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Corresponding author:
1 PE «GALAEXPERT», Ukraine.

DOI: https://doi.org/10.30525/2661-5150/2020-3-10

INNOVATIVE AND TECHNOLOGICAL POTENTIAL  
AS A NECESSARY CONDITION FOR THE SUSTAINABLE 

DEVELOPMENT OF THE REGION

Daria Londarenko1

Abstract. The object of the study is regional economic systems that implement innovative technological 
processes. The subject of the study is the economic, organizational, and managerial relations that develop in 
the process of formation and use of innovative and technological potential at the regional level. The purpose 
of the article is to study the innovative potential of the regions, substantiate the theoretical provisions and 
develop methodological recommendations for the development of effective ways and forms of its mobilization. 
Methods. The theoretical and methodological basis of the study is the conceptual provisions and scientific 
developments of domestic and foreign scientists on the formation and use of elements of innovative and 
technological potential at various levels of management, published in monographs, periodicals and materials 
of scientific and practical conferences on the topic of research. The study is based on a general scientific 
methodology that provides for the use of a systematic approach. Methods of observation, comparison, 
categorical, structural-functional, situational, economic mathematical methods, and the method of hierarchy 
analysis are used to solve the tasks. Results. The article describes the innovative and technological potential of 
the region as an economic and managerial category. The typology of innovation as a complex and diversified 
concept containing many interacting components is studied. The following essential characteristics of the 
innovation and technological potential of the region are highlighted. Firstly, the innovative and technological 
potential of the region is determined by the opportunities available to it for change. The innovation potential 
creates conditions sufficient to ensure the progressive development of the regional socio-economic system 
through the creation of innovations and their purposeful transformation into innovations. Secondly, the 
innovative and technological potential of the region is characterized by the presence of specific ones, both 
involved and not involved in production, but prepared for use in it. Third, the innovative and technological 
potential of the region is determined by the willingness to use the existing innovative opportunities in order 
to translate innovations into innovations. The structure of the innovation and technological potential of the 
region is studied. It is determined that of all the components of the innovation potential of the region, the most 
important is the labor (human) potential. It is characterized, firstly, by the level of qualification, intelligence, and 
creativity of the population living and functioning in the territory. It is the population, on the one hand, that 
is able to produce innovations, and on the other hand, to introduce and distribute them, thereby determining 
the opportunities and directions of innovative development. It is highlighting innovative and technological 
potential of the region following components, including the capacity of: organization and management 
technology; research and development; marketing; technology and production; personnel; potential financial 
base; knowledge base; natural resource. Practical value. This classification of the components of innovation 
and technological potential is of great practical importance. It focuses the attention of researchers and users 
on the simple fact that the key element of the innovation potential of the region is the subjects of innovation 
activity operating on its territory. In particular, among all subjects of management, both employed and not 
employed population in the market sector of the economy should be singled out.

Key words: technopolis, regional economy, innovative infrastructure, economic regulation, clustering, high-tech 
company, innovation and technological modernization, scientific and technical development.

JEL Classification: R11, F63



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1. Introduction
The process of adaptation of socio-economic 

systems to a dynamically changing external 
environment in modern conditions is largely 
determined by the ability to timely find and use 
competitive success factors as productively as 
possible. This process is directly dependent on 
the ability to continuously develop and improve. 
Innovative and technological potential are becoming 
the main engine of progress and a condition for 
the sustainable functioning of regional socio-
economic systems. This conclusion is confirmed 
by the assessment of the development results of 
countries that have created an innovative economy, 
in other words, an economy based on knowledge 
and information technologies. The truth of these 
provisions is determined by the main properties of 
the category "innovative economy ": the innovative 
economy is a continuous process of improvement 
and the emergence of fundamentally new ideas, 
inventions, which, as they accumulate, develop into 
new breakthrough innovations; in an innovative 
economy, knowledge plays a crucial role, and the 
production of knowledge is a source of growth; the 
innovation economy is based on information, as 
well as information and communication systems, 
space and the use of the Internet in all spheres of 
human activity.

The concept of innovation, which underlies the 
innovation economy, covers all aspects of human 
life and means innovation that improves human 
life. Innovation is a renewal, transformation 
of activity, which leads to the replacement of 
some of its elements with other, more advanced 
ones. Initially, they are formed in consciousness 
as a problem associated with the presence of 
a contradiction between reality and a possible 
state. Ultimately, innovations are manifested 
because of differentiation of interests of market 
participants and involve the resolution of existing  
contradictions through targeted activities.

2. Typology of innovations
Innovation is a complex and diversified concept 

that contains many interacting components. 
Innovation defines changes in the properties and 
performance characteristics of the product as 
a whole and changes in the components of the 
product that increase its effectiveness, including 
the nature of the services that provide them. In this 
regard, the validity of the methodological approach 

adopted by us is confirmed by the generally 
accepted list of types of innovations:
– introduction of a new product or qualitative 
change in an existing product;
– a process innovation that is new to the industry;
– opening of a new market;
– development of new sources of supply of raw 
materials or other investments;
– changes in the business organization.

From the point of view of managing the 
innovation process, it is important to take into 
account the existing typology of innovations. 
Traditionally, there are innovations that allow 
you to create new products or those for creating 
new technologies. Depending on the level of 
novelty, they are divided into basic and secondary. 
In the modern sense, basic innovations imply 
a radical change in the technological base and 
methods of organizing production, the socio-
cultural sphere. Secondary innovations are aimed 
at the development and modification of basic 
innovations, their dissemination in various fields. 
Among the technological innovations, experts also 
distinguish imitations that repeat already developed 
innovations, and innovations that are implemented 
for the first time. In the spatial sphere, global, 
civilizational, national, regional, local and point 
innovations are distinguished. Complementing the 
typology, it is proposed to subdivide innovations 
into ascending ones related to scientific research, 
and descending ones related to the process of 
commercialization of scientific achievements.

This list could be continued, but within the 
framework of the task, the above definitions 
are sufficient to draw the following important 
conclusion: the typology of innovation 
potential, which characterizes the conditions and 
opportunities for innovation activity, is adequate to 
the typology of innovation.

The multidimensional nature of the category 
"innovation" is the basis for resolving constantly 
emerging contradictions both within socio-
economic systems and in their relationship with 
the environment, in other words, the basis for 
the sustainable development of socio-economic 
systems.

In our opinion, to ensure a high level of 
competitiveness of socio-economic systems, it 
is necessary, on the one hand, to have a powerful 
innovation potential, on the other hand, to use it 
productively. Both sources should be considered 
as the root causes of innovation activity at the level 



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of the socio-economic system for the following 
reasons.

Firstly, the development of innovation activity in 
the region occurs as a reaction not to everyone, but 
only to the "technological push" that is adequate 
to the accumulated innovation potential. In other 
words, if the region does not have the necessary 
conditions and opportunities to create innovations 
in a particular area where there is a "technological 
push", then it is impossible to expect adequate 
innovation activity.

Secondly, information about the needs of society 
is a kind of push to find technical opportunities 
to meet them. This means that public choice, 
public preferences expressed through the ratio 
of supply and demand form the priorities of 
innovation in socio-economic systems. However, 
the statement about the linear dependence of the 
process of innovation and demand means a serious 
simplification of this problem.

Simultaneously with the formation of 
innovative priorities, there is an improvement and  
development of mechanisms that allow flexibly  
to combine the directions of scientific research  
ith the needs of society. The potential of the  
whole set of these factors is contained in the 
innovative potential of the subjects of innovative 
activity, whether it is an individual, an enterprise, 
a region, or a country as a whole.

3. Characteristics of the innovative  
and technological potential of the region

Within the framework of our research, the 
problem of the development and use of the 
innovative potential of the region is of exceptional 
interest. The innovative potential of the region is 
an independent system category, along with the 
production, economic, human, organizational and 
information potential, it is part of the potential of 
the region. The interaction of these independent 
system categories forms a synergistic effect of the 
region's activities and sustainable development.

The innovative and technological potential of the 
region as an economic and managerial category is 
currently poorly studied, in our opinion; it is the 
main one in the system of the total potential of the 
region. In this regard, it should be noted that in the 
above-mentioned review of the main terms and 
definitions, the category of "innovation potential" is 
not considered at all. Meanwhile, the development 
of theoretical provisions, assessment methods 
and recommendations for the management and 

use of the innovative potential of the region will 
help the authorities to navigate in a changing 
and contradictory environment, developing a set 
of adequate measures to ensure the sustainable 
development of the region.

Thus, the study of the above definitions of 
innovation potential, as well as the innovation 
potential of the region, allows us to draw the 
following conclusion. In their definitions, the 
authors focus on such characteristics of potential as 
"capabilities", "resources", "readiness" and "ability ".

Note that "opportunity " is a general concept that 
includes both private concepts such as" resources" 
and "ability ".

Therefore, in our opinion, the innovative potential 
of the region is the opportunities available to it and 
the readiness to produce and / or use innovations 
in this territory or beyond its borders that ensure 
its sustainable social, economic and environmental 
development.

The innovative opportunity includes available 
prerequisites for the implementation of the 
changes. Various reasons can serve as an incentive 
that encourages a business entity to change.

There are two types of changes: change because 
of innovation and change as a source of innovative 
opportunities. It should be noted here that 
changes as a source of innovative opportunities 
are determined by the totality of all changes in the 
internal and external environment of the region.

Thus, the following essential characteristics 
of the innovation potential of the region can be 
distinguished:

Firstly, the innovation potential of the region 
is determined by the opportunities for change 
at its disposal. The innovation potential creates 
conditions sufficient to ensure the progressive 
development of the regional socio-economic 
system through the creation of innovations and 
their purposeful transformation into innovations.

Secondly, the innovative potential of the region 
is characterized by the presence of specific ones 
both involved and not involved in production but 
prepared for use in it.

Thirdly, the innovative potential of the region is 
determined by the willingness to use the existing 
innovative opportunities in order to translate them 
into innovations.

The innovative potential of the region can be 
characterized, on the one hand, by the achieved level 
of its socio-economic development, on the other 
hand, by the possibilities of ensuring its further 



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growth. Three groups of dependencies determine 
the magnitude and dynamics of changes in the 
innovation potential of the region: quantitative 
and qualitative characteristics of the components 
of the potential; relationships between subsystems 
(system quality); interaction of external factors.

Innovation potential can be large from 
a quantitative point of view, that is, include 
significant material, technical, information, labor 
and other resources, but not used, and therefore do 
not have a significant positive impact on economic 
development. The potential may be high in terms 
of quality, but it may not correspond structurally to 
the needs of regional development. It is important 
to keep in mind that potential is only an opportunity 
that may not be used.

4. The composition and structure  
of the innovation and technological potential 
of the region

The composition of the innovative potential of 
the region in the economic literature is presented 
in different ways. The most common description 
of the innovation potential is the following, which 
includes:
– natural resources;
– state of the environment;
– population, its gender and age composition and 
general education level, labor resources, level and 
dynamics of employment;
– production potential (fixed capital, the level of its 
depreciation, the technological and reproductive 
structure of fixed capital, the level of specialization 
and technological equipment, the competitiveness 
of products);
– scientific and labor potential (the assessment of 
the resource, technological and human resource 
base, R & D results of scientific and innovation 
activities, the scope of progressive, traditional and 
high-technology-oriented activities);
– regional and geopolitical aspects of innovation 
potential (differentiation of levels of economic 
development, natural and climatic differences, the 
level of anthropogenic load by region);
– regional infrastructure (transport, communica-
tions, services, etc.).

Natural resource potential of the region, the 
achieved level of economic and technological 
development of society and the study areas used 
in economic and other human activities, on the 
one hand, create conditions for implementation of 
innovative activities and, on the other hand, are the 

permanent object of innovation. The availability of 
natural resources, firstly, affects the formation of 
the territorial structure of the economy; secondly, 
it affects the industry specialization of the region; 
thirdly, it affects the pace of district (regional) 
socio-economic development; fourthly, it helps to 
increase the role of the region in the commodity 
market.

Of all the components of the innovation potential 
of the region, the most important is the labor 
(human) potential. It is characterized, first of all, by 
the level of qualification, intelligence, and creativity 
of the population living and functioning in the 
territory. It is the population that is able, on the 
one hand, to produce innovations, and on the other 
hand, to introduce and distribute them, thereby 
determining the opportunities and directions of 
innovative development.

It is distinguished by the allocation of the 
following components in the innovation potential 
of the region, including the potential of:
– organizations and management technologies;
– research and development;
– marketing;
– technology and production;
– personnel;
– potential of the financial base;
– information base;
– natural resource.

The significance of this approach lies in the 
fact that it creates a basis for the practical use of 
each of the elements of innovation potential by 
management stakeholders. Thus, the use of the 
potential of marketing acts as an objective need 
to focus the scientific and technical, production 
and sales activities of the company on taking into 
account market demand, needs and requirements 
of consumers.

The potential of the organization and management 
technology represents the ability and readiness of 
the region to use innovative opportunities in the 
field of values, standards of behavior and traditions, 
worldview features of the region, centralization 
and decentralization, methods and procedures 
for monitoring the implementation of decisions, 
management information systems, organization 
of the communication system, management style, 
qualifications and abilities of senior management, 
strategic planning systems in the region. This 
element of innovation potential is currently 
being emphasized, since it is the introduction of 
innovations that is the most vulnerable stage in 



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the organization of the innovation process in our 
country.

The potential of research and development in 
the region characterizes the ability and willingness 
of the region to use innovative opportunities 
composition of personnel engaged in research and 
development, their qualifications and experience, 
motivation, condition of laboratory facilities and 
test equipment, cooperation with other regions, 
licensing agreements, and organization of the 
design process. 

Marketing potential of the region – the ability 
and readiness of the region to use innovative 
opportunities regarding the applied concepts and 
strategies, sales markets, consumers, products, 
pricing policy, distribution channels, sales 
organization, sales agents, inventory of goods, trade 
costs, after-sales service, advertising activities in the 
region.

The potential of technology and production 
of the region is the ability and readiness of the 
region to use for innovative purposes production 
units, technologies, fixed assets, organization of 
maintenance, production, scheduling system, 
organization of quality control.

Personnel potential of the region is the ability 
and willingness of the region to the use of staff 
competencies and skills, HR policy, training, and 
professional development, rating system, payment 
and work motivation. The potential of personnel 
in the regions of Ukraine in the current conditions 
remains very high, and often exceeds the same 
indicator of developed countries. This is especially 
true for the engineering staff of employees who 
have a high degree of sensitivity to innovation 
and qualifications, as well as a wide range of tasks 
that can potentially be effectively solved by these 
specialists.

The potential of the financial base of the region 
is the ability and readiness of the region to use for 
innovative purposes the sources and size of financial 
resources, profit, cash flow, financial planning, 
reporting status. The financial resources required in 
the process of creation and, in particular, the diffusion 
of innovations, certainly deserve special attention 
in this classification. In this regard, most regions of 
Ukraine are not only deprived of the possibility of 
using loans for innovative purposes, but often do not 
have their own funds even to carry out basic work to 
maintain the achieved level of production.

The potential of the region's information base 
is the ability and readiness of the region to use 

a communication system for innovative purposes, 
timely, reliable, sufficient, targeted information 
systems for collecting, processing and transmitting 
information, the possibility of encoding, and the 
relevance of information. An effective innovation 
process is unthinkable without access to 
information about the state of the venture capital 
markets, technologies, inventions, licenses, "know-
how", that is, without appropriate information 
resources.

Natural resource potential is the ability and 
readiness of the region to use resource and raw 
material for innovative purposes, the state of 
forestry, the number of pastures, roads, disturbed 
land, resource reserves, costs, and protection of 
natural resources.

The static component of innovative capabilities 
is a currently existing time innovative ability 
and the willingness of the region, dynamic 
component means capabilities and readiness to 
innovation. A feature of the dynamic component 
is its relationship with the strategy and tactics of 
developing static elements of potential, including 
material, financial and other types of resources.

In our opinion, this composition can represent the 
innovation potential of any subject of innovation 
activity, including the regional socio-economic 
system.

Along with such generally accepted structural 
elements of innovation potential as material, 
personnel, financial, investment and management 
system potential, we distinguish such elements as 
institutional, image, and external environment.

It should be noted that such a resource as the 
external environment does not belong to the 
region, and the full subjects of management of 
this resource are forces located outside the region. 
However, we believe that these circumstances 
cannot be the reason for ignoring this resource, 
excluding it from the process of forming and using 
the innovative potential of the socio-economic 
system. 

Our view of this problem touches on the issues 
of strategic management, which is particularly 
emphasized by the inclusion of the external 
environment in the dynamic component.

In the economic literature and in practice, the 
external environment is considered as a factor 
affecting the market potential of the region, and its 
impact is recommended to be taken into account 
when managing market potential. In our opinion, 
the fundamental differences dictate the need to 



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consider the external environment of the region as 
an element of its innovation potential.

The external environment as a factor affecting 
the innovation potential of the region may or 
may not be taken into account, but the potential, 
considered as an integral system, does not change 
from this: only its output parameters change for 
better or worse. On the other hand, if the external 
environment is considered as an equal component 
of the innovation potential of the region, then 
ignoring it deprives the system of integrity. 
Therefore, this provision qualitatively changes the 
structure of the innovation potential of the region, 
creating new methodological opportunities for 
determining the ways of its development and use.

The reason for this conclusion is also the fact 
that any of the regions is included in the system 
of interregional, and, at the present stage of 
development, international relations. Therefore, 
at present, each region uses the opportunities 
provided by the external environment to a greater 
or lesser extent, and counts on their use, forms 
appropriate programs for this purpose. Thus, the 
above proposal reflects the need to legitimize the 
status quo, and the consideration of the external 
environment as an element of the structure of the 
innovation potential of the region allows us to 
purposefully use the relationships existing between 
the elements of the innovation potential of the 
region, thereby increasing its effectiveness.

Institutional component of the innovation 
potential is unique because experience shows that 
in a market economy, effective use of achievements 
of science and technology, the use of intellectual 
capital is possible only under condition of presence 
in a particular state of a balanced, clear and effective 
legal basis and creating the necessary institutional 
organizations, providing innovation related 
services.

Another component that we have introduced into 
the innovative potential of the region is the image 
potential. The role of this potential component is 
difficult to overestimate, since a positive image of 
a particular region among potential users is the 

key to success in promoting its product. In our 
example, this means that the formation in the 
minds of business entities of a favorable image 
of a particular region as a territory where all the 
necessary conditions for fruitful creativity are 
created, contributes to the rapid increase in the 
region of the main component of the innovative 
potential – the potential of personnel.

Each of the subjects of innovation activity 
operating in the region has at its disposal the 
following elements of innovation potential: 
resources; management system; personnel 
activities; industry structure; environmental 
factors.

5. Conclusions
The determinant of the sustainable development 

of the regional socio-economic system in modern 
conditions is not so much the creation and 
increase of innovative and technological potential 
as such, but, firstly, the use of existing potential, 
and secondly, its increase in those areas that can 
provide real socio-economic returns. However, in 
order to ensure the effective use of the innovative 
potential of the region, it is necessary to determine 
its content.

The interaction of independent system elements 
of innovation and technological potential forms 
a synergistic effect of the region's activities and 
sustainable development. At the same time, the 
proposed classification of the components of 
the innovation potential allows us to focus on its 
priority elements in specific periods.

This classification of the components of 
innovation and technological potential is of great 
practical importance. It focuses the attention of 
researchers and users on the simple fact that the key 
element of the innovation potential of the region 
is the subjects of innovation activity operating on 
its territory. In particular, among all subjects of 
management, both employed and not employed 
population in the market sector of the economy 
should be singled out.

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