Various ongoing global events, the scientific-technological revolution, economic and social crises, and problems caused by the pandemic have intensified the race for knowledge development worldwide to achieve competitiveness and economic growth. The universities in the Caucasus countries also conducted research, although their task (or main interest) was not to ensure that the results of the research would apply to society. By combining university research and business, while simultaneously involving the public and private sectors in the research process, it will be possible to develop the real sector of the region, discover successful products and achieve economic growth (Dhebar, 2016).

In the countries of the region, there is a different, but clear increase in expectations from universities, which should create such human resources that can initiate and implement innovative processes-with discoveries and technologies based on them.

Rising expectations from universities and their role in the country’s innovation ecosystem and economic development increase the relevance of UBC’s research. A modern university should be a flexible incubator for startups and technology transfer.

UBC is any interaction between universities and businesses for mutual benefit and is considered an important driver of the knowledge-based economy and society, as UBC can solve the organizational problems of universities and businesses, and therefore the current social and economic problems of the country.

The article is theoretical and analytical in nature. The basic research method is the analysis of the literature on the subject, statistical data and documents of the European Commission and government materials of the analysed countries. The results of the analysis can be used in the economic practice of scientific and research organisations, especially in the business environment sector, which is considered a bridge between science and business. The implementation of scientific projects with a foreign partner is a very important part of the internationalisation of the activities of business support institutions and is crucial for the development of researchers’
careers. The article indicates the ecosystem for the development of longterm systemic relations in the area of internationalisation, and support for the mobility of scientists in the implementation of research projects, carried out jointly by international partners. The analysis of ecosystems in Caucasus countries will show how to create knowledge so that universities and research centres are not perceived as producers of higher knowledge for themselves, without much contact with society.

And UBC’s full-spectrum research shows that:

• Why academic, research and entrepreneurial entities and business support institutions should work together;
• How universities and businesses can cooperate and how these activities are interconnected;
• What is the extent of the institutionalisation of UBC;
• What is the culture and vision for the development of such cooperation;
• Results of university, national/regional governments, and business influence on UBC;
• The university’s innovative ecosystem, startup ecosystem, and its formation-development process;
• The operation of the mechanisms for promoting the development of UBC, identifying problems, and eliminating the hindering factors and the features of their interdependence/impact.

The Universities and Business Cooperation — Theoretical Background

The role of science has become better understood by entrepreneurs.

Governments promote R&D through direct and indirect support (grants and tax subsidies, public infrastructures development) (Wilson, 2005). In the oldest surviving poem by Georgian poet Shota Rustaveli, The Knight in Tiger’s Skin, we find a maxim that may convey the importance of cooperation between science and business 'He who does not seek a friend is an enemy to himself’ (Rustaveli, 2016). The claim touches on an issue that is universal and has accompanied man since time immemorial. Beyond that, when analysing the concept of cooperation, we have to face questions about the possibility of understanding two worlds governed by different 'institutional logics’ (Sijde, Firmansyah, Frederik, & Redondo, 2014), what unites and what divides them, as well as coexistence within the socioeconomic environment.

In the works of Trzmielak and Zehner (Dubinskas, 1988; Trzmielak & Zehner, 2011), it is also repeatedly stated that the scientist and the entrepreneur are immature market dreamers and mature realistic market managers.

In Europe and the United States, academic and business cooperation dates back to the 19th century. Through the efforts of the University of Cambridge (UK) and entrepreneurs, a spin-out company, Cambridge Instruments, was created by Horacy Darvin in1881(Cattermole & Wolfe, 1987). In the early 1980s, Cambridge was one of three clusters of new industry activity and research centres in the UK, along with London and central Scotland (Wissema, 2009). Among the many examples of European pioneers combining science and business, the venture of German chemistry professors Liebig, Hofmann and Ladenburg, who used chemical theory to develop an artificial fertiliser in the mid-19th century, stands out (Jackson, 2008). Although their business venture failed, Etzkowitz (2002) considers them forerunners of cooperation between the scientific and industrial communities. The Hatch Act (US) laid the legislative foundation for the development of an agricultural research centre. This idea, pioneering for the time, was intended to launch basic research that would be commercialised in the future. Interesting insights were indicated by Elizondo-Noeriega, Muńiz-Rivera, Mendoza-Enríquez, Aguayo-Téllez, and Güemes-Castorena (2014) regarding academic entrepreneurship and cooperation between science and business in countries influenced by U.S. trends, such as Mexico and other Latin American countries. The mentioned countries have less technological knowledge and this creates conditions of educational and technological vulnerability for entrepreneurship. However, these countries have a different cultural, educational, technological and socioeconomic context than the United States and some European countries. These societies are less dynamic and the transfer of knowledge, technology, capital, and goods and services is less dynamic. Hence, cooperation between the scientific and entrepreneurial communities involving doctoral students and academics faces serious problems. Young people are dropping out of education or not getting on the path of obtaining a degree. These trends paralyse national initiatives and delay in better understanding of science and business actors (Martins-Lastres & Cassiolato, 2005). In the countries of Central and Eastern Europe, a key element in the academic transition to cooperation between science and business along the lines of developed countries has become, in the first instance, the ability of universities to respond to the changing employment conditions of graduates. The drive for innovation and business competitiveness has subsequently resulted in interest in instruments for intensifying cooperation between science and business. Emerging opportunities for commercial cooperation between science and business with tangible results for both parties passed through the academic 'gray area’, involving the implementation of outsourced tasks using university equipment and infrastructure (Matusiak, 2010).

However, the phenomenon of third-generation universities, which included cooperation with industry in their mission alongside science and teaching, began in the 1970s. The developed concept of economic policy assumed the need to support innovation processes, the development of the small and medium-sized enterprise sector and the active formation of an entrepreneurial culture. Within the framework of the measures taken, it is important to emphasise the strong preference for academic entrepreneurship dynamising changes in the science and research sector. Matusiak (2010) refers to this as opening up silos of knowledge and increasing the possibility of commercial use of developed knowledge resources. Etzkowitz (2008) still uses the term 'capitalization of knowledge’, in the sense of building ties between the worlds of science and business. The capitalisation or otherwise commercialisation of knowledge causes universities to become important market players. Matusiak (2010) analyses the 'entrepreneurial university’ in two dimensions:

• the entrepreneurial activity of the university itself in the commercialisation of its know-how,
• the business activity of those associated with the university.

Researchers of science-industry relations add also the concept of 'entrepreneurial science’. Thorp and Goldstein (2010) scientific and research centres should be an enterprise for scientists, in which money is invested and which should bring a return on the invested capital.

The emerging knowledge economy has determined the emergence of new forms of science-intensive products and services. The current basis for industry-university cooperation was established, also enabling companies to become more competitive (Kamisi, 2000). 'The entrepreneurial science’, on the other hand, is strongly linked to 'knowledge transfer partnership’, which is an effective mechanism for cooperation between the two communities in question: science and industry (Howlett, 2010).

The corporation became more information-oriented and universities become more business-oriented. There emerged a novel class of human organisation: intellectual institutions (Kuhn & Munitz, 1988). Early involvement of business in cooperative efforts with universities speeds up commercial products or technology developments (Eller, 1988). In the XXIst century, there is little doubt that scientific and technological capacity is directly related to its education and training system (Wilson, 2005).

The traditional explanation for business cooperation is given by Badaracco (1991). Businesses seek cooperation to:

1. increase their competitiveness and revenue,
2. reduce the risk of operating in the market,
3. increase accessibility to resources and expand those they already have,
4. minimise barriers to entry into new markets or for new products on those already available. Książek and Pruvot (2011) further add the opportunity to learn from partners, especially the more experienced ones. We have to emphasise that the process of learning is key to shaping leaders of innovation and transfer of knowledge and technology from science to industry (Wiśniewska, Głodek, & Trzmielak, 2015).

Increasing the competitiveness of an enterprise is the natural operation of an organisation in the market (Jasiński, 2013). Reducing the risk of operation refers to operating in a selected, uncertain, market for R&D products.

Cooperation reduces risk and uncertainty associated with inappropriate management of the knowledge and technology commercialisation process. The reduction of uncertainty and risk also comes from linking the resources of partners (Silver, Pagaza, & Coraz-Flores, 2005; Maliszewska, 2017). Two trends emerging in the 1980s and 1990s, the emergence of science parks and spin-offs, should also be linked to increasing accessibility to resources and minimising barriers to entry into new markets or for new products. The first was the emergence of science parks encouraging scientists to collaborate with businesses as a new source of funding and market knowledge. The second was the emergence of spin-offs, which used the innovative activity of students and scientists to exploit intellectual property created at universities (Nadirkhanlou, Pourezzat, Gholipour, & Zehtabi, 2013).

However, we cannot overlook the many sceptical works and evaluations of cooperation between science and business. In the research of Trzmielak, Grzegorczyk, and Gregor (2016), we find the following main bases of scepticism for cooperation between science and business:

• the scientific dependence of research on the academic publication (track),
• the divergent mentality of scientists and entrepreneurs, which brings a passive attitude to cooperation,
• the level of scientific research that does not relate to the transferability of knowledge and technology to industry-scientism detached from the problems of the market.
• misalignment of external policies of universities and R&D institutes with the needs of the market,
• laws not adapted to the formation of academic companies.

The Knowledge Status of the Caucasian Countries —
The Global Secondary Data Analysis

Based on the Global Knowledge Index (GKI) 2021 data, we see a real picture of the development of the knowledge society in the countries of the Caucasus (Georgia, Armenia, Azerbaijan), (Table 1).

The table shows that Azerbaijan is far behind Georgia and Armenia in higher education, scientific research, innovation, and development indicators. However, overall, the positions of all three countries of the region in this direction are unsatisfactory.

In terms of the Enabling Environment Index, with its strong economy, Azerbaijan lags far behind Armenia and Georgia, the leaders in this respect. Azerbaijan also lags behind Georgia and Armenia in terms of preuniversity/ educational education.

Universities can be key drivers of change and innovation, especially when interacting at the local, national and international levels. Universities and the entire higher education sector are uniquely positioned at the crossroads of education, research and innovation.

Cooperation between universities and businesses (UBC) is crucial in solving social problems, sharing and exchanging knowledge, building long-term partnerships, and stimulating innovation, entrepreneurship, and creativity.

UBC is key to stimulating innovation in higher education and a vital part of the overall Commission’s Directorate General for Education and Culture (DG EAC) policy in higher education (European Commission, Press release, 18 January 2022, Strasburg).

The main goal of DG EAC policy is to preserve and develop European values, as well as the participation of citizens in the European integration process. Its main tasks are:

• building a Europe of knowledge (lifelong learning programmes, promoting exchange programmes);
• preserve and develop cultural diversity in the EU in all forms;
• involve citizens in European integration processes to promote mutual understanding, trust and tolerance.

DG EAC targets all kinds of higher educational institutions, independent of their size and location, faculties and disciplines, and oriented national positioning. On the business side, it not only addresses companies (in particular small and medium enterprises — SMEs) but also public authorities, regions, cities, non-governmental organizations (NGOs), hospitals, museums, etc. in the EU and Erasmus countries.

The European Commission supports University Business Cooperation with several instruments, such as the Erasmus+ Alliances for Innovation (formerly Knowledge Alliances and Sectorial Skills Alliances) and the European Institute of Innovation and Technology (EIT).

Since 2021, the European University Association (EUA), has started developing an evidence base for innovative activities of universities in Europe. EUA Solutions is a tailored service created to assist higher education institutions and stakeholders. (https://eua.eu). The association identifies different levels of innovation capacity in European universities and how these levels contribute to a wide range of impacts and social outcomes. Based on data from 166 institutions located in 28 European countries, the EUA and its Expert Group on Innovation Ecosystems can now provide a pan-European picture of innovation in universities, as well as key recommendations for universities, policymakers, and funding agencies to increase the contribution of universities to European innovation ecosystems. Thus, this policy position is an overview of how to support the growth of the innovative capacity of universities.

EUA plays a crucial role in the Bologna Process and in influencing EU policies on higher education, research and innovation. Through continuous interaction with a range of other European and international organisations, EUA ensures that the independent voice of European universities is heard.

By 2022, many universities in the Caucasus countries are members of the EUA, which means that they support its policies and express their readiness for active cooperation. (Table 2).

Despite significant efforts by European national governments and the European Commission to increase participation in UBC, there is a lack of understanding of how universities and businesses can work together and how these activities are (inter)linked. The perception of limited mutual benefits from cooperation reduces the usefulness of university training programmes for the labour market. The consequence is that university graduates are less likely to be employed according to their qualifications. The uncertainty of cooperation between science and business has an impact on the high risk of joint research.

A multi-stakeholder effort to increase UBC in Caucasus countries will have positive consequences for students, entrepreneurs, scientists, university authorities, and investors’ activities. The former will obtain employment opportunities under their competencies and skills acquired during their studies (which also reduces migration). The second will acquire personnel for the company’s development needs (which reduces the cost-quality personnel relationship) and ideas for innovation. The researchers can pursue increasingly ambitious research plans. The university authorities gain access to new sources of funding for science. The investors, in turn, reduce the risk of investing in R&D products, because UBC provides, in a sense, guarantees that university research is aligned with market needs.

It is recognised worldwide that university-business collaboration (UBC) is a complex and nonuniform field and its positive impact on economic outcomes has long been the subject of research and analysis in social sciences, innovation economics, entrepreneurship, marketing, and management scientific communities. UBC is an important component of the country’s innovation ecosystem.

The development of UBC requires a systematic and comprehensive study (of the innovation culture of the university, its ecosystem and development mechanisms, joint activities of the UBC operating model, and interconnected infrastructure elements (orientation to the common interests of the research process and UBC supporting mechanisms), mechanisms for identifying problems and removing obstacles.

The State of UBC in Europe study presents a mixed picture. To increase the low levels of cooperation, UBC needs to focus on drivers rather than barriers, the mechanisms of UBC need to be developed and aligned and relationships need to be placed at the core of UBC. In short, UBC needs to be seen as an ecosystem that requires careful management. For UBC to institutionalise and increase its impact, there should be a concerted effort between governments at national and regional levels, Higher Education Institutrion (HEI) and faculty boards, and business managers (Davey, Meerman, Muros, Orazbayeva, & Baaken, 2018).

The Global Startup Ecosystem Index Report 2022 (The Global Startup Ecosystem Index Report 2022 report https://www.startupblink.com/ startupecosystemreport) shows rankings of Caucasian countries. Among the Caucasian countries, Armenia moved up to 60th place from 65th a year earlier, ahead of Georgia, which took 73rd position (against 80th a year earlier) and Azerbaijan-to 85th (against 89th a year earlier).

In particular, according to the source, in the presented indicators, 100 countries were evaluated according to 3 criteria: quantitative (the number of startups, co-working spaces, accelerators, and events dedicated to startups), qualitative (the presence of statistical branches and R&D, corporations, branches of transnational companies, the volume of the rating is overall penetration of individuals into the number of start-up ecosystems, the presence of large individuals-business angels, venture morbidity, etc.), and the business environment (Doing Business rating, and the speed of the Internet, censorship, investment in R&D-design work), etc.). (Table 3.).

In 2022, Yerevan entered the top 250 city ranking globally. Yerevan has seen a major jump, improving by 38 spots to 244th globally, and reversing its declining momentum from 2021. This increase pushed Yerevan up the ladder in Eastern Europe, where it is now ranked 19th, versus 29th in 2021. Yerevan is the highest-ranking city in the Caucasus region, with a safe margin. Its score is more than double Tbilisi’s score, and more than triple Baku’s score.

In the countries of the Caucasus, systems for developing opportunities for university start-ups are dynamically developing, the existence of most of which is less than 5–6 years. (Table 4.).

Armenia

Armenia Startup Academy cooperates with world-famous service startups, accelerators and incubators, venture capital companies, and business angels. Academy is focusing on building game-changing entrepreneurship and startup education programmes that will armour capable teams with knowledge and skills for building products that customers love.

The Entrepreneurship and Product Innovation Centre (EPIC) is a platform of the American University of Armenia (AUA) for promoting entrepreneurial education, cross-disciplinary collaboration, and startup venture incubation. EPIC provides an ecosystem for emerging entrepreneurs consisting of first-class facilities and collaborative workspace, programmes and events, and a network of mentors, advisors, and investors. EPIC fosters the understanding and application of entrepreneurship in students and faculty at AUA to craft high-impact multidisciplinary ventures.

By the decision of the independent jury of the entrepreneurship world cup (EWC) Armenia 2022 National Finals, two Armenian startups, Text’nPayMTopshop, took first place and will represent Armenia in the EWC Global competition. They will compete for a chance to win $1 million in prizes.

Text’nPayMe is a banking keyboard that enables bank clients to send money by way of any messaging application or other application that contains an input field.

Hopshop is Shazam for fashion. It helps customers find and purchase clothes or accessories that are available on the Internet and social media and even those they might spot others wearing on the street.

Azerbaijan

Organisations in Azerbaijan that help startups launch and develop their products.

SABAH.lab acceleration centre. The centre is part of the Education Institute of the Republic of Azerbaijan and is supported by the Ministry of Education of the Republic of Azerbaijan. SABAH.lab also hosts many events for startups.

Incubator and accelerator INNOLAND — the State Agency for Services to Citizens and Social Innovation under the President of Azerbaijan (ASAN), includes mentor support, networking, and the opportunity to use office space.

Acceleration programme Azerbaijan Innovation Centre — helps startups from Azerbaijan connect with Silicon Valley. The programme was founded in February 2020 by INNOLAND.

Programme of incubation of NEXT STEP innovation centre — As part of the programme, participants get access to coaching, create an Minimum Viable Product MVP, and develop their own business model.

Sup VC acceleration programme — acceleration programme, which allows startups to grow and enter international markets.

Georgia

The startup ecosystem of Georgia is just being formed, but in the country, especially in the capital, Tbilisi, there are many platforms where you can develop your project. Georgia’s Start-up ecosystem is promoted and developed through different platforms.

THE Crossroads — The innovative startup programme for women entrepreneurs was launched in December 2016 and its goal is to create a suitable environment for both startups and investors. To take part in this project, the company must be registered as a legal entity, and it must be managed by a female director or partner.

Innovfin from Pro credit bank. Implemented in cooperation with the European Investment Bank Group. 'Relatively large innovative projects’ can take part in the programme.

Smartex from Liberty bank. This bank was the first in Georgia to create a startup incubator. Initially, the main areas in the incubator were e-commerce, telecommunications, and electronic payments. One of the projects that received funding under the programme was the startup Swoop.

The Spark Platform is a hub for people who have a business idea but no access to resources. The platform provides space for startups, helps startups calculate risks when developing a business plan and provides advice from financiers, marketers, and analysts. Works with such business areas as tourism, vocational and higher education, medical business, sports, health, IT, innovative business ideas, energy-efficient technologies.

Acceleration programme and coworking space Startup Factory from the Georgian University. The site is open 24/7, and the electronics and engineering lab, the Mobile Application Development Centre, and a stylishly designed space that can accommodate up to 40 people are available for startups.

Several university-based incubators are already operating in Georgia-at the Free University, at the Ili State University, and at the Georgian Technical University.

Since 2009, the Batumi Business Incubator has been operating — a project of the UN Development Programme, which is funded by the governments of Romania, Finland and the Autonomous Republic of Adjara (Batumi is the administrative centre of the Republic of Adjara, the Georgian autonomy). As part of the incubation programme, startups can get free advice on international trade, accounting, taxation, business organisation in a startup, financing, and logistics.

Silicon Valley Tbilisi (based on Business and Technology University) is the first private high-tech centre in Georgia, which combines a university, a business incubator and an accelerator, an IT academy and a media centre.

FasterCapital is an international incubator and accelerator with a portfolio of 20 certified startups, 69 incubation startups and 285 acceleration startups. It helps startups not only to work out their business ideas but also to get funding, and invites startups to become their technical co-founder. There are 3 startups from Georgia on acceleration at FasterCapital.

Startup Grind Tbilisi. A division of the world’s largest independent startup community of 2,000,000 entrepreneurs. The global sponsor of the organisation is Google for startups. Startup Grind Tbilisi hosts events where successful world-class startups share their experience; Startup Grind is also an opportunity to make useful contacts, and find investors and partners.

The universities of the Caucasus countries must make maximum use of the existing opportunities and development systems for university starters. It is possible to cite many such good examples, although their number is small in the region.

Center for Entrepreneurship and Product Innovative Products (CEPIP) of the American University of Armenia (AUA) together with the Entrepreneurship World Cup (EWC) National Leadership Committee at the EWC Armenia 2022 national finals, the main prizes were given to two Armenian startups Text’nPayMe and Hopshop who took first place and represented Armenia at the EWC Global Finals. They competed for the chance to win a $1 million prize.

Georgian startupper Ana Robakidze, the founder and CEO of the AI platform Theneo won a Pitch contest at the world’s largest technology event, Web Summit 2022 in Lisbon among 2,300 startups, representing hundreds of countries worldwide. 'We are the first Georgian company to ever go this far in any kind of big startup competition. So I feel like it’s beyond just me or my company. It also represents a lot for my country. Unfortunately, not a lot of people know about the startup ecosystem in Georgia. There are so many great startups, and I feel like I’m also representing them’, Robakidze said.

Conclusions

In the countries of the Caucasus, more than ever, the awareness of the importance of innovation is constantly growing in society, where the
modern university is the main driving force.

The University and Business cooperation (UBC) is dynamically becoming an important component of the innovation ecosystems of the Caucasus countries, which requires a systematic and comprehensive study of the innovation culture of the universities, its ecosystems and development mechanisms.

To increase the low level of cooperation, UBC must focus on drivers rather than barriers, UBC mechanisms must be developed and agreed upon, and relationships must be placed at the heart of UBC.

One may assert that university and business cooperation arises from the necessity of finding non-state funding to carry out scientific research. We accentuate the fact that higher education institutions should establish spin-off companies or grant licences to companies for their most advanced innovations and R&D work. The model of academic companies is what can be applied in the countries of the Caucasus, particularly Armenia and Georgia, where small business entrepreneurship has its roots in distant history. Universities and research centres in Caucasian countries should not only generate research results but also seek out purchasers for them. This can be most effective if they consider the requirements of industry partners as early as the planning stage of the scientific research. We note that the creation of knowledge on technology at the university and research centres should also be combined with an analysis of future market trends and strategies for businesses.

UBC should be seen as an ecosystem that needs to be carefully managed. For UBC to institutionalise and increase its influence, a concerted effort is needed from national and regional governments, university and faculty boards, and business managers.

Too many universities in the Caucasus countries still do not properly understand the relevance of UBC and its role as an important component of the country’s innovation ecosystem. An important task for such universities should be the formation of an effective UBC model, the effective interaction of related elements and the improvement of development mechanisms. University leaders must be prepared to make strategic and operational decisions to build a successful UBC model based on research and excellence.

Universities of the Caucasus countries should be more committed to improving the opportunities for the development of start-ups and becoming part of the innovation ecosystems of the country and the world. They must express their readiness to create joint programmes in this direction, invite specialists, increase student mobility, and improve curricula in entrepreneurship, marketing and management.

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The purpose of this article is to analyze the elements of the innovation ecosystem in the country of Georgia, such as knowledge and
entrepreneurial skills, in relation to support for the process of new business formation. The article is both theoretical and practical in nature. The basic research method involves analysis of the subject literature, agenda-setting documents of Georgian government agencies, business support and development institutions and statistical information. The findings may be useful in the economic practice of institutions supporting science, as well as the development of knowledge-based companies.

In recent years, Georgia has made significant reforms to develop its national economic innovative ecosystem, although its impact on the economy is still negligible. The discussion on a startup ecosystem for the formation of an innovative economy in Georgia focuses on the forms of cooperation between universities and businesses, the main „drivers” for generating and promoting innovative ideas and on identifying the main obstacles and trends for these relations.

The authors of many academic studies emphasize that knowledge and entrepreneurial skill play a significant role in building different management concepts of regions and entities operating in the regional market, offering innovative ideas and knowledge and intellectual property that are mechanisms in building competitiveness of enterprise (Etzkowitz, 2000, pp. 313–330; Lundvall, 2002, pp. 147–165; Nowakowska, 2010, pp. 129–159; Ornowski, 2010, pp. 161–166). The pace and scale of regional development depend on the pace of innovation development. The latter are shaped primarily by scientific and research achievements and opportunities for their diffusion in the local environment (Markowski, 2009, pp. 97–104).

Kjellberg et al. indicate that the central role in the innovation process is played by the institutionalization of new knowledge (Kjellberg et al., 2015, pp. 4–12). Through technology transfer, universities support innovation of enterprises and thus contribute to economic growth in the region (Trzmielak et al., 2016, pp. 49–54). Nowakowska (2010, pp. 223–236), analyzing the territory as a place for building competitiveness of economic entities, indicates that the development of territories strongly highlights the relationship between the pace of change and the characteristics of the territory and interactions between the various entities (actors) occurring in the region. Gibson et al. (2012, pp. 35–50) argue that creative and innovative regions build relationships between specific actors — visionaries and leaders of innovation in the region from the three spheres of science, business and local government.

Knowledge and Entrepreneurial Skills at Universities and Ecosystem Impact

Recent literature has paid increasing attention to knowledge as a factor responsible for the socio-economic development of the most developed countries (Świadek, 2021, pp. 85–95). The innovativeness of countries and their institutions is mainly reflected in the fact that the companies systematically implement new scientific and technical solutions and introduce new technologies and products to the market and within their organizations (Szopik-Depczyńska, 2018, pp. 22–23). Nonaka (2007, pp. 162–171) argues that the innovative capacity of enterprises is directly proportional to the efficiency of knowledge creation. The knowledge and entrepreneurial skills are associated with the effectiveness of knowledge creation, which is then transformed into new technologies. These two key factors that underlie the idea of this article are created and collected in scientific (academic) centers. There are different ways of systematizing the knowledge and entrepreneurial skills impact on the start-up ecosystem. We would like to emphasize the relationship between the development of knowledge and entrepreneurial skills acquired in scientific (academic) centers and the socio-economic and cultural elements of the ecosystem (Thore & Ferrao, 2002, pp. 277–290). Knowledge and technology should be understood as a kind of wealth that influences the economic, social and cultural status of an entrepreneur, a region or a country. Technological innovation stimulates productive capacity and competence, but technology must be linked to commercial needs. Therefore, skills are needed to manage know-how, knowledge and technology transfer, and applied research in order to successfully implement a commercialization strategy. This enables rapid adaptation to market changes. When considering the implementation of R&D activities and their success, factors related to efficiency, effectiveness, productivity and profitability must also be considered (Mallak, 1999, pp. 3-37-3-44; Trzmielak, pp.79–85).

The role of universities and research centers in creating new ideas, transforming them into technologies and new solutions, is also emphasized in the theoretical and practical considerations, innovation system, and innovation culture operating in academic research centers support the links between the science and business. Albors and Hidalgo (2007, pp. 3–17) and Christensen and Eyring (2011, pp. 20–24) emphasize that universities are a key element in the ecosystem for innovative companies because their „DNA” consists not only in not only the similarity of institutions, but also in their high stability, which has evolved over hundreds of years. The replication of that „DNA” occurs continuously because each student and doctoral candidate, as a subject of the ecosystem, can be replaced by a person checked against the very same criteria that were applied to them. At the same time, the way knowledge and skills are built is not the performance of the tasks by individual preferences, but by institutional procedures written in a general code.

The innovation ecosystem may or may not motivate scientists to prepare projects of new technologies aimed at implementation in industry, obtaining funds for scientific research and creating technology companies, especially academic firms (spin-off or spin-out). The culture of innovative entrepreneurship is also shaped by legal regulations related to intellectual property (Trzmielak, 2012, pp. 54–66). The experience and skills contribute to maintaining a close relationship between the demand and supply side of new technologies. As Jolly points out (1997, p. 15), building links between the commercialization process and the entities involved in it is crucial because the entities involved in technology transfer may have different objectives. A failure to accumulate knowledge, experience and skills can lead to a distortion of the technology transfer process. It may not culminate in the introduction of a product or service to the market in such a way as to be considered a successful product or service. Knowledge must be expanded and replicated, keeping it current and accessible to an everincreasing number of users. This is a fundamental factor in the development of enterprises in the era of R&D products. Gierulski et al. (2020, pp. 16–17) point out that the practical use of knowledge in enterprise operations is linked not only to entrepreneurial skills but also to competencies. The latter are created when scientific and research centers become involved in the creation of new technological companies. Generally, the support for startups should include the transfer of knowledge and skills from academic centers to enterprises and the creation of relationships between research centers — enterprises — business support organizations for the creation of competencies in enterprises during their operations.
Kozmetzky et al., (2004, pp. 39–48) argued that the implementation of new technologies results from a high level of science, and factors such as knowledge and innovation must result from the integration of social entrepreneurship. Knowledge and technology created in scientific centers are often the basis for the creation of new products and services and provide an opportunity for sustainable economic development and enterprises. The basis of new companies (often academic) can be the results of research, know-how and technologies created in scientific centers.

However, the most important task that the ecosystem has to fulfill is to enable business formation and development. Modern universities provide many opportunities that are absent on the knowledge market, skill in terms of a multiplicity of technology and market niches, and multiplicity of emerging start-ups and their supporters (Thore, 2020, pp. 39–48).

Therefore, Kozmetsky calls knowledge and entrepreneurial skills the wealth of the organization (the future organization). The knowledge and skills built at the universities must be supported by appropriate innovation policies, entrepreneurial culture and business-related infrastructure.

Manion and Cherion (2009, pp. 71–85) indicate that „fresh opportunities”, new opportunities for entrepreneurial „actors” are the most important thing to improve the quality of life and operation of entities. New firms (start-ups) are relatively poor in resources, and in particular lack experience and understanding beyond the fields of their new technology and products (van Geenhuisen et al., 2015, pp. 145–164). For these reasons, entrepreneurial knowledge, skills and competencies, and the ability to build market competencies are important and perhaps even crucial in building an ecosystem to support start-ups.

The Startup Ecosystem in Georgia

Among the many challenges facing modern organizations, one of the most crucial is the need to increase their innovativeness (Kamińska, 2020, pp. 71–85). In the broader economic world, the European Union, and more specifically in countries such as Georgia, innovation is seen as a key factor contributing to the growth of competitiveness of organizations and economies. As indicated in the previous chapter, the DNA of innovation is knowledge and skills created and obtained from scientific centers. Various scholars argue that the key to building a knowledge-based economy in 2022 and beyond will be the sustained growth of start-ups based on knowledge transfer from research, academic centers and business support organizations.

Georgia does indeed have the basis for such development — a claim that is supported by various data. Among the ten indicators the World Bank uses to evaluate the economy, Georgia scores highest in terms of starting a business. The country has made significant progress in reviving its economy (PricewaterhouseCoopers Georgia, 2020). As a result of the reforms implemented, the Georgian economy has made significant progress in recent years (Table 1). Georgia’s ranking in the Ease of Doing Business 2020 among the 190 countries (World Bank Group, 2020. p. 5) covered by the World Bank Group annual report is 7th, with a score of 83.7 points.

According to the Global Competitiveness Index (p.18), Georgia lags slightly behind its neighbors but according to the index of economic freedom, it has a much better indicator (Georgia — 75.9 points, Azerbaijan — 65.4 points, Armenia — 67.7 points) (Miller et al.,2019, p. 18). Georgia is also ahead of its neighbors in the Global Innovation Index. According to the data for 2019, Georgia was among the 50 most innovative countries in the world and took 48th place (Global Innovation Index 2019, xxxiv). In addition, Georgia has a favorable tax system. According to the Global Competitiveness Index of the World Economic Forum 2018, Georgia ranks 8th in total taxes (16.4%) (World Economic Forum, 2018).

Despite these achievements, unemployment and poverty remain the main problem for the country’s economy. Activation and development of entrepreneurial activities requires improvement of the startup ecosystem, access to business finance, and successful cooperation between the universities and the business sector. Since 2014, Georgia has created several programs and agencies that promote the entrepreneurial
ecosystem in the country and try to create more opportunities for start-up or existing businesses to access finance and knowledge. One of the main players on that field is the Georgian Agency for Innovation and Technology (GITA), which offers start-ups different programs. These programs are focused on innovative and high-tech projects, whose aim is to stimulate the use of innovations and technologies in various fields and to commercialize innovative, high-tech products in the international market.

In 2016, GITA opened Technoparks in Tbilisi, Zugdidi and Telavi. Then in Batumi, Kaspi and Gurjaani, which are high-tech space and allow startups to access technological infrastructure. GITA’s mission is to form of an ecosystem which improves all kinds of innovations and technologies in the country, to promote a commercialization of knowledge and innovations, to stimulate using them in all fields of economy, to create an environment for the growth of innovations and high-tech products, and develop high-speed internet nationwide.

GITA currently provides the following grants for the implementation, prototyping and co-financing of innovative ideas:Small grant for organizing events. The project finances the organization of workshops to promote innovation and technology development, exchange of information, share experiences and strengthen the local innovation ecosystem (maximum amount GEL 5,000 — approx. 1,500 EUR):

• Small grant for prototyping. The project finances the creation of a prototype of an innovative product/service with commercial potential, testing, revision and/or improvement of an existing prototype (maximum amount GEL 5,000);
• Co-financing grants for startups. Their aim is to stimulate the emergence of innovations and innovative enterprises through the development-assimilation and commercialization of innovative products and services with international potential. The grant is intended for the start-ups, private and small enterprises, less than two years after registration. Funding is intended for maximum one-year projects and does not exceed 90% of the project budget or 100,000 GEL (approx. 30,000 EUR).

To date, a total of 534 start-ups applied for the program, of which only 65 applications were accepted in the competitive procedure (12.2%). In order to support the development of entrepreneurship, in June 2014 a joint program of the Ministry of Economy and Sustainable Development of Georgia and the Ministry of Agriculture was launched — the state program known as „Produced in Georgia.” The program aims to develop and support entrepreneurship, to encourage the creation of new enterprises, and to increase export potential in the country. Its goal is to improve the business environment, develop the private sector, popularize Georgia’s investment climate, and promote exports. The „Produced in Georgia” program combines three components: local production, exports, and investments.

Since 2014, „Produced in Georgia” has supported up to 12,000 beneficiaries in starting and developing a business. To address the economic challenges posed by the spread of the novel coronavirus (COVID-19), the agency has made changes to its program and added 6 new economic activities to its list of priority areas. These include creating computer games, hospital operations, general practice, specialized medical practice, dental practice, and purchasing and renting of film production equipment.

„Start-up Georgia”1 was established on May 11, 2016 by the Georgian Innovation and Technology Agency and the Partnership Fund, with the main goal of developing and co-financing high-tech business ideas. The amount of co-financing available from Startup Georgia is defined from 15,000 GEL to 100,000 GEL. Participation in the project is possible in cash and non-cash form; however, the applicant’s cash contribution must be at least 10% of the total project budget. Start-up Georgia remains a partner of the joint venture for a period of not more than 10 years; however, the duration is individual for each project, depending on its specifics. Since 2017, more than 100 start-ups have received co-financing under the project.

In 2020, the Georgian government received $23.5 million from the World Bank Group to develop the GENIE (Georgia National Innovation Ecosystem)2 project, which has the aim of improving the innovative activities of firms and individuals in the borrower area. Improving the innovation performance of individuals and SMEs consistently contributes to increasing business participation in the digital economy. The project should promote an integrated approach to the development of the Georgian National Innovation Ecosystem in the following components:

• Component I envisages the development of innovative infrastructure and includes: a) the development of a network of Regional Innovation Hubs (RIH) and Community Innovation Centers (CIC) in selected cities, towns and villages in Georgia; b) Broadband-for-Development (BfD) program to support the acquisition and use of large-scale Internet services and advanced information technology — by relevant
  households, micro, small and medium-sized enterprises (MSMEs) with a focus on rural areas; C) piloting and, if necessary, implementing the BfD program, implementing BfD payments and related training;
• Component II includes service delivery, in coordination with Innovation Centers (CICs) and Regional Innovation Centers (RIHs). It should provide training and technical assistance to develop individual digital economy skills and be tailored to project beneficiaries to support firms that receive financial assistance under various grant programs at various stages of the innovative ecosystem.
• Component III provides funding for innovation, which should support: a) providing matching grants, the selection of appropriate MSMEs to receive matching grants, and oversight; b) providing technical assistance for the preparation and implementation of authorized MSME projects; c) issuing applied research grants for selected science through the Shota Rustaveli National Science Foundation (Foundation) of Georgia3; d) providing technical assistance and related costs to the Foundation for the administration of the Applied Research Grants Program, as well as to GITA and Enterprise Georgia, to support MSME;
• Component IV provides support for project implementation and aims to implement all components of the project effectively.

In close cooperation with the relevant institutions, GITA is the central institution responsible for the implementation and coordination of the project, which serves the Ministry of Economy and Sustainable Development of Georgia (MoESD). GITA is committed to assisting aspiring entrepreneurs and providing advice on issues such as customer concerns, product (service) overview, development stages, market size and growth, target market and segmentation, go-to-market strategies, competitive environment and advantages, financial forecasts, financials, and operational capabilities. There are also many other donors and initiatives in the country which are not systemic. The most distinctive is the 500 Startups acceleration program.4 This largest accelerator was introduced in the country in partnership with the Bank of Georgia and the Innovation and Technology Agency. 500 Startups is a start-up accelerator based on „Silicon Valley”, which has already invested in more than 2,400 companies.

Its capital today exceeds $600 million. The accelerator portfolio includes companies that have been operating successfully on the world market for years and have a turnover of millions of dollars, including for instance „Credit Karma”, „Canva”, „Ipsy”, „Udemy”, „Gitlab” and others.

The 500 Startups — Georgia program started in early 2020, and now the acceleration program for the first stream has reached the final. The top 5 selected from the first stream are: „Nextsale”, „Cargon, „Cardeal”, „Phubber” and „Stack”. Before the final stage, each start-up went through different types of training and masterclasses, which helped them refine their ideas. Registration for the second stream of the program 500 Startups — Georgia has already begun.

University knowledge and Georgian perspectives

The ongoing process of start-up ecosystem development has brought the issue of creating relevant innovative infrastructure in Georgian
universities and developing the necessary entrepreneurial start-up skills and knowledge to the forefront. An important task for higher educational institutions in Georgia today is to unite teaching, research and entrepreneurial activities, generate income from such activities, and train appropriate personnel for certain high-tech sectors of the real economy. For a significant section of Georgian universities, the priority strategic goal (and not an additional advantage) is the formation of the university as a center for the creation and development of innovations, as an effective part of the country’s innovative economic system.

Business incubation and acceleration is one of the most effective tools for the development of this strategy, which, together with the internationalization process, gives every student and scientist the opportunity to acquire the necessary entrepreneurial and start-up skills and develop innovative ideas at the university. The universities of Georgia actively working in this direction are as follows:

• University of Business and Technology (BTU), a young university created in the „Tbilisi Silicon Valley” space — one of the most high-tech spaces in the region with a rapid pace of development. BTU operates an Entrepreneurship Center with the EFSE (The European Fund for
  Southeast Europe) implementing a pre-acceleration program (conducts masterclasses, hackathons, demo days). It aims to help local technology start-ups acquire the skills needed to develop and manage a business, to be able to commercialize and internationalize their own ideas;5
• Georgian Technical University, which is one of the oldest universities in Georgia with a strong school of applied research. Since 2014, the University has been developing the Commercialization Department.6 The University also operates an Innovation Center, where project proposals for innovative research and entrepreneurial work, copyright and licensing, transfer and commercialization are being developed. The Center actively cooperates with various international donor
  organizations. On May 28, 2020, the project idea of a university student team — „Contacting Agro-Cam” won the global project „Competition of Big Ideas 2020” within the framework of the Georgian-British program „Creative Spark”. (The project is supported and funded by the British Council);
• Ivane Javakhishvili Tbilisi State University, which is the first national university in the Caucasus (1918). The University has a scientific support unit — the Center for Knowledge Transfer and Innovation. The center also includes a fab-lab for prototyping products7. The main goal of the center is to support the development of entrepreneurial skills and to give each scientist and student the opportunity to develop the necessary entrepreneurial and start-up skills, to help them in the implementation and development of their activities;
• In 2020, a new International University (KIU) was opened in Kutaisi, which received the first stream of students. The University aims to become an international center for education, innovation and technology in the region and to promote innovation and
  entrepreneurship in the region through a cluster hub.

The need to create an innovative infrastructure, as well as to introduce and develop targeted research and entrepreneurial (business) skills in curricula, is being actively discussed in Batumi State University, Sokhumi State University, Kutaisi State University and other private higher education institutions. The main challenges on this field are the following:

• Development and popularization of vocational training. Increasing the level of knowledge in the interaction between business and education;
• Implementation of teaching methods based on modern technologies.
  Providing laboratory research in the field of technology;
• Deepening knowledge in the field of ICT and compliance with international standards;
• Integration of entrepreneurial and startup management skills into training programs. Raising awareness of intellectual property rights;
• Formation of pre-accelerators, accelerators and incubators on the basis of universities. The organization of events and meetings with start-ups and investors;
• Transformation of educational and research activities, the process of its commercialization into an innovative model.

Universities interested in developing start-up skills and knowledge acquisition are actively developing methods for analyzing the start-up ecosystem in Georgia, generating ideas, lean startup, KPI Analytics, strategic marketing (Customer Research and Idea Validation, Sales, Advertising and Customer Success), legal and accounting matters, investor relationship, Powerful Pitching. They organize workshops, hackathons, and demo days.

Researchers and practitioners agree that the success of small and medium-sized businesses is closely correlated with the skills and abilities of the entrepreneur.

New and successful projects in the innovation ecosystem play an important role in the economic development of the country, creating new employment opportunities, improving the political and social environment, and ensuring the country’s competitiveness, sustainable and inclusive economic growth.

A strong start-up ecosystem contributes to the formation of a culture of innovation in the country and, consequently, to the innovative
development of the economy, as evidenced by the developed countries of the world: Israel (the world leader in the number of start-ups per capita; third place in the world in the number of start-ups in the field of artificial intelligence; exports of $6.5 billion worth of cybersecurity products per year); Great Britain (manages the third largest techno hub in the world and the leading techno hub in Europe; third country in the world with a perfect global ecosystem); Ireland (world-class business hubs and accelerators for Fintech, Biotech, Med tech and ICT).

Conclusions

The aim of this article was to present the relationship between the use of knowledge and entrepreneurial skills within the ecosystem for start-ups in creating support mechanisms for innovation growth on the example of one selected country in the Caucasus. We conclude that greater attention should be paid in Georgia to the still inadequate flow of scientific and technological solutions into practice, resulting from an insufficiently developed ecosystem for innovation. Today Georgia is fighting the COVID-19 coronavirus together with the rest of the world, which seriously hinders the country’s economic development. However, the process of forming a startup ecosystem in Georgia has been actively ongoing for the last 9–10 years.

The market is ready to finance innovative and digital solutions during this period, but at this stage the country is facing a number of problems that require further refinement:

• Given the existing business climate and human resources in Georgia, attracting foreign investment in innovation and research remains one of the key strategies for accelerating economic growth. This strategy will encourage the creation of a high-value workforce and will also contribute to the reform of the education system. Cooperation with globally recognized global corporations will attract other corporations to enter the Georgian market and increase the country’s competitive advantage.
• A safe environment needs to be created for investors. As a result, different types of international investors will come to the country, the methods of obtaining alternative financing will be diversified and expanded, and the country will no longer be so heavily dependent on government programs.
• There is a need for expert evaluation of the country’s key institutional framework programs and projects to support entrepreneurship
  development.
• The state should not only issue various types of grants/loans, but also create an attractive environment to achieve the goal of maximum involvement of the private sector and foreign investors. It should also ensure the relationship between entrepreneurs with insufficient capital and business „know-how” and thus ensure the development and improvement of the entrepreneurial ecosystem.
• Integration and development of entrepreneurial education in the curricula and programs of universities remain relevant.
• The universities should develop human capital, provide entrepreneurial education for start-ups and provide this process with incubators and accelerators.
•  Start-up Accelerators and various programs should try not only to receive financial assistance, but also engage in active mentoring, training, coaching and improving the skills of start-ups.

In parallel with building a start-up innovative ecosystem, the Government of Georgia has also been actively seeking state subsidies in recent years to develop the business development support system.

However, it is important to identify the effectiveness and additional needs of the state for such activities. International and domestic surveys, as well as surveys of start-ups participating in various programs, confirm that one of the main challenges in Georgia is to receive the formal or non-formal education necessary for the development of knowledge and entrepreneurial skills. The lack of knowledge and entrepreneurial skills are the main reason for non-financing of start-ups by investors.

For the next stage of our research, it is also very important to analyze where start-up ideas are created, how often start-ups turn to the various means of obtaining funding available, how easy it is for them to obtain funding, what challenges they face at each stage of development and how to accelerate the development and diffusion of innovation by effectively using the knowledge accumulated in academic centers.

Endnotes

1 Start-up Georgia 2020. www.startup.gov.ge
2 The World Bank. Projects and Operations 2020. https://projects.worldbank.org/en/projects-operations/projectdetail/ P152441
3 Shota Rustaveli National Science Foundation of Georgia. https://rustaveli.org.ge
4 500 Georgia accelerator program. https://ecosystems.500.co/500georgia
5 Business and Technology University. https://btu.edu.ge/en
6 Georgian Technical University. https://gtu.ge/Commercialization
7 Ivane Javakhishvili Tbilisi State University. https://www.tsu.ge/ge/research/institutes_centers/a15mvb0_jkq9b95jg/yruy3 qbhaitkeiyn9

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    Lachiewicz & A. Zakrzewska-Bielawska (Eds.), Monografie Politechniki Łódzkiej, Łódź.
34. Trzmielak D. M., (2013). Komercjalizacja wiedzy i technologii — determinanty i strategie [Knowledge and technology commercialization — determinants and strategies]. Wydawnictwo Uniwersytetu Łódzkiego, Łódź.
35. Trzmielak D. M,. & Gibson, D. V. (2014). International Cases on Innovation, Knowledge and technology transfer. Center for Technology Transfer UL.
36. Trzmielak D. M., Grzegorczyk M., Gregor B., (2016). Integracja wiedzy — ilościowa analiza empiryczna wybranych uczelni i firm z siedmiu państw [Knowledge integration — A quantitative empirical analysis of selected universities and firms from seven countries]. Wydawnictwo Uniwersytetu Łódzkiego, Łódź.
37. Trzmielak D. M., & Ropęga, J. (2013). Innovations and Knowledge Commercialization.
    Cooperative Resources, Integrated Science and Business. Center for Technology Transfer UL.
38. UNDP. (2019). Human Development Report.
39. Van Geenhuisen M., Ye Q., Au-Yong Oliveira M. (2015). A Skills Approach to Growth of University Spin-off Firms: Export as an Example In Building Sustainable RDD Centers in Emerging Technology Regions, D. Gibson & J. Slovak (Eds.), Masaryk University, Brno 2015.
40. World Bank Group. (2020). Doing Business 2020: Economy Profile of Georgia.
41. World Economic Forum. (2019). Global Competitiveness Report.
42. World Economic Forum (2018). The Global Competitiveness Report.

Universities and Programs

1. Business and Technology University. https://btu.edu.ge/en
2. Georgian Innovation & Technology Agency 2020. https://grants.gov.ge
3. Georgian Technical University. https://gtu.ge/Commercialization
4. GITA — Georgia’s Innovation and Technology Agency. https://www.gita.gov.ge
5. 500 Georgia accelerator program. https://ecosystems.500.co/500georgia
6. Ivane Javakhishvili Tbilisi State University. https://www.tsu.ge/ge/research/ institutes/centers
7. Kutaisi International University. https://kiu.edu.ge/geo/innovation
8. Startup Georgia 2020. www.startup.gov.ge
9. Shota Rustaveli National Science Foundation of Georgia. https://rustaveli.org.ge
10. The state program „Produced in Georgia”. http://www.enterprisegeorgia.gov.ge
11. The World Bank: Projects and Operations 2020. https://projects.worldbank.org/ en/projects-operations

Tourism, as one of the world’s fastest-growing industries (Matviyenko et al., 2015) and a developmental sector reflecting increasing personal income, leisure and mobility, has become one of the most important aspects of human spatial behaviour today. Travel and tourism are conducive to the creation of jobs for both highly qualified and unskilled individuals (Korinnyi and Tsyhanok, 2020); Kvartalnov, 2002; Pohuda and Rozmetova, 2019). This sector, unlike many others, has the potential to grow without major investments, offering multiplied benefits in terms of both income generation and employment. For many countries, therefore, tourism is a key industry in both the public and private sectors.

The global tourism industry was certainly one of the first to make extensive use of new information technologies. The technical progress of the last thirty years has given rise to a highly innovative tourism sector, which can focus not only on its own organizational structure, but on relations with partner organizations, thus optimizing operating costs and increasing the ability to generate value for customers. Tourism is one of the significant fields of the economy in well-developed countries, prioritizing innovative processes that unify scientific, technical, and economic advances (Kotsan and Kyrilo, 2015).

Overall, tourism is a very broad sphere of innovative activity, constituting an intersectoral socio-economic system that includes not only accommodation but also transportation, communication, leisure, food and other aspects. Tourism not only creates new products, but also harnesses innovations introduced in other areas: such as the latest experience in the field of management, task implementation, and applications of recent scientific achievements and technologies put to use by the tourism market to improve products and services demanded by the market. Through the introduction of the latest advancements in informational technologies, the creation of tourist products, services, hotels, reservation of air tickets or other types of ticketing can all be taken to a qualitatively new level (Abbate et al., 2019).

The importance of tourism for modern economies is underpinned by the following circumstances:

1. Tourism is a complicated social-economic phenomenon, involving not only economic activity but also opportunities for regional and
   international cultural exchange and means for overcoming crisis situations.
2. Tourism is one of the most profitable and rapidly developing economic fields.
3. Tourism is characterized by a „high multiplier” effect, reflecting its extensive indirect impact on related fields of industry, e.g.
   transport, trade, etc. The World Tourism Organization, for instance estimates1 that tourism has an indirect impact on more than 32
   economic fields.

The determinants and trends in an innovation in tourism

The determinants of innovation in tourism can be classified under three broad subheadings: innovation inputs (inventions, investments or activities that SMEs undertake in new services or product development); company characteristics (their capability to undertake innovation activities) and the environment (external factors that are beyond the control of the firm, such as law, the country’s level of development, the infrastructure for transport and accommodation) (Van Nguyen et al., 2021). One of the major technological trends which is crucial for tourism development is online marketing. In many markets, online sales continue to explode. In the United States and Europe, more and more people are opting to do their shopping online rather than at brick-and-mortar stores (Kaplan, 2017; Marketo, 2017). DeMers (2017) forecasts that the trend towards cybershopping is likely to accelerate due to new technologies which are enriching the „online” shopping experience. Technologies supporting shopping, booking and social media coupled with artificial intelligence are analysing „big data” to create customer profiles which enable firms to create „market segments of one”, at the individual level. In 2014, Stanford University launched a multi-million-dollar study of Artificial Intelligence (AI), issuing its first report on AI in 2016, which forecasts the impact of AI on eight industries. The most immediate impact of AI is likely to be on transportation, „Where a few key technologies have catalysed the widespread adoption of AI with astonishing speed. […] Autonomous transportation will soon be commonplace […] …city-dwellers will own fewer cars […]” (Trzmielak and Zehner, 2018). This all has an incremental impact on the tourism sector.

Another important trend that affects the development of tourism, in terms of the quality of tourism services, is smart mobility and smart city initiatives. The report of European Parliament mapping smart cities in the EU indicates the relationship between places with high levels of innovative and entrepreneurial activity with smart environment (Parris, 2020). There are many concepts of tourism service management — one of which would be based on the service models explored by Enoch, who proposed a fourfold service model typology: interchange service, network services, destination services and substitute services (Enoch et al., 2002, Potter, et al., 2020).

Enoch’s concept is applicable to the development of innovation in the tourism sector; in practice, it emphasizes the higher frequency of plane, bus and train services (e.g. autonomous vehicle technology) and self-check-in.

Algorithms in phone applications can calculate the most efficient route for travel. One type that can now be found almost everywhere and is used in tourism involves chatbots, which can be quite helpful for any journey and can significantly facilitate tourist services. The tourism sector is characterized by a huge amount of interrelationships, services, data and information exchange. All this results in huge amounts of data being collected. With a wide variety of users, data-intensive technologies become necessary, making it possible to learn about travellers’ behaviour, habits and needs (Li et al., 2018). Destination-specific services include the airport shuttles that operate to many world airports. The replacement of conventional transport also entails less noise and vibration, making transport more comfortable for tourists (e.g. mag-lev trains) (Vuchic, Casello, 2002).

Generally, in describing the impact of new technology on the tourism sector, many studies have focused on the business functions and tourism sectors. Therefore, studies indicate a significant role for technology applications and impacts in the hospitality, airline, intermediary, distribution, attraction, and Destination Management Organization (DMOs) sectors, with fewer studies on sectors representing events/festivals, cruises and other transportation players (Sigala, 2018). Many authors indicate as well that the new technologies are giving a considerable boost to fostering „smart tourism” (Bilotta, in press). The role of innovation in „smart tourism” can be seen in means of communication, decision support tools for firms, market intelligent sources for collecting, storing, analysing, sharing, visualizing and interpreting big data, e-learning tools for selfservice, automation tools, enabling new business models, transforming
tourist experiences and co-creation platforms (Sigala, 2018). New technologies and services are critical to the long-term sustainability of tourism operators and particularly SMEs.

The introduction of innovation in modern tourism demands the following: the economic and political stability of the country, the existence of a current legislation base, an appropriate level of scientific-technical development, the existence of natural, financial and other necessary resources, and a certain level of infrastructural development. Current trends also must be well-analysed, including: demographic changes (aging population), lifestyles, the nature of the labour force, the frequency and duration of holidays, growing interest in new and unusual, non-standard experiences, etc.

Note also that in the modern tourism industry, the following trends are becoming increasingly evident as well:

• There is significant growth in trips to neighbouring countries and nearest regions as compared to more distant countries, which experts feel is connected to growth in the terrorism threat in the world, growth in the number of trips per year, growth in the distribution of holidays and a number of other factors.
• The economic benefits derived from tourism are growing increasingly clear and countries are taking an increasingly supportive attitude towards tourism, as expressed in the significant reduction of different barriers on their part. This provides for growth in the number of tourists in future and supports the current process of globalization.
• Constant growth in competition, both inside or outside the region, motivates the leading tourism companies to take broad and aggressive measures to continually stimulate their products.
• Growth in urbanization processes and densely inhabited regions has significantly encouraged the emergence of such new types of tourism as village tourism, short-term holidays, non-seasonal holidays, non-active forms of tourism, tours without living in hotels, eco-tours, hunting, etc.
• As a result of the introduction of informational technologies and the development of tourism operators’ services, the world has become more informed and tourism much better studied.
• This trend will be developing in the future, giving rise to a new trend of travelling to less-known and hard-to-access locations for the purpose of seeking unique entertainment and unforgettable experiences.

Considering these factors and trends, tourism marketing should maximize the ability to harness all the opportunities available to it: natural conditions, multiple sightseeing locales, and cultural potential, combining previously unharnessed services into a united tourist package and offering new products to the market.

Marketing of innovations in the field of tourism considers the application of these new methods and techniques, implementing measures to support the formation of attractive and positive image of the country from the point of tourism within the world community. These must be systematic efforts which have a qualitative innovation, lead to positive developments, and ensure the stable formation and development of the sector. This may entail changes in processes, organization, marketing, products and so on, but it will have the effect of bolstering socio-economic development. Innovations in tourism require substantial material and financial outlays, making state support necessary.

Another significant tendency in tourism is related to sustainable development. Trips to locations off the beaten path and away from the given country’s greatest tourist attractions, where one can enjoy peace and quiet and engage in close contact with nature are becoming more and more popular. A recently emerging trend of turning to local tourism is evident here. In recent years the fashion for trips to unusual places, such as houses floating on a lake or apartments situated in the treetops, has also been developing more and more. Websites are being created with databases of such unique accommodation, addressed to people looking for a bit more luxury and originality. Another trend that can be observed in the sustainable tourism industry (in Poland, for instance) is the organization of thematic trips, which typically involve some physical activity: this may include bicycle trips, family survival camps, culinary trips, selfdevelopment workshops, yoga weekends, sports trips and multi-day canoeing trips.

The world tourism market and the impact on the Georgian tourism industry

From the standpoint of development of innovations in the field of tourism, Georgia offers a very interesting example, where many measures have been implemented in this direction over the past 10–12 years. Georgia is among those countries of the world that derive a significant share of their income from tourism. In such countries where tourism is a priority sector of the economy, it is important to forecast what the tourism business can expect in the future, based on current changes in the country and distinctly defined trends.

Despite its small area (69,700 km2), Georgia is distinguished by rich natural and cultural resources and a unique biological diversity. Rare subtropical wetlands, semi-deserts, high alpine zones and snowy peaks can all be found in the country, just several hundred kilometres apart. There are more than 12000 historic and cultural monuments in the country and 4 of them are even listed as UNESCO World Heritage. Leisure tourists can choose from more than 100 resorts, sample mineral water from about 2400 springs, and enjoy the seaside. Nature lovers can visit the 8 national parks and 31 protected areas. The winter resorts of Gudauri, Bakuriani and Mestia promise visitors and skiers unforgettable days in winter and in summer.

In 1997, tourism revenues amounted to $75 million USD, or about 2.1% of the gross national product. At that time, this meant about 313,000 tourists and about $ 240 per person. As Fig. 1 shows, the income from tourism has increased significantly over the last 22 years. In 2019, tourism revenues accounted for 20.32% of gross national product, or $ 3.55 billion. 9.3 million international travelers have already arrived in Georgia by the end of 2019 (Georgian Journal, 2019)

The variety of reforms being implemented in Georgia in various aspects, the improvement of its economic and political stability, its gaining an image as a „country of reform” in the world and its making tourism development a priority industry in public policy have truly yielded results. Worth noting among the innovative activities implemented in Georgia are support for tourism infrastructure development, the facilitation of international travel, the improvement in service quality and awareness of the country, the implementation of marketing activities in both domestic and international markets, and development of tourism products.

International tourism expenditures by international visitors are characterized by nearly exponential growth, confirming the great import of
the tourism sector in Georgia (fFg. 2)

With the objective of widening the investment opportunities in tourism infrastructure in Georgia, three free tourism zones have been set up, in Kobuleti, Anaklia and Ganmukhuri, offering preferential terms to investors: exemption from property tax and income tax obligations as set forth in the Tax Code of Georgia for a period of 15 years, exemption from construction permit fees. The investor of the land shall be transferred to the Georgian legislation, a symbolic price — 1 lari; When a hotel is built with more than 80 rooms, the investor will obtain a casino license for free. Investments in Georgian tourism sectors can be made in collaboration with the Partners Fund of Georgia, which offers financing and co-investment. Several successful projects have already been implemented in this way: the „Roialbatoni”, „Gino Wellnes” and „Spa Rixos Borjomi” hotels, as well as the mineral-water resort Likani and a leisure complex in Sairme.²

The Georgian government has taken significant steps to boost the flow of tourists and has considerably eased visa regime. Citizens of 104 countries of the world have extended terms of visa-free entry and may stay in Georgia up to one year.. EU citizens can enter the country carrying a passport or identity card issued by the EU.

Georgia has become well-known for innovative projects implemented in tourism, not only in the region (as a leader country) but also throughout the world. In 2012 Georgia was mentioned in the report of World Tourism Organization (WTO). Its main annual publication — UNWTO Tourism Highlights — named it as one of the fastest growing tourist countries. The report estimated growth in travellers to Georgia at one of the highest rates in Europe as a whole.³

Georgia was ranked among the 50 best destinations by National Geographic Traveler (side by side with France, Italy, Portugal, Scotland, Switzerland, Sweden, Denmark) and its millions of readers were advised to travel in the country⁴. Georgian cuisine, wine and culture was outlined. Georgia also ranks high as a country safe for travellers, placing among the top ten in the world. The country has hosted several international media forums, attended by journalists from many countries, who also had a chance to familiarize themselves with the country’s cultural heritage, wine tourism, and ski resorts. They visited Tbilisi and a variety of resort centres in Sighnaghi, Tsinandali, Mtskheta, Gudauri, Gori, Tskaltubo, Akhaltsikhe and Batumi. The country hosted four meetings of the World Tourism Organization’s (WTO) Silk Working Group, which was attended by delegates from 18 countries and representatives of the World Tourism Organization.

In recent years, many articles about Georgia have appeared in National Geographic, The New York Times, and The Guardian. CNN posted pictures of ancient Svaneti on its social network profile, and BBC journalists described the Svaneti villages as ranking among the legendary villages in Europe. An article was carried by the influential American edition of Bloomberg, where the writer advised readers to take a journey to Georgia, to sample Georgian wine. Many articles have also been published in the The Washington Post on Georgian wine and cuisine. Advertisements for Georgian wine are frequently run on Euronews, which has an audience of 400 million and broadcasts in 14 languages in 155 countries. Every year the country participates in approximately 25 exhibitions, where its tourism potential is promoted. The National Tourism Administration of the country carries carrying out a marketing campaign every year almost in 50 countriesand is conducting press tours.

With the aim of raising the quality of service, rigorous training is implemented for representatives of the tourism industry throughout the country. There is a hotline for tourists (0 800 800 909), and a new „Online chat” service is being added, where tourists can obtain any information they request within 24 hours. The website www.georgia.travel has been revamped in line with demand, offering an updated and well-developed control panel, including the possibility of finding information via the „Google maps” application.

Despite of all these efforts, however, Georgia still faces a lot of problems in its tourism industry, especially in the regions. First of all, this stems from the infrastructure, particularly roads and transport. Prices are high in hotels offering the all-inclusive regime. The international air transport market requires more internal liberalization. The quality of customer service also requires further improvement. Lastly, tourists still have to pay significantly for quality accomodations in Georgia.

On the positive side, we should not that in order to facilitate the infrastructure for innovations in Georgia, at the end of 2020 the first technology park (industrial park) was opened, which should provide a suitably qualified workforce training, the necessary supporting infrastructure for R&D and also promotion of full-cycle production — from idea to production.

Start-up developments in the tourism industry — A chance for a rapid return to growth in Georgia

Georgian tourism is an industry in which start-ups occupy an increasingly important place. Tourism start-ups seek to fill niches where it is difficult to succeed. Firstly, things are very competitive in the industry, with hundreds of travel agencies selling tickets and packages to any destination. Secondly, destination-oriented holiday bookings are often a one-off transaction, as few people travel to the same holiday destination each year. Moreover, most start-ups are based on IT solutions, regardless of the industry in which they operate. The key to the development and, above all, the survival of a start-up is the successful matching of the offered product or service to the appropriate target group.

The products of start-ups in the tourism industry are, in most cases, websites or applications (apps) that are dedicated to various groups of recipients, which can be grouped in terms of common features or preferences, which are key when choosing a way of traveling or spending free time. In this respect, the products of start-ups can be classified into several groups:

• Apps for people with disabilities, allowing for easier travel.
• Apps to increase travel safety by alerting tourists of potential scams and deceptions in various places, providing information on hospitals, doctors, and emergency points, and information on road assistance services in the event of an accident.
• Websites that help tourists with transport, e.g. to work or to tourist attractions.
• Apps that allow one to find travel companions — such applications can identify people traveling to the same place and using the same means of communication, who have similar travel preferences, thus helping to minimize travel costs.
• Concierge services — apps that help hotels provide additional services, such as b-Guest, or apps connecting communities that provide concierge services with travellers with payments built into the system.
• Trip planning apps and websites (by far the largest group of start-ups) — such apps offer, for example, travel planning according to a set budget.
  Users set the time, place and budget, and the system searches for specific trips. By entering further information and choices about destinations, expectations etc, we end up with personally tailored sightseeing plans.
• Connecting travellers with locales and companies — this is a very large group of apps, designed to help travellers learn about local life in a given destination country/city. These applications can be very precisely
  tailored to target groups, e.g. applications that allow one to search for local private tours led by professional guides (linguoguides), portals for photography hobbyists (fripito), specific sports (guidebase), portals for ethnic groups, national minorities, sexual orientations (gaybrhood)^5,6.

The goal of the Georgian government is to lay solid foundations for economic growth; to achieve this, Georgia, like many other countries, must focus on developing innovation. Start-up support, in turn, is one of the crucial factors of innovation policy, requiring the creation of an appropriate ecosystem to support innovators. To this aim, in 2014 the LEPL „Innovation and Technology Agency” was created under the Georgian Ministry of Economy and Sustainable Development,7 meant to promote this field in the country and create an innovation ecosystem. The purpose of the agency is to bolster Georgia’s research infrastructure, to help foster innovations and new technologies, as well as to accelerate and facilitate the processes of knowledge commercialization. The agency also aims to increase the participation of private companies in the research and commercialization process, and to increase the share of venture capital in the process of investing in modern technologies. It initiates the basic directions of investment in infrastructure for innovation, supports the opening of innovation centres and industrial laboratories, technology parks (Gavtadze and Ipshiradze, 2016).

Public-private cooperation and a more well-developed technological ecosystem are making Georgia start-ups attractive to foreign investors. Due to its location, Georgia has always been a meeting place between Europe and Central Asia. Even before the creation of the ancient Silk Road, the country was a melting pot of peoples and cultures. Nowadays it is a very attractive country for new investors (Dugienko and Bondarenko, 2020). According to the World Bank, Georgia is the seventh easiest place to do business and the second easiest place to start a business. There are only six types of taxes, and for the IT sector things have recently become even easier, as international companies will have their income tax reduced to only 5%. This is undoubtedly an incentive for tech companies, which can prove useful for start-ups. Georgia also offers infrastructure supporting the development of start-ups, such as co-working spaces or new business centres. These are places where big players from the financial markets are involved in development, e.g. Tbilisi City Hall and TechPark. 500 Georgia, a regional accelerator created by Georgia’s Innovation and Technology Agency (GITA), the Bank of Georgia and 500 Start-ups with the support of the World Bank, is doing well. The program focuses on beginning start-ups from Georgia and Eastern Europe. In Georgia, business is well digitized, which is why start-ups based on high technologies are the most common. These are SaaS B2B start-ups related to various industries.

Unfortunately, however, this does not really apply to the tourism industry. Despite the fact that Georgia is an attractive tourist destination, this has unfortunately not translated into the digitization of the industry. The number of new technological solutions that are produced in Georgia ultimately for tourism is very small. This is also visible in the area of startups.⁸

Be that as it may, a few successful examples are evident in the results of the Subsidy Program of the Agency for Innovation and Technology of the Ministry of Economy and Sustainable Development. A total of 20 winners were selected under the program. Several of them support the tourism industry: LiveCaller,⁹ Travel Guide,¹⁰ Phubber,¹¹ and Atrion.¹²

Particularly noteworthy in this respect is Travel Guide, one of the few start-ups successively operating in the travel segment in Georgia. The Travel Guide app aims to fill the information gap for visitors to important landmarks around the world. The main goal of the company is to develop the tourism sector through the use of innovative technologies. It simplifies travel planning for customers and offers a full package of services. The platform includes audio files on landmarks, museums, points of interest and excursion routes. The platform offers audio recordings of local artists, poets and vocal groups. The offered tours can be adjusted by the user to their preferences, i.e. route length, duration, costs, topics, groups of visitors. All content is easily accessible via a state-of-the-art interface and can be equipped with GPS to deliver notifications if a user is near a featured site. The application provides audio and video content. The content is available in four languages: Georgian, English, Russian and Chinese. Thanks to this, the creators are continually expanding their audience. Travel Guide is led by an international team of „people of ideas” and programmers. Their goal is to expand the offer throughout Georgia and major European cities.

Successful Russian start-ups for the Georgian tourism market

The start-up ecosystem in Georgia is just emerging, but more and more companies are trying to create products with the global market in mind. This means it is worth looking at tourism-industry start-ups established, for example in Russia,¹³ to find models which could be successfully harnessed in the Georgian tourism industry. Several such start-ups offer excellent examples of such activities:

Chatme.ai offers ready-made and custom intelligent agents for various business functions in each industry. Chatme.ai has developed rich models of customer service, IT Service Desk, HR Helpdesk and services in BFSI, Telco, Logistics, Travel, etc. As a solution for the tourism industry, the company offers the use of artificial intelligence tools for effective communication with customers and employees of the hotel industry. For example, an AI-based travel chatbot that recognizes Russian can easily order a transfer or rent a car, check in for a flight, report the weather, and even chat with a customer about topics they choose.¹⁴

3Drimtim has created an IT solution for the museum business and socio-cultural projects. The project consists in creating a platform for the application of VR, MR and AR technologies in the field of culture with feedback through a neural interface. This solution is especially helpful for people working in museums who do not have technical knowledge and must perform activities such as archiving data, preserving exhibits, and demonstrating museum collections. In practice, this entails using virtual and augmented reality to create a virtual museum: anyone with the Internet can access the 3D gallery.¹⁵

Start-ups also offer solutions for the promotion of tourism and tourist destinations. One example is the company Neutrotrend,¹⁶ which is the largest Russian neuromarketing company with a wide range of solutions and research tools for various sectors of the economy. Neurotrend’s business rests on a scientific basis, which opens up new possibilities for its customers to use neurotechnologies in marketing. The company has presented a solution based on the use of neuromarketing techniques to model product offers and communication in the tourism sector. The idea is to select the best tourist offer through synchronized registration of the client’s psychophysiological reactions.

The start-up Republic offers intelligent solutions, namely smart tags in the form of a bracelet for tourists. The bracelet contains personal medical documentation in the cloud with a non-electronic identifier attached. Thanks to this, important information, e.g. on medications, diseases, allergies, and the attending physician, is always available to doctors in emergency situations involving a tourist. An interesting solution is the availability of data in 24 languages. In addition, the solution offers notifications about the user’s location.

The Insurion¹⁷ project offers travellers automatic insurance — for example in the event of a flight delay or loss of a connecting flight. The insurer transfers customer data to Insurion. In the event of a flight delay, the insured person receives an SMS with a link, goes through the verification process, generates an electronic claim for insurance compensation and receives it for each hour of delay at the airport.

A fishing booking system is offered by the FishTravel¹⁸ start-up, which is designed to assist in booking fishing trips through the global booking platform. The service provides a range of services from booking a fishing trip, transport, accommodation, as well as guide.

Conclusions

The tourism industry recognizes that it is indispensable nowadays to invest in innovative solutions in the field of information technology. New technologies should be implemented in all areas of the tourism sector, including museums, hotels, restaurants, gastronomy, transport, insurance, and medical services. Such efforts represent a big step towards the digitization of the tourism industry as a whole, and the emerging start-ups whose IT solutions are well tailored to support the flourishing of the industry in this respect are of particular importance.

This paper first proposed a certain framework for understanding the possibilities for harnessing technological innovations in the travel industry (particularly apps and websites). Because start-ups often make use of external sources of financing (Megha, 2017), typically derived from regional funds, their business profile must be linked to the development of the particular region or country the grant derives from, thereby determining their scope and area of operation. Hence, there is a visible trend to highlight the culture of a specific region or country.

In the ongoing COVID-19 pandemic, however, tourism has become a loss-making industry in all of the world’s loss-making countries. This means that the industry is all the more in need of innovative ideas that respond to the clients focusing on local and often self-organized trips. New technologies have been quickly implemented in the sector, aimed at facilitating its growth. Whether growth proves possible will depend on the duration of the pandemic, the new restrictions imposed after the quarantine periods and the use of new technologies to facilitate the development of tourism.

All this is particularly true in the case of countries like Georgia, where tourism is a priority sector of the economy. State efforts to foster technological innovation are crucial for the success of a tourism-based development strategy — and this has become particularly important in the post-pandemic realities. This paper has considered the specific example of Georgia, examining its moderate successes to date in this respect (e.g. Travel Guide). Next, the paper has examined Russian tourist-sector startups. Several such Russian-created apps and websites were presented in closer detail (Chatme.ai, 3Drimtim, Neorotrend, Republic, Insurion, FishTravel) as potential models for operation that be successfully harnessed in the Georgian tourism industry. Given that Georgia derives such a significant share of its income from tourism, its success in taking its economy towards post-pandemic recovery will hinge, in part, on its successful fostering of technological innovation in the travel sector and its harnessing of similar models to those discussed herein.

Endnotes

¹ http://www2.unwto.org/
² https://www.fund.ge/site/news/63
³ http://www2.unwto.org/publication/unwto-annual-report-2012
⁴ http://travel.nationalgeographic.com/travel/best-trips-2014/
⁵ https://websummit.com/startups/featured-startups
⁶ http://www.magelloapp.pl/web-summit-ciekawe-startupy-turystyczne.html).
⁷ https:/gita.gov.ge/eng/static/3
⁸ https://emerging-europe.com/voices/georgias-start-ups-are-ready-for-investment-time-for-vcs-to-take-note/
⁹ A customer relations start-up that allows businesses to communicate for free with visitors to their website through internet calls, video calling, collaborative browsing, and correspondence.
¹⁰ An innovative tourism platform whose main goal is to develop the tourism sector by introducing innovative technologies.
¹¹ A ocial shopping platform — a mobile application that combines a social network and an online clothing store.
¹² A program for organizations operating in the field of international development to be able to successfully implement international aid projects with less time and costs.
¹³ https://www.atorus.ru/news/press-centre/new/44391.html
¹⁴ https://chatme.ai/
¹⁵ https://gadgets-room.ru/bs/klassifikaciya-informacionnyh-tehnologii-v-turizme-osnovnye-informacionnye/
¹⁶ https://neurotrend.ru/en/
¹⁷ https://eng.insurion.org/
¹⁸ https://fish.travel/

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