Why Business Process Innovation Is the Most Common in Georgia — And What That Means for Long-Term Growth

Innovation is often associated with new products or technologies, but in reality, it takes many forms. One of the most widespread types is business process innovation, which refers to improvements in internal operations — including marketing, production, logistics, administration, or human resources management.

In Georgia, this is the most active form of innovation. According to 2024 data, 10% of companies introduced changes in marketing, 9% improved production processes, and over 9% focused on administrative innovations, including accounting and organizational operations (Geostat). Innovation was less frequent in logistics, communication, and HR management.

Process innovation is often seen as a relatively “safe” option. It involves lower costs and less market risk compared to developing new products or technologies. Georgian companies — especially small and medium-sized enterprises — tend to choose areas where the results of change are more predictable, such as improving internal efficiency, optimizing sales strategies, or automating administrative tasks.

Globally, process innovation is important, but it is typically a complementary part of broader innovation strategies. In leading EU countries, process changes are often tied to the development of new technologies — such as integrating AI into manufacturing, adopting new materials, or digital modeling.

In Georgia, however, as the data shows, companies mostly limit innovation to internal improvements. Moreover, over 81% of these innovations are developed entirely in-house, indicating that collaborative innovation — with universities, technology partners, or international networks — is nearly absent.

This pattern also reflects a low level of technological and product-oriented innovation. When innovation is limited to internal processes, it often aims to cut costs or improve efficiency — not to expand markets or increase customer value.

Globally, this is the difference between incremental and transformational innovation. Process changes may improve performance in the short term, but without new products, technologies, or market expansion, such innovation rarely leads to long-term competitive advantage.

In Georgia, this structural trend is driven by several factors: low R&D investment, weak technological infrastructure, limited university-industry collaboration, and a risk-averse mindset among small firms. As a result, innovation becomes a tool for small adjustments rather than meaningful business transformation.

However, if Georgia aims for sustainable economic growth, innovation must go beyond internal operations and move toward technological, product-based, and customer-oriented models. Only then can Georgian businesses access new markets and succeed in global competition.