Digitalization as an element of the economic mechanism for supporting small and medium-sized businesses in the context of integration into the EU internal market

Abstract

The article explores digitalization as a key institutional component of the economic mechanism for supporting small and medium-sized enterprises (SMEs) amid Ukraine’s integration into the EU internal market. The authors argue that digital transformation is not only a technological shift but also a structural prerequisite for building a new model of economic governance. Digital tools are becoming essential elements of regulatory, financial, and organizational support systems. The study identifies how digitalization affects the main elements of the economic mechanism, including regulatory frameworks, access to finance, information services, consulting, marketing, and monitoring systems. A comparative analysis is presented to show the transition from traditional to digitalized approaches. The paper highlights the current digital readiness of Ukrainian SMEs, noting a near-universal access to computers and internet, yet low adoption of advanced tools such as ERP, CRM, cloud computing, and artificial intelligence. Barriers to digitalization include limited access to funding, low digital literacy, poor IT infrastructure, and a lack of trust in digital solutions. The authors emphasize the fragmented nature of current state support for digital transformation. Particular attention is paid to EU initiatives such as Digital Europe, COSME, Horizon Europe, and EU4Digital, which offer significant support for SME digital growth. The paper underlines the importance of aligning Ukraine’s digital business environment with European standards. It suggests policy recommendations to enhance SME digitalization through financial incentives, digital skills training, infrastructure development, and integration into European digital platforms. The study stresses that digitalization serves an institutional function, setting new norms and practices in entrepreneurship. Successful digital transformation is deemed vital for improving SME competitiveness and facilitating access to EU markets. Overall, the article concludes that digitalization is not an option but a necessity for SMEs aiming to thrive in the European economic space.