TBILISI, Georgia — Small and medium-sized enterprises (SMEs) in Georgia need to move beyond basic internet access and focus on using digital technologies to improve productivity, innovation, and competitiveness, according to Giuli Giguashvili of Gori State University, Georgia. Published in 2026 in the International Journal of Applied Research and Sustainable Sciences (IJARSS), the article examines the connection between digitalization, innovation, and SME competitiveness and identifies the areas that could shape the sector’s next stage of development.
The findings matter because Georgia has already made substantial progress in providing businesses with access to digital infrastructure. The bigger challenge is turning that access into concrete business results, including better processes, new products and services, stronger market positions, and greater participation in international markets.
Digital Transformation Is Changing the SME Landscape
SMEs are an important part of Georgia’s economy, contributing to employment, entrepreneurship, economic activity, diversification, and regional development. However, smaller companies can face greater limitations in accessing financial resources, technology, and skilled workers.
Digital technologies offer a way to address some of these challenges. Websites, e-commerce platforms, digital marketing, cloud technologies, customer relationship management systems, data analytics, automation, and artificial intelligence can help businesses improve operations and reach customers beyond their traditional markets.
But access to technology does not automatically translate into stronger business performance. Giguashvili’s analysis emphasizes that companies also need digital skills, management capabilities, financial resources, knowledge, and an environment that supports innovation.
This distinction is central to the article from Gori State University. The question is no longer simply whether SMEs can connect to the digital economy. It is whether they can use digital tools effectively enough to create economic value.
How the Study Examined Georgia’s SMEs
Giguashvili used descriptive, comparative, and critical analysis of existing quantitative and qualitative data. Rather than conducting a new survey of individual companies, the study examined secondary information from the National Statistics Office of Georgia (Geostat), OECD/EBRD assessments, government policy documents, and relevant Georgian and international academic literature.
The analysis considered four interconnected areas: the economic importance of SMEs, digitalization, innovation activity, and the business environment and government support.
The data were compared across different periods and, where appropriate, with Eastern Partnership averages and international assessments. The conclusions were developed by combining evidence from statistical indicators, policy assessments, and previous research. The article does not claim that digitalization directly causes greater competitiveness; instead, it identifies relationships and development priorities based on available evidence.
Internet Access Is High, but Business Integration Lags
One of the clearest findings concerns the difference between digital access and digital integration.
According to Geostat data cited in the article, 94.9 percent of enterprises in Georgia had internet access in 2025, while 74.7 percent used fixed internet connections. Yet only 15.3 percent of enterprises had a website.
The figures suggest that basic digital infrastructure is already widespread, while the use of digital technologies as part of commercial and management activities remains much less developed. For smaller businesses, this creates an opportunity to use websites, e-commerce, digital marketing, and online customer communication to create additional sales channels and reach broader markets.
The policy environment also shows progress. Georgia received a 3.96 score for SME digitalization policy, compared with an Eastern Partnership average of 3.54 in the OECD/EBRD assessment cited by Giguashvili. The country also scored 4.02 for general framework conditions for digital transformation, compared with a regional average of 3.61.
Innovation Remains an Important Opportunity
The article also highlights relatively limited levels of business innovation.
Geostat data cited by Giguashvili show that in 2025, 7.6 percent of enterprises introduced new or significantly improved goods, while 7.9 percent introduced new or significantly improved services.
Among these innovations, 65.2 percent were new to the enterprise, while 34.8 percent were new to the market. This means that much of the innovation activity involved adopting or adapting existing practices and technologies, while the development of products and services that are genuinely new to the market remains an area with substantial potential.
Innovation activity was relatively more visible in information processing and communication, the production and development of goods and services, and activities involving promotion, packaging, pricing, placement, and after-sales services.
These results reinforce a central message from Gori State University: digital technology becomes more valuable when companies have the organizational and human capabilities needed to use it productively.
Three Priorities for Georgia’s SMEs
Giguashvili identifies three interconnected priorities for the future development of SMEs in Georgia.
What the Findings Mean for Business and Policy
The findings have implications beyond technology adoption. For businesses, digital transformation should be connected directly to measurable business needs, such as improving customer service, reducing inefficient processes, expanding sales channels, or developing new products.
For policymakers, the findings suggest that technology support can be more effective when combined with employee training, management development, consulting services, business-process improvements, and evaluation of actual outcomes.
Giguashvili also points to the importance of stronger cooperation between universities, research organizations, government institutions, and businesses. Such collaboration can help SMEs develop skills, access knowledge, strengthen innovation, and participate more actively in international value chains.
The article recommends expanding support for e-commerce, cloud technologies, data analytics, and artificial intelligence while strengthening digital and innovation skills among SME employees and managers. It also recommends financial and advisory support for innovative products and services, stronger university-business cooperation, and policies that help SMEs enter international digital markets.
Gori State University: Digital Access Must Create Business Value
Giguashvili’s analysis from Gori State University can be summarized around a straightforward shift: Georgia’s SME sector needs to move from digital access to digital productivity.
In the author’s analysis, digitalization provides technological capabilities, innovation allows those capabilities to be used productively, and competitiveness reflects the economic outcomes that can emerge from their effective use. Weakness in one area can limit progress in the others.
The study therefore presents digital transformation not as a purely technological process, but as a broader business transformation involving people, management, organizational processes, innovation, and market development.
For Georgia’s SMEs, the next phase of digital development is consequently less about simply becoming connected and more about making digital technologies useful for productivity, innovation, and international competitiveness.
Author Profile
Giuli Giguashvili is affiliated with Gori State University, Gori, Georgia. Her work in the article focuses on small and medium-sized enterprise development, digitalization, innovation, competitiveness, and SME policy.
Research Source
Article: Development Priorities for Small and Medium-Sized Enterprises in Georgia: Digitalization, Innovation, and Competitiveness
Author: Giuli Giguashvili
University: Gori State University, Gori, Georgia
Journal: International Journal of Applied Research and Sustainable Sciences (IJARSS)
Publication: Volume 4, No. 7, 2026, pp. 717–726
DOI: https://doi.org/10.59890/ijarss.v4i7.41
Official Journal URL: https://ijarss.my.id/index.php/ijarss/index
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