APPLICATION OF INNOVATIVE BUSINESS MODELS IN UKRAINE

Abstract

The article analyzes the main theoretical aspects of the application of innovative business models in Ukraine. The main characteristics of a business model that are relevant for many large, medium and small companies today are identified. The authors reflect the main promising areas of innovative business models in the activities of leading enterprises. In the course of the research the general provisions on the functionality of business models and the impact of non- operating business models in companies are analyzed. Examples of various current, basic classic business models used in many organizations around the world are given. One of Freemium’s innovative business models, how and where it is used in business, is also discussed in more detail. It is determined that this business model has many advantages, one of which allows you to attract new customers without significant costs. The study found that in today’s digital age, when marginal costs for many products are falling, businesses will increasingly turn to the freemium model. “Freemium” is a popular business model adopted by the vendors of digital products, and it has aroused extensive attention in the academia. The existing research studies commonly explore the business model from the perspective of network effect, but lack the attention to the small-world features of network effect. In order to explore the effect of the small-world network, the current work presents a two-period optimization model of monopolist. The optimization model is incorporating with the Freemium model and the small-world feature of consumer base. The optimization model is solved analytically, and the comparative static results show that if the integrating network effect caused by the strong and weak relationship group is sufficiently high (or the small-world feature of the user group is prominent), the user group network exerts a positive effect; if the integrating network effect is not sufficiently high (or the small-world feature of the user group is not prominent), the user group network exerts a negative effect; especially, if the integrating network effect is low or moderate, the premium product is supposed to be free for the consumers. The conclusions enrich the understanding on the operation of digital products firms in the academia and industry.