Diversification of activity as a factor of innovative development of the enterprise

Semenova Valentyna
Doctor in Economics, Professor, Head of Enterprise Economics and Entrepreneurship Activity Organization Department, Odessa National Economic University, E-mail:semenova_vg@ukr.net, ORCID ID: https://orcid.org/0000-0001-5194-4878

Cite this article:

Semenova V. (2019). Diversification of activity as a factor of innovative development of the enterprise. Ed.: D.V. Zavadska (ed.-in-ch.) and others [Dyversyfikatsiia diialnosti yak chynnyk innovatsiinoho rozvytku pidpryiemstva; za red.: D. V. Zavadskoi (gol. red.)], Scientific Bulletin of the Odessa National Economic University, No. 7-8 (270-271), pp. 119–128.

Abstract

The article is devoted to the research of the activity diversification of the enterprise as an economic phenomenon and the possibilities of its effective realization at domestic enterprises. Considering fierce competition for Ukrainian producers, the issue of a rational use of sufficiently limited resources arises. An important way of solving these problems is to apply a diversification strategy of the enterprise which involves the redistribution of resources of the enterprise in different areas of activity not related to each other (production of products of different industries, investments in various projects, acquisition of securities, etc.). The basic characteristics of activity diversification, its connection with other forms of organization of activity and the importance of activity diversification for economic development of enterprises have been investigated. For a more thorough study of the economic nature of the diversification of activities, different approaches have been considered to define this concept by different foreign and domestic scientists. The relationship between diversification of the activity and reduction of entrepreneurial risks for the enterprise has been determined. It has been revealed that in most of the definitions above mentioned, diversification of activities is directly related to innovative changes at the enterprise (new products, new technologies, new markets and industries, etc.). It has been determined that the effectiveness of implementation of diversification measures directly depends on the possibility of providing innovative development of the enterprise in selected areas of activity, both traditional and diversified. As a result of the analysis, it has been proved that the orientation of the diversification strategy on the innovative development of the enterprise, taking into account the current trends of industry and technological changes, will allow to take competitive advantages in most areas of activity, to offset entrepreneurial risks as well as to explore new markets.

Keywords

business diversification, competition, innovative development, entrepreneurial risks, enterprise, competitive advantages.

JEL classification: L250; О310; DOI: 10.32680/2409-9260-2019-7-8-270-271-119-128

UD classification: 658.589:338.33

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