Innovations and digital transformation as a competition catalyst

Abstract

The basic aim of the paper is to examine the relationship between innovation and digital transformation, on the one hand, and the conditions of competition on the other hand. The intensive application of advanced technologies leads to a digital transition and companies which operate in a changing environment must pass through it. The market share depends on, among other factors, the speed of digital transformation. One of the implications of this process is the strengthening of competitive pressure among companies. The correlation between exposure to digitalisation and productivity causes the effects that are reflected an increasing gap between the most successful companies and those less successful who are struggling to survive in the market. The question arises what is the role of innovations in modern business conditions and whether they represent substitution for price competition. The results show that efficient enterprises in the static neoclassical sense can not withstand the pressure of their competitors without innovations. Therefore, it can be noted that innovations are crucial for survival of companies in the capitalist economy.