter analyzes the debate on the theoretical understanding and analysis of financial intermediation; how disruptive technologies influence the economy with a focus on organizational changes in financial markets; the use of digital currencies; and exploration of block-chain technologies applications. The chapter discusses how technologies have changed the market. Customers are also a focus: how they are perceived as they foster entrepreneurial creativity and as they disrupt existing financial markets through the introduction of innovative business models in the modern credit institution. Digital transformation in financial intermediation shows the possibility of “survive” for finance-credit institutions (which would be receptive to technological innovation), to maintain financial stability and to focus on the client. The authors do not share the views of those experts who predict that banks, in the context of digitalization, will lose their market share and field of action as a result of Fintech companies’ competition. The banks’ practice of distance-based working with their customers will create the conditions for reformatting the business model of banks, which will become more secure and familiar to customers.

The digital economy expands business opportunities and forms new lines of business. The modern era is associated with the growth of information technology and the spread of telecommunications. Digitalization opens up prospects for various sectors of the economy, but at the same time carries new risks that require special attention to ensuring the economic security of companies, which determines the relevance of the research topic. The aim of the work is to improve the theoretical and methodological apparatus aimed at ensuring the economic security of companies in the digital economy. When writing the chapter, general scientific methods of cognition were used: analysis, synthesis, comparison, grouping, dialectic and integrated approaches that allow us to form informed conclusions. The chapter discloses the concept of economic security in a digital economy. The main elements of ensuring the economic security of the company in the context of business digitalization are highlighted. The advent of innovative global developments in the field of telecommunications and technologies entails the emergence of new types of risks that threaten the economic security of organizations. The chapter clarifies such atypical risks that are characteristic of the digital economy. Ensuring the economic security of the company is largely determined by the development and implementation of functional strategies, taking into account the digital development of the business environment. As a result of the study, such functional strategies were identified and an algorithm for managing the economic security of the company based on digitalization conditions was developed. The results of the study can be used in the activities of small- and medium-sized companies.

The chapter provides an evaluation of the global civil helicopter market, with a special focus on the status of helicopters produced in the Russian Federation. The purpose of this research is to classify the main development trends of the civil helicopter industry and the main methods used to enhance competitiveness of Russian helicopters. The data presented herein are derived from the major manufacturers (Airbus Helicopters, Robinson Helicopter Company, Russian Helicopters, etc.). Until 2016, civil aviation accounted for less than 10% of the total number of helicopters produced in the Russian Federation, and with the domestic defense market already saturated, declining demand in this sector is imminent; civil helicopters are to ride the development trend. Russia, compared to the major international manufacturers, is far from being a leader on this market, considering severe competition and the country lacking cutting-edge technologies for building in-demand light and medium helicopters. Along with designing new and advanced machines of the classes mentioned above, positions need to be maintained and augmented related to heavy helicopters; this is a niche Russia already occupies. One of the alternative development paths that the industry could follow is upgrading its existing and proven helicopters, of which Mil helicopters are the most well known.

The chapter substantiates the need to use digital twin technologies in decision-making at all stages of the life cycle of a high-tech product (strategy developing, R&D managing, construction) and at different levels of management (intersectoral, industry, corporate, and engineering). It is proven that, with the growth of the level of management, it is necessary to consider more and more extensive systems and to take into account a wider range of factors of various natures (physical, technical, technological, economic, environmental, social, political, etc.). The authors analyze the types of management tasks in modern high-tech industries and the significance of what experience and abilities highly qualified managers have (in contrast to mathematical modeling and digital twins), and furthermore assess whether the experiences of Soviet engineers and designers from the aviation and space industry are applicable in this area. The reasons for the low demand for digital twins in the Russian high-tech sphere are investigated. Examples of erroneous decisions at various levels of management—and the losses caused by them—are given.

The effects of digital transformation not only have a positive impact on many aspects of society but can also threaten a companies’ stability. The chapter examines the impact of digital transformation on the business environment and shows that the solutions being developed to prevent crises require a rethinking of the theoretical assumptions of crisis management.

To achieve the goal of the study, it was necessary to distinguish three types of companies: (1) industrial companies that arose in the previous era of public relations, (2) companies completing their digital transformation, and (3) new types of companies created as a response to digital challenges. The chapter shows that one of the main techniques of crisis management—diagnostics of the financial condition—begins to give false results when comparing the identified types of companies. This is because today, digital companies can show significant losses with the growth of capitalization, which leads to a break in the historically formed causal “financial condition–crisis” relationship. It is shown that the well-known crisis management tools do not work fully, either with companies of the recent past, or with companies that have undergone digital transformation, or with digital companies. It is argued that the mass non-personalized approach of the state is controversial and business is both supported and inhibited in terms of economic development. It is concluded that the most appropriate tool for ensuring the survival and development of companies is individualizing crisis-management scenarios.

The chapter embraces the analysis of recent trends in artificial intelligence (AI) related to public governance. Governmental bodies across the world are looking to use AI to improve public policy and service deliveries experiencing challenges of digital uncertainty. These technologies are mainly used to automate strictly defined, repeatable tasks, and discuss public decision-making procedures related to various social issues aimed to enhance understanding of current policymaking practices. Those issues nowadays seriously impact all aspects of government practices. AI is playing a crucial role in the public sector: spanning from understanding public and social needs in managing traffic flows and maintaining public transportation system to helping police services to manage their data and citizens to communicate with local government. The authors believe that in the context of slowdown in the world economy, AI development may play a significant role in boosting labor productivity, ensuring GDP growth and general communication at the federal, regional, and municipal levels, creating opportunities for new digital business strategies. This initiative will require reliable measurement tools aligned with the strategic goals and objectives of the national AI strategy.

The goal of this chapter is to study and systematize the prospects of applying global navigation satellite system (GNSS) technologies in smart cities amid the search for solutions to the challenges that urban management and agglomerations face in the conditions of digital uncertainties and risks. The results of the bibliometric analysis indicate a significant increase in the interest of the expert community in GNSS topics, which we witness in recent years. It proves our hypothesis that GNSSs are becoming a core element in the development of smart cities worldwide. Case studies presented in this chapter reveal GNSS as a facilitator and digital solution for resolving current problems and overcoming challenges in the urban environment. The results of this article disclose the phenomenon of a smart city, the identification of the main characteristics and features of GNSS, as well as the formation of a holistic view on the downstream space technologies segment of GNSS, the industry value chain and the core GNSS applications in smart cities.

It has been identified that it is the transportation industry that has seen the most active digitalization, more so within the industry itself, in transit carriages on Europe-Asia trade routes. Digital transformation of the transportation and communication systems as well as of modern trade routes is a vital necessity, especially pertaining to e-commerce. The main focus in the process of developing trade routes to the EEC economic space are the organizational and institutional features of implementing electronic navigational seals (“smart” seals) and electronic way bills, the digitalization and automatization of customs operations and other forms of control, identifying the directions of the use of autonomous (unmanned) vehicles powered by digital technologies, and others. The results may be utilized by Russia’s governing bodies in the framework of the development and expansion of the EEC, as well as by other post-Soviet nations, for the purposes of neutralizing the existing problems arising in the application of efficient socio-economic dynamics and the structure of economic growth regulation mechanism. For efficiently regulating the main problems and contradictions, as they arise from the linked socio-economic development of Russia alongside other member-states of the EEC at a time of instability, the suggestions and mechanisms developed may be needed in order to preserve and to strengthen the advantages that national economies offer.

Digitalization and robotization raise questions of providing society with a sufficient number of jobs, since the absence of the latter can lead to social upheaval. Two trends seemed to us the most important in the study of this issue: a sharp increase in the population of the planet, which is already approaching eight billion people and the fact that developed countries are less needing living labor and are abandoning it in favor of capital. The EU economy is one of the largest in the world, but the proportion is gradually decreasing under the influence of the Chinese economy; secondly, Germany and France occupy key positions in the Eurozone, the rest of the countries make an insignificant contribution to the Union’s GDP; thirdly, the assessment of the influence of macroeconomic factors on the Union GDP within the framework of the Cobb-Douglas function showed that the gross capital accumulation has the greatest impact, while the return on scale is characterized as constant. And finally, the labor factor plays an insignificant role in the formation of the EU GDP in comparison with the capital factor. Further studies of structural (technological) unemployment and labor market problems in the digital economy, digital uncertainty, business strategy, and technology can be based on this research.

The contemporary Russian economy needs to update its production base, without which it is impossible to produce high-quality innovative products, achieve high productivity, and gain competitive advantages in global markets. However, most of the country’s manufacturing enterprises today operate on an industrial basis, and it is technical re-equipment, modernization, and the reconstruction of fixed assets that allow companies to use their resources in full using modern technologies, reducing costs while increasing profits. This chapter uses regression analysis to assess the multiplier effects in order to study the influence of external factors, such as investments in the technological transformations of Russian GDP from 2005 to 2018. The most appropriate models with significant parameters and which indicators have the greatest positive effect on economic growth are identified. The results obtained prove the effectiveness of investments in reconstruction and modernization, contributing to increases in gross output and, as a result, strengthening the national economy.

The chapter discusses the development features of countries that are at different stages of economic modernization. The author determines that modernization can be caused by economic, technological, environmental, cultural, and social factors. The chapter analyzes the advantages and limitations for countries that have chosen the path of catch-up development in the context of globalization and which use technological transfer and equipment import, as well as which are oriented toward the export of raw materials. The prospects have been assessed for large-scale implementation of digital technologies in the world’s leading countries, which are actively increasing the pace of innovation commercialization, and in developing countries, where (in addition to social inequality) digital inequality is increasing. There are manifestations of reshoring, when developed countries withdraw production from developing countries where unemployment is increasing, yet unemployment is also on the rise in developed countries due to the spread of robotics. As a result of economic modernization, each country should choose its own set of advanced technologies that will provide competitive advantages on the global market, but this choice should be justified by the existing innovative potential, access to investment, and prospects for the activities of national companies. As recommendations to reduce the risks of modernization, it is proposed to use mechanisms of interaction between the state and business to implement investment projects using innovations and digital technologies in industry and services that provide employment and a country’s GDP growth.

With the development of modern digital technology, and competition growth in the intellectual capital field among global economic leaders, this chapter, which focuses on overcoming organizational barriers in intellectual property use and current protection systems, is of particular relevance. The aim of the chapter is to cover the full extent and order of these study areas in Russia, making use of global experience, for the purposes of securing Russia’s position as a world technological leader. The methodology of the chapter includes analysis of international treaties and analytics, and a comparative analysis of approaches to constructing key elements of intellectual property management mechanisms in multiple countries (the United States, Germany, China) and in Russia. The chapter contains a comparative assessment of innovational indicators both in Russian and in other countries. By means of content analysis, we have identified the advantages certain countries possess in the field of intellectual property protection. An institutional approach makes it possible to identify specific features of intellectual property use and protection. The authors’ conclusions address the degree to which the existing mechanism of intellectual property management in Russia corresponds to the tasks set forward by state policy on the path toward global technological leadership. The conclusion offers a number of particular solutions to Russia overcoming organizational barriers in use of innovation, and gives recommendations on intellectual property protection.

The chapter is devoted to the new role governments acquire when developing Smart Cities. The hypothesis of the research is that data-driven governance as the core management framework for Smart Cities leads to the new creative economic environment, which uses public data and converts it to marketable information. We refer to this phenomenon as hyper-economy—higher level of economic transactions based on data derived from traditional business activities. The state of hyper-economy is achievable solely in cities with deployed digital management systems. In order to retrieve documented evidence of the technological readiness level of data-management systems and evaluate the maturity of Russian hi-tech-based governance, we examine the Smart City solutions bank maintained by the Russian Ministry of Construction and Utilities. This study presents possible solutions to detected risks by re-focusing the consideration of this concept as a technological superstructure over the region to its presentation as a new yielding environment for innovative technologies and business strategies. The results will be useful for the work of metropolitan state bodies and municipal government, private firms involved in the development of software and R&D in the field of high technologies, as well as consulting companies in the environment of digital uncertainty.

The main goal of the research is to identify the main advantages and risks of using the so-called smart contracts in practice of business digitalization. Their characteristics and applications are indicated, then the potential risks of the digitalization that may arise in this context in business practice of smart contracts are analyzed. Smart contracts represent the next step in its development from simple accounting of financial transaction records to universal use as digital solution. The ability to conclude and verify such contracts through the blockchain reduces the costs of the parties and eliminates the risks of unreliable methods of data transfer. At the same time, despite the obvious advantages of smart contracts, it is necessary to take into account the potential risks arising in the process of their use, some of which were identified in the study. Practical recommendations are given to business organizations regarding the digitalization and use of smart contracts, and it is also concluded that the technology of smart contracts is currently at an early stage of development and requires careful testing and adequate control over its use.

The chapter deals with trends, both modern technological (autonomy, AI, technology of emotional intelligence, drones, etc.) and economic (business models of the joint consumption economy [joint mobility, mobility on demand, etc.] and closed-cycle economy), in the transition from Mobility 3.0 to Mobility 4.0. The authors analyze the factors and barriers (including the regulatory ones) and state policy (program documents) for the development of intellectual forms of urban mobility. Urban mobility platforms are gradually becoming a global phenomenon, but the nature and directions of their development are regional. Analysis of the current situation in the urban mobility market allowed us to identify several segments that are extremely dynamic and closely interconnected: (a) the ride hailing segment (mobile taxi services, online platforms and applications that unite passengers and drivers; (b) the short-term car rental market (car sharing); (c) the travel sharing market (carpooling search market); (d) segment of multimodal and intermodal transportation. The formation of all segments of the urban mobility market is accompanied by active mergers and acquisitions of companies, both horizontally (combining companies in one segment—the market for short-term rental vehicles) and according to the expansion-geographical principle (the absorption of regional players by world leaders in the mobile services market of taxi services).

The theme of banking activity in the paradigm of achieving sustainable development goals—which is dictated, on the one hand, by the aggravation of environmental, social, and economic problems, and, on the other hand, by the desire to direct financial resources to their solution—has become particularly relevant in light of these modern challenges. Recent scientific research on this issue shows that a successful and profitable business cannot exist in the long term, neglecting the corporate culture and environmental care. The chapter analyzes banks’ approaches to the issues of achieving sustainable development goals in national and global financial markets; it also analyzes international initiatives aimed at solving global environmental and social problems by encouraging companies to comply with the principles of sustainable development and disclose information on the level of environmental, social, and corporate risks.

The chapter compares analytical approaches to determining the impact of director’s liability insurance contract on corporate governance. The role of the insurance contract as an advanced business strategy is analyzed in relation to two models of corporate governance: the outsider or distributed equity system (Great Britain, the USA), and the insider or concentrated equity system (Russia). The chapter examines the direct and indirect impact of purchasing an insurance policy on the system of relationships between corporate governance participants and identifies the general positive function of liability insurance for members of corporate governance bodies associated with the assessment of the company and the corporate governance system by the insurer when disclosing information by the insured for proper risk assessment. It is concluded that there is an inverse relationship: influence of corporate governance on the liability insurance contract of members of management bodies. The better the corporate governance system of the company in a digital uncertainty is arranged, the better the negotiating capabilities of the policyholder and the more chances to agree on the most optimal terms of the contract. At the same time, there is a negative function of making such a contract, namely, the degree of the threat of opportunism of members of the governing bodies and ways to reduce it.

The aim of this chapter is to analyze the position of the Constitutional Court of the Russian Federation on the matter of digital uncertainty in restricting constitutional rights of citizens to inviolability of professional and banking secrecy in effecting controlling activities. The result of the present research is the authors’ conclusion on the necessity of the political establishment to improve the Russian legislation with the aim of compliance with the provisions of the Constitution. Attempts by the banks to “over-implement” anti-money laundering law under the threat of severe sanctions of the regulators actually lead to failures in the execution of the normal economic activity and their business strategy. This leads to digital uncertainty with payments on a clearing basis in addition to problems with cash withdrawals for individuals. The chapter focuses on different theoretical approaches toward the concept of “secrecy”. The Constitutional Court of the Russian Federation in consideration of the Constitution of the Russian Federation has its special understanding of the issue, which should be supported by further digital solutions and legislative development in the Russian Federation.

The specific benefits of digital technologies in various fields of activity have been presented in the previous chapters of the book. The purpose of this chapter is to take a critical look at digital technologies. The growing debate about the effectiveness of digital strategies based on technological innovation allows us to systematize the reasons why particular digital strategies fail. The systematization is based on the fact that the financial results of digital companies differ from those of industrial companies. The challenges of digital technologies are highlighted as threats to the efficiency of business models, classified by their interaction with both the internal and external environment. Moreover, for digital technologies many parameters of the external environment become those of the internal environment. It is concluded that the list of identified problems and threats is not final. However, the digital approach can be applied for both research and practical activities, with faith in the future of man.