Digital Transformation of Business Processes of Enterprises on the Way

to Becoming Industry 5.0 in the Gig Economy

KATERYNA KRAUS

Department of Management,

Borys Grinchenko Kyiv University,

Kyiv, 18/2 Bulvarno-Kudriavska St.,

UKRAINE

NATALIIA KRAUS

Department of Finance and Economics,

Borys Grinchenko Kyiv University,

Kyiv, 18/2 Bulvarno-Kudriavska St.,

UKRAINE

OLEKSANDR MANZHURA

Poltava University of Economics and Trade,

Poltava, 3 Koval St.,

UKRAINE

INNA ISHCHENKO

Department of Pedagogical Mastery and Management named after I.A. Zyazyuna,

Poltava V.G. Korolenko National Pedagogical University,

Poltava, 2 Ostrogradski St.,

UKRAINE

YULIIA RADZIKHOVSKA

Department of Enterprise Economics, Accounting and Auditing,

Bohdan Khmelnytskyi National University at Cherkasy,

Cherkasy, 81 Shevchenko Blvd.,

UKRAINE

Abstract: - The purpose of scientific research is discovering the stages, protocols, ways and instruments of

becoming the Industry 5.0 through the prism of innovation, technology in management of industry and

business, and introducing the features that define the new quality of smart industry, smart business, and smart

services among which modularity, interoperability, virtual reality. The rapid emergence of the Industry 5.0

declares new quality of economic relations through innovation, discoveries and technologies in management of

industry and business. Key features of the Industry 5.0 include: full automation of the production process; high

communication between staff and machine through Internet technologies; cyber-physical systems that integrate

into one network, interact in real-time, self-tune, self-study. The structural elements of the ecosystem of

Industry 5.0 are presented, and it is proved that they determine an effective digital economic relation that

shapes the gig-economy, as a result of step-by-step content of the stages of becoming a smart business, assets,

and digital platforms. Tools and mechanisms that will accelerate the emergence of the Industry 5.0 have been

identified. The content of the concept “ecosystem of the Industry 5.0” is disclosed. A number of practical

measures are proposed, aimed at deepening the development of high-tech industries and expanding the new

quality of life of people. The main characteristics that determine the emergence of smart industry and smart

services are indicated. The visual section of the structural elements of the Industry 5.0 concept presented in this

paper is an attempt to understand the essence of the Industry 5.0 for the reason that it differs significantly from

the theory in its incompleteness and lack of verification. The value of the presented research is that the

understanding of the Industry 5.0 content is through the prism of its structural elements in the conditions of

virtual reality and the functioning of Industry exclusively within the 7th technological system. In order to use

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DOI: 10.37394/23207.2023.20.93

Kateryna Kraus, Nataliia Kraus,

Oleksandr Manzhura, Inna Ishchenko,

Yuliia Radzikhovska

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all the power of available information technology, authors propose to abandon old processes, rethink the

content of work, radically restructure processes and give businesses a new format of cooperation. This requires

ensuring the variability, dynamism and adaptability of economic development processes based on digital

context. Development of production processes in terms of their digitalization and innovation of the economy is

proposed to be divided into stages of standardization, adaptability and predictability, which will allow for

consistent digital transformation, which opens fundamentally new opportunities for added value in almost all

sectors of the economy.

Key-Words: - Industry 5.0, digital economy, innovation, gig-economy, digital business, innovative

technologies.

Received: October 29, 2022. Revised: April 11, 2023. Accepted: May 5, 2023. Published: May 15, 2023.

1 Introduction

The issue of accelerated formation and development

of the Industry 5.0 is an important world-class

problem, the relevance of which is growing in the

context of new digital solutions, the growth of

virtual mobility and global socialization. In the

context of rapid institutional change and

technological structure, developments of only digital

experience with clients or the digitization of

business operating models is no longer sufficient. It

is necessary to be prepared to disrupt the established

business model, change the market, and rethink

product lines and service models. The Industry 5.0

that provides not only the introduction of

innovations, but also the change in business

processes, the creation of a modern IT

infrastructure, the development of corporate culture

aimed at encouraging employee participation in

generating new ideas for the development of

innovative business and increasing the level of

customer service efficiency.

We share the opinion of Jack Ma Yun, a co-

founder of Alibaba Group, claiming that the key to

future business success lies in:

- Making society, customers and employees

happy;

- Investing in people working for the company

because they believe in its success;

- Investing in small businesses and the private

sector, develop and protect entrepreneurs;

- Being not afraid of artificial intelligence,

because robots will never replace humans as they do

not have a heart and self-confidence. It is creativity,

innovation and critical thinking that makes human

beings different from machines;

- A teacher should believe that his student will

succeed and devote more time to him unleashing his

potential. It is worth appreciating good teachers and

becoming even better for our future learners;

- Learning from real business, from mistakes

done in it, which forms high-quality knowledge that

needs to be applied;

- Thinking about how communications and

advertising of the future will help their clients;

- Working in various industries and constantly

learning.

The digital space, constant and accelerated

changes and the pace of development of innovations

lead to constant systemic and complex

modernization. Instruments, mechanisms and

theories that worked qualitatively in such a

relatively stable world cannot be combined with

new development institutions, and their behavior is

unpredictable. This creates a need to study the

traditional concept of competition that has

dominated business research for the past decade.

But times have changed, and old theories do not

always work in practice, as entrepreneurship has

become digital, commerce has become electronic.

2 Problem Formulation

2.1 Literature Review

M. Porter’s world-famous model of the five forces

of competition that used to dominate in the world of

strategic thinking for a long time, but the digital

transformation of business has changed the

situation. According to this model, the strategic

position of a particular business is influenced by the

following threats: the threat of appearance on the

market of substitute products; the threat of the

emergence of new market players; the threat of

market power of consumers; the threat of market

power of suppliers; the level of competition in the

industry.

The goal of the strategy itself is to put under

control these five threats and thus keep the business

secure. However, this model does not work in the

digital space. Let’s take as example, platforms as

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one of the common business models for the digital

economy. The main players in digital platforms are

consumers, manufacturers and business partners. On

these platforms, high-quality and effective

interaction has the greatest value for consumers and

manufacturers. The digital platform itself is

designed to maximize this value and reduce risks. In

practice, expectations come true in terms of the

threat of the emergence of new players and market

power of consumers in M. Porter’s model, which

can fail and cause devastating damage to the digital

platform.

Digital platforms, as they develop, form an

innovative ecosystem around them, which promotes

the platform and is responsible for its revenue side.

But in practice, it is not economically profitable

when development partners outgrow the

development company and “bypass” it, so it is

worth strengthening the quality of management. If

such a threat exists, then it is worth immediately

taking countermeasures, such as the buyback of a

block of shares in support of the developers.

Therefore, this situation testifies to how the first two

conditions are fulfilled in M. Porter’s model. In

terms of the level of competition as the fifth

component in this model, then through the prism of

the digital economy, it is dynamic and three-

dimensional. “This is due to the fact that the

following enter into competition: platforms among

themselves, trying to make the transition and

interaction more expensive; platform with partners,

in order to prevent them from growing the volume

of the platform; partners with each other for market

share, [10]”.

In the digital economy, one more feature can be

traced, namely, that competition allows you to

significantly increase profits and increase the share

of digital business. In the context of the

digitalization of the economy and the existing

hypercompetition, the proliferation of technological

progress, the establishment of the institution of

ownership of infrastructure and the uniqueness of

resources no longer provide adequate permanent

competitive advantages. However, for a platform

economy operating on the basis of digitalization,

there are such resources available and this is

valuable interaction and information. Therefore,

such unpredictability in the digital space suggests

that as a result of using M. Porter’s model for digital

business, the outcome can turn both positive and

negative.

The number of scientific researches and

publications devoted to this problem in the world is

growing explosively. Innovative countries are

currently developing key signs of the emergence of

the Industry 5.0. They are manifested in the

transformation of existing business processes under

the influence of new technologies and the formation

of smart assets, e-services for digital business and e-

government, the formation of Education 5.0 and

Society 5.0, launching a quality educational and

research process in University 5.0. It is digital

entrepreneurship in terms of virtual mobility

contributes to the rapid development of the concept

of the Industry 5.0 in terms of creating qualitatively

new business models, logistics, e-commerce, smart

manufacturing in gigonomics. This study is

performed in the interests of the national security of

Ukraine, as evidenced by the provisions of

paragraph 51 of the National Security Strategy of

Ukraine (Decree of the President of Ukraine from

14.09.2020 № 392) and paragraph 18 of the

Economic Security Strategy of Ukraine

(corresponding decree from 11.08.2021 №347):

“guaranteeing national economic independence and

the ability to protect national economic interests, in

particular in high-tech sphere”. The research

presented in the article is interdisciplinary, the

results of its implementation have every chance to

become relevant for related fields of science.

The following names of such scientists as

R. Azum [3], W. Isaacson, [17], D. Lichtblau, [29],

T. Stock and G. Seliger [45], E. Schaeffer, [41] are

associated with the study of the general aspects of

transformational changes and the comprehensive

modernization of the economy in the direction of its

innovative and digital development. In the course of

writing the article, it was the book by Eric

Schaeffer, a researcher, “Industry X.0: Realizing

Digital Value in Industrial Sectors”, [41], which

really attracted our scientific attention having

become a bestseller in the scientific world. In

addition, it clearly demonstrates the powerful

impact of the Industrial Internet of Things on

manufacturing and explains in detail how to realize

the possibilities of technology to increase

competitiveness, profits and further the development

of business digitization.

Well-known researchers and economists,

including H. Androshchuk, K. Alieksieieva [37],

Yu. Bazhal and V. Vyshnevskyi [48], V. Vitlinskyi

[47], V. Heiets and G. Davtyan [8; 9; 11],

Ya. Zhalilo, N. Yehorov, S. Koliadenko,

O. Kryvoruchko [24], P. Leonenko [27],

V. Liashenko [28], O. Manzhura [32], V. Nekrasov

[36], I. Novikova and V. Osetskyi [37], B. Paton

[39], M. Slabko [47], S. Shchehliuk [42], O.

Yurchak [49] were involved in the formation of

digital platforms in the world, the disclosure of the

institutional content of their work and the formation

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of the Industry 4.0 on the scale of the global system,

the innovation of the Ukrainian economy, the

possibility of its breakthrough development and the

study of the prospects, directions and mechanisms

for the development of the smart industry in the era

of digitalization.

S. Bespalov, H. Holotsukov, V. Ivlichev,

S. Ivanov, M. Pustovoit, I. Malchevskyi,

D. Nikolenko, V. Kirsanov, O. Khimich and

I. Shchetynin, [19] were engaged in the

development and implementation of distributed

information technologies related to the processing of

documents accompanying the opening, execution,

control, accounting, closing of research and

development works. But a significant number of

problems, such as the formation of digital platforms

and in general the formation of a quality the

Industry 5.0 in terms of innovation and

digitalization of economic relations in the gig-

economy, remain insufficiently disclosed.

Kenneth S. Laudon and Jane P. Lodon are

scientists and practitioners in the field of

information systems, who managed to present

systems through a sociotechnical view in the

organizational changes of their textbook for

teaching information systems management. This

view states that “optimal organizational efficiency is

achieved by joint optimization of both social and

technical systems used in production, [25]”. Thus,

they argue that system performance is optimized

when both technology and organization mutually

adapt to each other until a satisfactory match is

obtained.

Some aspects of the implementation and

operation of smart innovations, the main

components of digital infrastructure (applications,

data centers, information and communication

networks, information collection systems),

mastering the technology of the Industry 5.0 and

analysis of their potential application are revealed in

the works of scientists such as P. Maddikunta,

Q. Pham, B. Prabadevi, N. Deepa, K. Dev,

T. Gadekallu, M. Liyanage, [30], M. Javaid and

A. Haleem (reveal new digital technologies and

critical components of the Industry 5.0, point out

changes brought by the Industry 5.0 for the

economy, determine the factors for successful

implementation in the field of production), [18].

Completed scientific and practical work, which

examines the practical measures, tools and methods

of accelerating the emergence of Industry 5.0 in

terms of defining new role of workers, safe and

inclusive work environment, attracting and retaining

talents that shape Society 5.0 is the work of

M. Breque, L. De Nul, A. Petridis, [6].

The use of artificial intelligence and innovation

in the age of Internet of Things and the Industry 5.0,

the work of digital twins, the efficient use of

renewable energy sources is revealed in the works

of F. Aslam, W. Aimin, M. Li and K. Rehman, [2],

J. Müller, [35].

The problems of transformation of the Industry

4.0 into the Industry 5.0, which go from digital

production to Society 5.0, as well as the security of

critical infrastructure are revealed in the scientific

work of P. Skobelev and S. Borovik, [44]. The role

of soft skills in improving the efficiency of

companies during the modern digital revolution has

been thoroughly revealed by F. Caputo, V. Cillo,

E. Candelo and Y. Liu, [7].

Given the existing developments, authors

consider it necessary to continue work on some

vectors of the research aimed at solving the urgent

problem of developing new approaches to the

formation of the Industry 5.0 on the basis of

digitalization of economic relations in virtual

mobility and in the context of global socialization.

Results of COVID-19 and economic convergence,

congruence and collaboration with the countries of

the European Union, in order to ensure national

economic security.

2.2 Tasks of the Article

The purpose of the publication is to present the

opportunities and threats of the Industry 5.0 concept

in the national economy; it has every chance of

becoming a decisive step in the implementation of

Ukraine’s digital development strategy by

introducing smart assets, smart services and

launching smart business and smart government

through the latest technologies that determine a new

quality of life for people. Among the tasks that are

set in the article are the following: to reasonably

reveal the content of possible ways and tools that

will accelerate the formation of the Industry 5.0; to

present the author’s vision of a visual cross-section

of the structural elements of the Industry 5.0

concept; propose a protocol for the formation of the

Industry 5.0 through the prism of innovations,

technologies in industry and business management;

explore the taxonomy and categorization of

terminology with the help of which it is possible to

reveal the formation of the Industry 5.0 and its

further development; indicate the main parameters

that determine the formation of a smart industry,

smart business, smart services, including

modularity, time reality, decentralization,

interoperability, virtual reality.

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2.3 Methodology

Methodological support of the study will be based

on a systematic approach, which will justify the

necessary transformations of digital economic

relations in the transition to the Industry 5.0. On the

basis of dialectical and systematic methods, the

vectors, priorities and means of formation of the

Industry 5.0 will be substantiated, which determines

new quality and format of digital business in the

conditions of virtual mobility.

It is envisaged to use Sociotechnical systems

(STS) as a scientific approach to the design of the

labor process in terms of human interaction and

technical and technological factors of labor in the

formation of the Industry 5.0. In a general sense, the

term refers to the study of the interaction of

infrastructural elements of society, substantive

realizations of society, on the one hand, and human

behavior – on the other hand. It is the scientific

approach of STS that makes it possible to reveal

society, social institutions and their substructures as

complex socio-technical systems. The term

“sociotechnical systems” was coined by Eric Trist,

Ken Bamfort, and Fred Emery during World War II,

based on their work with English coal miners at the

Tavistock Institute in London, [5].

Sociotechnical systems relate to the theory of

social aspects of people and society and technical

aspects of organizational structure and processes. In

this sense, when we talk about technical aspects, we

do not necessarily mean material technology. The

focus is on procedures and related knowledge, i.e.

the ancient Greek term “techne”. “Technical” is a

term used to describe the structure and broader

meaning of technical subtleties. Sociotechnical

refers to the relationship of social and technical

aspects of the organization or society as a whole, [4;

40].

The use of synergetic and evolutionary methods

is expected in the development and disclosure of

tools and mechanisms that will accelerate the

formation of the Industry 5.0; the content of the

concepts “the Industry 5.0”, “gig-economy”, “7th

technological way”; a series of practical measures

aimed at the in-depth development of high-tech

industries and the expansion of a new quality of life;

main characteristics that determine the protocol of

formation of the Industry 5.0 through the prism of

innovation, technology in industry and business

management.

Methodological approaches to assessing

domestic competitiveness of digital products /

services in the global market will be developed by

presenting the content of the work of Ukrainian

companies whose activities have the characteristics

of the Industry 4.0. The development of new tools

should be an important element in improving the

strategic planning of virtual economy on the basis of

the Industry 4.0 and the Industry 5.0 and will

improve approaches to the new quality of digital

policy of the Government of Ukraine in

digitalization of business in the long run.

During the writing of the article general and

special research methods were used, namely

methods of deduction and induction, methods of

synthesis and analysis, unity of historical and logical

in clarifying the nature and role of the Industry 5.0

in the development of a phased protocol of its

formation through the prism of innovation,

technology in management of industry and business.

Based on dialectical, systemic and matrix methods,

the characteristic features and differences between

the Industry 4.0 and the Industry 5.0 in virtual

reality, which are now becoming a field of practical

implementation of economic entities of different

sectors of the economy in the course of

digitalization.

The method of comparison was used to find out

the essence of the latest technologies that determine

the new quality of people’s lives. The method of

grouping and generalization is applied at studying

the successful experience of functioning and

development of Ukrainian companies whose activity

has all signs of the Industry 4.0. The process and

system approach were used in formulating practical

recommendations for developing ways and tools to

accelerate the emergence of the Industry 5.0, as well

as implementing a number of steps in the context of

the Industry 5.0, which is a high-tech industry and

the driving force and engine of economic growth of

innovatively developed countries.

3 Problem Solution

3.1 The Latest Technologies of Modern

Society

In the rating of innovative economies 2020 by the

Bloomberg agency, Ukraine lost 3 positions and

took 56th place out of 60 possible. For the ranking,

Bloomberg analyzes 60 economies of countries,

among which are mainly representatives of Europe,

North America and Asia. The rating was topped by

Germany (88.21 points), which moved the South

Korea for the first time in during 6 years. South

Korea and Singapore are in second and third places

respectively. Switzerland and Sweden are closing in

the Top-5. The Top-10 includes Israel, Finland,

Denmark, the USA and France. Japan lost 3

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positions and took 12th place. China is in 15th place

(+1 position). The Russian Federation in the ranking

of 2020 is in 26th place (adding one position),

Poland – 25 (-3 positions), [46].

The rating of innovative economies is

calculated on the basis of information on the

intensity of research and development, the

production of innovative services and goods, labor

productivity, patent activity and other indicators.

The index also takes into account the quality of

education and the concentration of high-tech

companies in the country, [34]. The result of

Ukraine in 2019 worsened due to the low level of

education efficiency and the number of scientists,

and in addition, there is a low level of use of high

technologies and the number of registered patents.

The Deloitte’s study, “Forecasting the

Development of High-Tech, Media and

Telecommunications” has identified five key

technologies that could dramatically change

people’s lives already in 2020. A brief summary of

them has been presented in Table 1.

Table 1. The latest Technologies Defining a New Quality of Life for People

The latest

technology/

product/ service

Characteristic content features, new opportunities that open up as a result of the application of technology,

obtaining service, use of a product

Autonomous

artificial

intelligence (AI) in

a smartphone

“Neural processor” (edge AI) is a chip designed to process information using AI directly on the device,

without a “cloud” connection. Nowadays, in every smartphone, i-pad, TV, smartwatch, fitness tracker,

wireless headphones, AI will work without an Internet connection. That is, we are talking about

autonomous AI. Face recognition on the smartphone screen while taking a photo, biometric access to the

gadget, image filters, voice recognition, language translation, voice assistance, virtual reality, applying 3D

effects, hiding wrinkles, incredible photos in low light conditions – all this works on the basis of machine

learning technology. These technologies operate on the power of a conventional processor or in the “cloud”

using an Internet connection. However, when they run an AI neural processor, they will run faster and use

less power, increasing battery life. It is better to store and process the user’s personal information on

devices in terms of privacy and security. Personal information that is always on the phone cannot be

intercepted or used improperly. When the phone has an AI chip, it can do all these things without

connection to the network.

Professional robot

assistants

Unlike industrial robots, professional robots are used outside of production. They usually help people, not

replace them. Professional robots are most popular in retail, hotel business, healthcare and logistics. Some

of them are used in space and defense, agriculture and construction. There is also a class of robots for end-

users. They are designed for home cleaning, lawn maintenance and window cleaning. The price, power and

flexibility of robots are driven by the advancement of 5G and AI chips. An archetypal industrial robot is a

mechanical arm with varying levels of freeness and flexibility found in factories around the world. The

largest users of industrial robots are automobile manufacturers, electrical and electronic products, metal,

plastics, chemicals, food products and drinks.

Available satellite

Internet

Satellite broadband can provide high-speed Internet for people outside the reach of cell towers or high-

speed lines. The world is expected to receive social and economic dividends that benefit entrepreneurs,

hospitals, schools and governments.

The rise of

audiobooks and

podcasts

Podcasting is an audio or video broadcast on the Internet in the style of radio and television programs on a

specific topic and with a specific broadcast frequency. Market growth of audiobooks and podcasts shows

that they are characterized by crisp sound.

Cycling

technology

revolution

As a result of the growth in cycling, a number of technological innovations are also increasing, such as:

predictive analytics, mobile applications, wireless communications, digital urban planning tools, 3D

printing, electrification. These innovations make the bicycle safer, faster, more comfortable and provide

accurate speed and route information. The bike becomes more attractive to use. The growing use of city

bicycles can bring significant positive social changes: reducing traffic, reducing nature pollution, reducing

load on public transport systems, and improving health. Due to improvements in lithium-ion battery

technology, lower prices and increasing production capacity the electric bike market is growing rapidly.

More than 130 million of them are expected to be sold during 2020-2023.

Source: Compiled by the authors based on [36; 23; 12]

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In a digital environment, one of the main

strategic advantages is technology, so a company

can be successful or even a monopoly until another

company creates a new technology that is superior

to it. And most importantly, collaborative

interaction with all participants in the digital

environment, based on the institution of trust. For

these reasons, the participants of the digital

platform, if they see the technology, are interested in

the market, then willingly cooperate with the

companies that own it. Main participants in digital

platforms are: the platform itself, manufacturers,

users, terminals. The platforms are entrusted with

the right to establish rules and ensure transactions

between manufacturers and the users who are

connected to the platform through terminals

(smartphones, computers, etc.). The goal of the

digital platform is to create value for all parties and

maximize profitability.

A striking example demonstrating the work of a

digital platform is the experience of Huawei:

entering the Huawei market, it did not create a new

mobile platform, there was no need, it was the

experience of Microsoft. Therefore, Huawei as a

terminal has connected to the Android platform,

playing by the rules of the digital environment. But

the US sanctions and Google’s actions have violated

one of the main pillars of cooperation, namely, trust.

And this left an imprint not only on Huawei, but on

the available other terminals (for example,

Samsung, Xiaomi, etc.). The solution to the problem

and the preservation of Huawei’s strategic

superiority lies in the creation of its Harmony OS

operating system. Therefore, if Huawei manages to

turn it into a full-fledged platform, comprehensively

enforce the rules of cooperation and, at the same

time, provide protection from local laws in order not

to “fall into the trap” like Google, the company will

take possession of a significant share of the

smartphone user market, [11].

3.2 Innovative Digital Technologies of the

Industry 4.0 and the Industry 5.0

We are convinced that digitalization and innovation

of the economy can be realized only through the

development and implementation of innovative

digital technologies on an ongoing basis, the

formation of high-quality legal, organizational,

socio-economic and other conditions for the

transformation of society and the reincarnation of

the traditional economy to a new level of

development, namely, the formation of gig-

economy, [38]. The gig-economy is a new form of

relationship between employer and employee based

on the development of technologies and the

emergence of new types of economic activity, when

the employer does not own the means of production,

but becomes the acquirer of intellectual property,

due to which service providers are not protected by

any mechanisms in front of the owner of the digital

platforms and consumers of services, [42].

The emergence of the gig-economy is causing

revolutionary changes in literally all spheres of life.

We are talking about the creation of qualitatively

new models of business, logistics, trade, production.

Transformational changes are not bypassed by the

education system, health care, and public

administration. It can be affirmatively stated that the

concept of the gig-economy today defines a new

paradigm for the development of the economy,

society and the state. We share the scientific views

of the Ukrainian professor V. Vitlinskyi, who is

convinced that “the basic core of the gig-economy is

mobile services that allow workers to interact in the

economic field without intermediaries, such as state

institutions, institutions of power, etc., [47]”.

If we consider the gig economy from the

standpoint of sociotechnical systems, it will mean

that technology, in terms of its content, should not

be a governing factor in the implementation of new

operating systems. Therefore, in order to be

classified as “sociotechnical”, equal attention should

be paid to providing a high-quality and pleasant

working environment for employees. Work System

Theory (WST) and the Work System Method

(WSM) simplify the conceptualization of traditional

complex sociotechnical system (STS) approaches.

Expanding previous STS studies that separate social

and technical aspects; WST combines two

perspectives in the work system and outlines the

structure of WSM, which considers the work system

as a system of interest and offers appropriate

solutions, [1].

Gig economy statistics show a free market

system where organizations and independent

workers engage in short-term work arrangements.

BLS data suggest that in 2017 the US gig economy

had 55 million participants. It’s estimated that 36%

of US workers take part in the gig economy and

33% of companies extensively use gig workers. The

word “gig” refers to the transient nature of the job

itself. Gig economy definition encompasses all sorts

of contingent work arrangements, for example:

Freelancers; Consultants; Independent contractors

and professionals; Temps (temporary contract

workers).

Gig economy is not a new phenomenon-

freelancers have been around for a while. So have

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consultants, temps, and so on. The reason why the

gig economy has been under scrutiny for the past

couple of years is that technology has lowered

barriers to entry so much that “gigs” have become

easily accessible to an unprecedented number of

people, [15]. What was perceived as a side hustle

only a couple of years ago, turned into a trillion-

dollar industry with millions of participants.

Because of the very technology that made all this

possible, it became increasingly hard to clearly

classify what counts as part of the gig economy and

what doesn’t.

What’s more, studies vary so much in terms of

their design that many arrive at conflicting

conclusions. Just like in the case of the Contingent

Worker Supplement from the BLS and the study

conducted by Alan Krueger of Princeton University

and Larry Katz of Harvard University – with the

latter saying that the gig economy is rapidly

growing and the former that it’s slowly shrinking.

Let’s get in sync on the definitions first. Say gig

economy and people will think of: Uber/Lyft

drivers; TaskRabbit workers; Airbnb landlords;

Online marketplace sellers; Volunteers; Artists. But

the list should also include: On-call workers;

Multiple job holders; Contingent and part-time

workers; Highly skilled contractors; Seasonal

workers; Consultants; And many others. The gig

economy participants sometimes treat their gigs as

their main source of income, and sometimes as a

secondary one. Some of them are highly skilled and

this mode of work is their choice, some are

unskilled and have no alternatives, [14].

We believe that a deep understanding of the

opportunities and threats of the implementation of

the concepts of Industry 4.0 and Industry 5.0 in

Ukraine can become a decisive step in the

implementation of the digital economic

development strategy of the country. Within the

framework of the study, we consider it necessary to

note the difference between these Industries (Table

2, Table 3). The Industry 4.0 is an updated concept

of “smart factory”, identified with the Fourth

Industrial Revolution and the emergence of

cybersystems, it is one of the phases of

digitalization and demonstrates full automation and

robotization of production, development of

information and communication technologies, [31],

[43], [50].

Table 2. General characteristics of the Industry 4.0

and the Industry 5.0

Industry 4.0

Industry 5.0

Focus on equipment

connectivity

Focus Customer Experience

Mass

personalization

Hyper-Customization

Smart Supply Chain

Responsive & Distributed

Supply Chain

Smart Products

Interactive Products

(Experience-Activated)

Remote workforce

On-site Workforce

Source: Author’s development

“The Industry 4.0” is one of the higher phases of

digitalization (functionality exclusively within the

6th technological mode), compared to “smart

factories”, where such technologies as big data

analytics (Big Data), machine learning, m2m-

communications, artificial intelligence, a new

generation of robots, [12]. “Smart factories” (from

the English – smart factory, “smart production”) –

the concept of “digitalization” of industrial

production in order to improve their operational

activities and business efficiency, work within the

5th and 6th technological way. “Smart factories”

appeal to such technologies as “cloud” computing,

wireless communications, remote control and

maintenance, cybersecurity, integration of control

systems, integration and better cooperation in the

value chain, 3D printing, [12].

So, the Industry 1.0 is about Mechanization,

Industry 2.0 is about Electrification, the Industry 3.0

is about Automation, the Industry 4.0 is about

Digitalization, and the Industry 5.0 is about

Personalization and about the interdependence of

man and machine using cognitive computing and

human intelligence. Mass customization and

personalization for humans. The Fifth Industrial

Revolution, or the Industry 5.0 will be focused on

the co-operation between man and machine, as

human intelligence works in harmony with

cognitive computing. By putting humans back into

Industrial production with collaborative robots,

workers will be upskilled to provide value-added

tasks in production, leading to mass customization

and personalization for customers. The Industry 5.0

can be considered as a new quality of collaboration,

customization, personalization, human intelligence,

cognitive computing, optimal balance of efficiency

and productivity. The Industry 5.0 is a new

production model where the focus lies on the

interaction between humans and machines, [6; 35].

The previous tier, the Industry 4.0, emerged with

the arrival of automation technologies, IoT and the

smart factory (characterizes the content of the 6th

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technological way). The Industry 5.0 takes the next

step, which involves leveraging the collaboration

between increasingly powerful and accurate

machinery and the unique creative potential of the

human being (characterizes the 7th technological

structure). The Industry 5.0 provides a vision of

industry that aims beyond efficiency and

productivity as the sole goals, and reinforces the

role and the contribution of industry to society. It

places the wellbeing of the worker at the center of

the production process and uses new technologies to

provide prosperity beyond jobs and growth while

respecting the production limits of the planet. It

complements the existing “the Industry 4.0”

approach by specifically putting research and

innovation at the service of the transition to a

sustainable, human-centric and resilient European

industry.

Technological structure is a set of related

industries that have a single technical level and

develop synchronously. The change of technological

devices dominating in the economy causes an

uneven course of scientific and technological

progress. The 7th technical-technological structure

is a combination of “fusion” technology and psi-

technology, which are synchronously evolving with

bioenergy, cognitive technologies (such as

neuroimaging, cognotropic drugs, cognitive

assistants, brain-machine interfaces), artificial

organs, technologies and organs related to morality

and responsibility. This technological way of life is

realized with the help of hyperintelligence,

hyperknowledge, hyperinformation,

hypercommunication.

Analyzing the content of Table 2 through the

prism of the concept of sociotechnical systems in

contrast to theories of technological determinism,

which argued the unilateral effect of technology on

man in the process of labor operations, we conclude

that the Industry 5.0 is also based on human-

machine interaction. We are convinced that the

design of technical and social conditions should be

carried out in such a way that technological

efficiency and humanitarian aspects do not

contradict each other. The formation of the Industry

5.0 lies in the plane of interaction of subsystems of

the sociotechnical system. Namely:

- We develop a technical subsystem through

devices, tools and technologies that convert input

into output and in a way that improves the economic

efficiency of the organization;

- We strengthen the social subsystem with

knowledge, skills, mood, values, attitudes to the

functions performed, the system of incentives,

quality management structure of industrial

development institutions 5.0;

- Considering the connections of organizations

with the environment, we have the opportunity to

develop a new quality of the subsystem of the

Industry 5.0 environment, through social values,

state and social institutions with which the

organizations of Industry 5.0 interact.

Achieving high efficiency of the Industry 5.0

organization is possible only when its subsystems,

their interaction and their harmonized work are

optimized.

Table 3. Characteristics and Differences between the Industry 4.0 and the Industry 5.0

Type

Industry 4.0

Industry 5.0

The type of economy

in which the

corresponding

Industry is being

implemented

Lays foundations for the formation of the

digital economy. Acquires the

characteristics of the network economy.

The development of the digital economy, at the same

time, the formation of the gig-economy can be traced,

the economy functions in conditions of virtual and

augmented reality.

Features inherent in

the production of

Industry

Automation of production, its

standardization, harmonization of

initiatives and development programs.

The emergence of cyber production,

cyber systems, cyber machines that exist

and are not yet integrated into one

network at all levels of economic

aggregation.

“Living” devices, smart services, smart assets, smart

business. Cyber-physical systems, united into one

network, interact in real time, self-adjusting, self-

learning. Virtual secretaries, smart advisors, virtual

assistants.

Technological mode

that is the core of

industry

6th technical and technological mode

7th technical and technological mode

Submarine super liners, string transport,

electric vehicles, aerospace transport

systems.

Waste-free and closed technological

Technologies of “thermonuclear fusion”, psi-

technologies (achievements in modern psychology,

including new means of managing people),

bioenergy, technologies related to morality and

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Possible

implementation

options

“chains”.

Nanotechnology, amorphous metals,

materials with memory, high-

temperature superconductivity, torsion

technologies for processing materials.

Water purification, seawater

desalination, modified agriculture,

disease treatment, cloning. Bioenergy,

optics, quantum vacuum computers,

artificial intelligence, torsion

communication systems.

Hydrogen energy, synthetic fuel, solar

energy converters, closed-cycle nuclear

power plants, fast reactors, vortex heat

generators.

responsibility. The 7th mode is implemented on the

basis of the formation of Industry 5.0 with the help

of:

- hyperintelligence,

- hyperknowledge,

- hyperinformation,

- hypercommunication,

- “Games with the subconscious and mind”.

The presence of 5 cognitive technologies is

predicted:

- neuroimaging,

- cognotropic drugs,

- cognitive assistants,

- Brain-Machine interfaces,

- artificial sense organs.

The main factor of

production

novation and innovation

creative intelligence

Type of enterprise

Innovative enterprise prevails.

Innovative enterprise – enterprise

(association of enterprises), develops,

produces and sells innovative products

and (or) products or services, the volume

of which in monetary terms exceeds 70

percent of its total volume of products

and (or) services (zakon.rada.gov.ua,

2012).

Digital entrepreneurship and e-business are

represented in small, medium and large businesses.

Digital entrepreneurship – entrepreneurship that is

fully digitized as a result of the use of digital business

technologies based on digital platforms with ERP,

CRM, SaaS systems, etc., digital specialists who

develop, produce and implement a digital product /

service, at the same time, is accelerator of the socio-

economic life of Society 5.0 in virtual reality and is

able to increase quickly the GDP of any country.

Electronic commerce

model that prevails

Business-to-consumer model (B2C) – the

subject (producer of goods / services) is

the business, and the object (consumer of

goods / services) is the consumer. The

model is consumer oriented.

Business-to-business model (Business-to-business:

B2B) – the subject (producer of goods and services)

is business and the object (consumer of goods /

services) is business. Priority and concentration of

efforts on the development and implementation of the

so-called industrial orientation of the Internet, which

provides for the application of high technologies in

industry. A limitless B2B market will be created for

digital companies, the development of new areas and

development factors will be stimulated, where the

leading role will be given to production innovations

solely based on “green” and low-carbon technologies.

General

characteristics,

presentation of the

content of the

Industry

Develops industry, taking into account

the trends of the new industrial era. This

is about the transition to fully automated

digital production, controlled by

intelligent systems in real time in

constant interaction with the external

environment, going beyond the

boundaries of one enterprise, with the

prospect of their network interconnection

on a global scale.

This is the highest stage of digitalization and

represents the concept of innovative digital

production, which includes sufficient assets, smart

services, smart business and smart government. The

ecosystem of the Industry 5.0 is a dynamic, adaptive

“organism” that is aimed at the technological

development of the country according to the 7th

technological mode and not only because of territorial

cooperation, the participants of which, by combining

their resources, pursue the goal of joint achieving

innovative results on mutually beneficial principles,

but also full use of the potential of virtual and

augmented reality that opens up from the use of

public digital platforms (public economy / sharing

economy).

Source: Author’s development

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3.3 Content of the Industry 5.0 Concept and

Prerequisites for Transition to It

Industry 5.0 is currently the highest stage of

digitalization and at the same time is a concept of

innovative digital production, which consists of

smart assets, smart services, smart business and

smart government. The visual components that in

our understanding reveal the content of the concept

of the Industry 5.0 are presented in Figure 1.

However, it should be noted that we tried to present

the concept of the Industry 5.0 for the reason that

the concept differs significantly from the theory not

only in its incompleteness, but also insufficient

verification (confirmation). Within the topic of the

article, we consider the concept as a system of views

on the understanding of the Industry 5.0 and its

institutionalization, or as a single idea that defines

some preliminary, incomplete, and our assumptions

for current and future research on understanding the

content of the Industry 5.0 through the prism of its

structural elements in the conditions of virtual

reality and functioning of the given Industry

exclusively within the limits of the 7th technological

way, [33; 22]. In our opinion, the characteristic

features of the Industry 5.0 are:

- Full automation of the production process, the

management of which is carried out in real time,

taking into account constant dynamic changes, can

be traced in the external environment;

- Decentralized decision-making that controls

physical processes and creates virtual copies of

objects of the physical world of exclusively cyber-

physical systems;

- High communication maintained between staff

and machine, provided by Internet technologies;

- Cyber-physical systems, being united into one

network, interact in real time, self-adjusting, self-

learning;

- Production of goods within the limits of the

needs and requirements of an individual order,

optimizing the production cost.

- Production within the needs and requirements

of the individual order, optimizing the cost of

production. The concept of the Industry 5.0,

presented visually in Figure 1, is understood by us

as a synergy of innovation-digital and business

environment with the use of research [20],

organizational-managerial, institutional, financial-

economic and educational resources, which is

provided by high-quality work of mechanisms and

tools of knowledge transfer, for the purpose of

production of the newest products / services by all

subjects of an ecosystem of the Industry 5.0,

through network interrelations of various formal and

informal institutes which form public interaction in

the course of creation of idea and its

commercialization, [21]. The ecosystem of the

Industry 5.0 is a kind of dynamic, adaptive

“organism” aimed at the technological development

of the country in the 7th technological way and not

only through territorial cooperation, whose

participants, combining their resources, pursue the

goal of jointly achieving innovative results on

mutually beneficial principles, but also the full use

of the potential of virtual and augmented reality,

which opens up from the use of digital sharing

platforms (sharing economy / line economy).

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Fig. 1: Visual section of the structural elements of the concept of the Industry 5.0

Source: Author’s development

The gig-economy and those economic relations

that are inherent in it, is a modern form of existence

of the information economy on the technological

and ideological basis of the Fourth Industrial

Revolution, [32; 23]. In our opinion, the

philosophical meaning of the Industry 5.0 is

extremely important, which is that its potential,

results and impact are reduced to people and their

values. Inadequate awareness of business entities

about the effectiveness of the implementation of the

Industry 5.0 concept, the dignity and complexity of

its implementation and the novelty of technologies

to fill it, become an obstacle to the rapid formation

of the digital economy. In addition, there are no

appropriate institutional conditions for creating a

favorable investment climate for the introduction of

digital technologies. There is no full funding for the

development of the infrastructure of the platform

economy and the preparation of appropriate human

resources for the implementation of the digitization

process itself.

Among the obstacles on the way to the

accelerated formation of the Industry 5.0, the

following ones should be named: problems with the

general positioning of Ukraine in the field of world

the Industry 4.0 and 5.0; vague or no positioning of

Ukrainian developers in terms of individual

segments; there is no consolidated, export program

of action with the support of the government.

Digital transformation is not only about technology,

but also about the business strategy towards the

formation of the Industry 5.0. The transition to the

Industry 4.0 and the gradual transition to the

Industry 5.0 (the Industry 5.0 is the next stage of

development of the “start” factory / “smart

industry”, i.e. it follows the Industry 4.0) is a

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complete change of the existing business model, and

hence what products, to which customers, through

which sales channels and at what price the company

will make an offer. Ukrainian companies need to

reconsider their approaches to what markets they

operate in, what customer problems they want to

solve, and what roles they play in the value chain

formation.

3.4 Experience of Ukrainian Companies in

Implementing the Concept of the Industry

4.0

The secret of business success through e-commerce

lies in the constant work on logistics, payment

systems and Internet quality. Today, the signs of the

Industry 4.0 available in the Ukrainian industry can

be traced in various sectors of the economy.

Successful examples have been presented in Table

Table 4. Ukrainian Companies which Have Signs of the Industry 4.0, as of March 1 2020

Name of a

company

City,

region

General characteristics of the content of the company’s work, its product or service

Distributed

Data Systems

Dnipro

the leader of the Ukrainian segment of manufacturers of human-machine interface tools,

known for its WebHMI product successfully exported to the EU.

eLaks

Kharkiv

one of the leaders in industrial automation and power engineering in Ukraine. Offers

innovative technical solutions for control systems of technological and production

processes, as well as electric drives in Ukraine and for export.

Infocom Ltd

Zaporizhzhia

the company with the largest portfolio of industrial high-tech, innovator in the field of

solar energy, electric transport and robotics technology, automated transport technologies.

IT-Enterprise

Kyiv

leader in the category of Ukrainian IT developers for the Industry 4.0. Development of

R&D services (CableDesigner), personnel and equipment integration (Industrial IoT),

optimal production planning (AI, APS, MES), predictive maintenance of equipment

(RCM).

QRSmarty

Zaporizhzhia

development of an accounting system of inventory items in production using laser

marking methods.

Lemberg

Solutions

Lviv

a service company that helps companies in the EU, the USA and Ukraine create

innovative solutions based on the Industrial Internet of Things (IoT) and Machine

Learning.

Oueedo

Robotics

Odesa

a startup specializing in the implementation of solutions for collaborative robots (cobots).

It is a representative of the 4.0 Centers network in Ukraine, based on the country’s leading

technical universities.

RWA

Kharkiv

the leader in the automation of railway transport in Ukraine, which specializes in a

number of modern solutions for the automation of railway traffic, which is of interest to

international partners, including proposals in the Mobility 4.0 segment.

Virgil

Security Inc.

Kyiv

a company specializing in cybersecurity, including for industry, namely in data protection

solutions in complex infrastructure facilities of the energy and industrial sectors.

S-engineering

Odesa

one of the leaders in industrial automation in Ukraine and the production of electrical

equipment. Offers patented innovative solutions for transport production lines. EPC

contractor in the field of automation and electric power supply.

SMARTICO

Dnipro

one of the leaders of the Ukrainian market in the segment of telemetry and the industrial

Internet of things. Complete automation solutions based on SMARTICO cloud

technologies are implemented today in the segments of industry, energy, as well as in

urban infrastructure.

Source: Grouped by authors on the basis of [49]

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To organize and efficiently manage a business,

both in the real and digital world, you need metrics.

For traditional businesses, there are a number of

proven metrics and KPIs that can help you

understand how successful your business is. But the

virtual-real space has not yet developed such many

number of necessary protocol options for high-

quality organization and effective management of

digital business, platform economy. This is how

traditional business creates values that consumers

receive along the chain, conveyor belt at the end.

In this type of conveyor business, products are

produced with the lowest cost of resources, then

delivered to consumers through well-organized

logistics systems, marketing policy, and advertising.

Having received income, the business covers its

costs, and at the expense of profits pays rewards to

investors and supports future growth, expands

production. The system of indicators of the

conveyor business is designed to assess the

efficiency with which the flow of values moves

through this traditional conveyor. In simplified

form, these are key indicators such as cash flow,

inventory turnover, net profit, gross profit, overhead

and profit aimed at business expansion, and so on.

These indicators allow managers to identify

problems, obstacles and breakdowns in this chain,

increasing the efficiency of the process, which, in

turn, provides a rapid passage of more profitable

flow of values.

But today’s realities of the digital space require

the development of a new logic of platform

business. This is triggered by a number of factors:

- Digital platforms create value due to the impact

of network effects, and platform management

should focus on the positive network effects and

actions of the digital platform that generate them.

An indicator of the level of success of interactions

that create value and the factors that affect it is a key

measure of the functioning of the platform.

Therefore, it is important to maintain constant

repetition to create the value of interaction. The end

result of the analysis should be positive network

effects and value creation for all participants,

including users of the platform, its sponsors, and

managers;

- In the platform business, companies pursue a

goal in terms of creating, sharing and delivering

value within the ecosystem, and part of this activity

takes place on the platform, and part – outside. The

goal of the platform business is to create value for

all users;

- A number of indicators used in traditional

business do not apply to digital business, which

operates on an innovative basis, sometimes some of

them can be dangerous if they are used in the wrong

life cycle of digital business. Innovative business

that is implemented on digital platforms goes

through several stages, such as launch or startup,

growth and maturity. Each stage has its own system

of indicators and protocol for their application. For

example, it can be a user base, active producers and

consumers, the critical point of the size and volume

of the platform, liquidity of the platform, conversion

of active users, solvent customers, depth of

involvement of users and producers, user-to-

manufacturer conversion rate and vice versa, [8].

It is worth noting that the Industry 4.0 is

essentially designed to digitize and integrate

processes vertically throughout the organization

through all functions, from product development /

acquisition through production, DIEM logistics and

after-sales service capabilities. It is vertical

integration that defines intelligent integration and

digitization at different hierarchical levels of the

value chain. This makes it possible to use order

digitization processes and products, taking into

account customer characteristics, when automatic

data transmission in integrated planning and

production systems can be guaranteed. It is within

the framework of vertical integration that flexible

and reconfigurable production structures become

possible, which can be adaptable to each specific

customer order and market changes. These functions

are the main tools for manufacturers to remain

competitive in the markets, [45].

3.5 Step-by-step Breakdown of the

Formation of the Industry 4.0

Digitization of the horizontal value chain integrates

and optimizes the flow of information and the flow

of goods from the customer throughout the

corporation to the level of the supplier and vice

versa. Within this approach, all internal mechanisms

(for example, procurement, logistics, production)

will be interconnected with all external partners,

[16]. In horizontal integration, the concept of

Industry 4.0 will allow all businesses to adapt to

new circumstances at all times (to the volume of

orders or availability of materials). Under such

conditions, automatic optimization of production

processes becomes possible due to the integration of

customers and suppliers into the value chain, [29].

The content of the step-by-step protocol of

formation of Industry 5.0 through the prism of

innovations, technologies in the management of the

industry and business has been revealed in Table 5.

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Table 5. Protocol of the Industry 5.0 formation through the prism of Innovations, Technologies in Industry

and Business Management

Name of the stage

General characteristics of the

stage

Step-by-step content of the stage and its possible substages

Defining the

innovation basis of

a “technological

breakthrough” in a

particular industry,

forming the

Industry 5.0

Not every innovation will

become a great thing in the

future, and not every new

technology will redefine the

rules of the game. Disruptive

innovation depends on the

sector and in fact can only

work effectively for

individual enterprises.

Companies must constantly

scan the horizon for potential

game changers, that is, events

or changes that fundamentally

change the situation.

Potential industry trends. Studying industry trends can reveal

potential investments by competitive or adjacent participants in the

value chain, as well as threats to sector convergence. In addition, it

can help to predict potential areas for future changes in the

industry. By critically examining the value chain, one can identify

problem areas that a disruptive innovation initiator can try to

eliminate or losses that can be prevented by a new or different

approach. Evaluating changes, one can determine where there are

likely reputational issues or potential loss of trust. This is where

new competitors can “play” to gain market share.

Disruptive technologies. The latest technologies provide

opportunities that can significantly change the business

environment. Every potentially disruptive technology must be

examined for its possible application in a particular sector. To

assess the situation, it is most important to review the activities of

startups in the field. It is also necessary to analyze the use cases of

recognized disruptive technologies from other sectors and assess

which of these technologies or their combinations may be key in

the further development of activities.

Strategic technologies. Analyzing and assessing disruptive

changes, it is worth paying attention to the value of disruptive

technologies. An analysis of the values of revolutionary

technologies will allow determining priority technologies for

further study and a clear delineation of investments.

Threat Assessments

Assessment of the impact of

disruptive innovation, changes

on business. It is important to

understand that ongoing

disruptive innovation can

have different implications for

different enterprises, even

within the same sector, that is,

a differentiated approach must

be applied. To assess the

impact of the most promising

disruptive changes, one

should study the business

models, operations and

financial performance of

enterprises. Studying the

above areas of the enterprise’s

work in a complex will create

a holistic picture, determine

where the impact will be felt

in the first place and what are

its cascading consequences.

Business model. Each element of the business model must be

considered to identify potential weaknesses that could be used by a

disruptive change initiator. Market participants must explore new

opportunities to tailor unique value propositions to customer needs,

increase costs and improve coverage. New market entrants can

disrupt the value chain, take it to a qualitatively new level or

change markets, affecting the area and challenging the fundamental

principles of its development. Disruptive innovators can play the

game to get rid of intermediaries and “take over the customer”.

Financial model. This model covers income, expenses, profits,

investment models and taxation. The influence on the financial

model can be carried out in several directions, namely: new models

for generating income; increased volatility and the emergence of

new competitors can reduce investment; profitability may be

jeopardized by declining revenues, customers, price pressures and

increased costs; threats to the long-term competitiveness of a

business can directly affect the ability to raise capital. The potential

impact of the initiators of the technological breakthrough on the

financial model can be assessed by developing and running

scenarios that involve stress testing the main assumptions in the

model, checking its robustness and identifying vulnerabilities.

Operating model. Development in technology accelerates changes

in operating models. For example, “artificial intelligence” and

“machine learning” allow you to consider certain cases of payment

of insurance compensation in a matter of seconds, instantly

destroying the traditional model of considering an issue, assessing

and making decisions by a person.

Determination of

A wide scale technological

breakthrough can radically

change the main components

of an organization’s current

Defense. Sometimes, potential disruptive innovation can be

countered by creating barriers or other similar defensive actions.

However, this becomes, as a rule, a short-term strategy.

Innovation adoption. Attempt to integrate disruptive technologies

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a course for

further

development and

route plan.

The four main

approaches

organizations can

take are: defense,

innovation

adoption,

disruptive

innovation

initiation, retreat

strategy and cause the need

for its revision. Therefore, it

remains important to assess

the relevance of the existing

portfolio of strategic

initiatives. Significant sources

of value should be identified,

assessment criteria agreed,

priorities reconsidered and

investment areas redefined. It

is advisable to consider

important disruptive changes

and determine where the

innovator gains advantage,

where the defensive play is

required, and where it is more

profitable to copy quickly the

innovation of others.

into a company’s business or operating model

Retreat. Admission of failure and trying to keep the maximum

profit, focusing on the development of other areas of activity

Disruptive innovation initiation. Companies can decide to innovate

and disrupt the market. Such a move inevitably leads to total

dominance of the current business model, but can also provide an

invaluable advantage for the innovator.

Implementation of

structural changes

at the level of the

organization’s

DNA

Change of culture, as the

successful choice of an

approach to technological

breakthrough, depends on it.

Employees of the organization

must become open to change

and be encouraged and

stimulate innovation in every

possible way in order to break

stereotypes.

Culture change must start from the “top”. The organization’s

management should consider disruptive innovation as a priority.

This issue should be regularly discussed by senior management,

and it should form the main part of the current strategy. To move

beyond modernization and develop a truly innovative approach to

disruptive change, organizations must find solutions to incubate

innovative ideas and effective ways to integrate innovation from

startups back into the business. Classic linear approaches of phased

planning and 2–3-year implementation programs should be

replaced by adaptive approaches and traditions of constant

experimentation and quick decision-making that break stereotypes.

Source: Author’s development

In the context of the formation and development

of the Industry 5.0, it should be considered as a

high-tech and medium-tech industry. They are

considered to be the driving force, the engine of

economic growth of innovative developed countries.

The focus should be on the practical implementation

of the following steps:

- Focus on industrial high-tech, where the key

advantage for the national economy is a talented and

cheap labor force, which determines an efficient

engine of industrial production. In addition,

industrial high-tech traces the presence of cross-

sectoral, technological areas, including artificial

intelligence, cybersecurity;

- High-quality transmission through the chain of

“segmentation-targeting-positioning” type, which

allows achieving effective geographic segmentation,

entering attractive markets and as a result of the

desired positioning in new countries;

- Design (mechanical, electronic, electrical,

technological, construction);

- Working out of startup projects in close

cooperation with integrators and big brands;

- Development of real support of state

stakeholders in the organization of target companies

for industrial high-tech, adherence to coordination,

integration, improvement of communication

between all stakeholders during the implementation

of the national innovation strategy;

- Development of easy scaling of successful

startup projects to global markets through the

implementation of not only the B2C model

(business for consumers), but also B2B (business for

business);

- Building up in terms of industrial automation

and integrated engineering (including the

commissioning of complex industrial facilities);

- Creation of real sectoral and regional

innovation ecosystems, the participants of which

must be IT companies and their customers, state and

commercial institutions (including educational

institutions, office lessors), IT entrepreneurs and

full-time employees, suppliers of computer

equipment. Since all actors in the innovation

ecosystem influence each other, they must be

flexible in order to develop the market quickly and

compete with the global market;

- Collaboration with associations and innovation

clusters, cooperation with leading industry and

profile experts, marketing agencies, venture studios,

creation and quality work of the site-marketplace;

- Establishment and effective development at all

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stages of venture studio’s performance: 1) search

for and verification of the idea (the idea may belong

to a startup or studio: market and target audience

definition); 2) creation of prototypes (definition of

the main feature, creation of design); 3) hypothesis

testing (site, usability tests, funnel testing, change of

project development direction); 4) packaging

(creation of the final product model, design,

presentation); 5) project analysis (determining

success, creating reports, allocating resources).

3.6 The Procedure for Establishing the

Industry 4.0 and the Industry 5.0, defined by

European Institutions

European institutions have identified along with the

formation and development of digital business with

the characteristics of both the Industry 4.0 and the

Industry 5.0. The procedure involves the following

steps:

1. When you set up a website for your business,

you should decide if you’ll be opening an online

shop in addition to your general information

website. If your idea is to set up an online shop, you

can either: do it yourself with your own resources,

engage an online shop provider and develop it

externally. In either case, there are specific things to

keep in mind to offer your customers a transparent

and user-friendly experience.

2. Setting up a business website (if you choose to

use a third-party platform, which is any software

developed externally to you or your core website

provider, there are certain additional elements to

consider).

3. Selling online using a third-party platform (if

you choose to set up an online shop yourself, make

sure that is compliant with rules and regulations).

4. Setting up your online shop (in all cases, be

prepared to secure your website against any threats

that could ultimately impact your business, such as

data theft).

5. Securing your website (once you have

completed a sale online, remember to also consider

your obligations related to deliveries, fulfillment,

and any type of customer service).

6. Deliveries and fulfillment for online sales.

7. Customer service for online businesses

(promoting your business online is another

important part of digitalization. Remember to

adhere to specific rules related to business practices

online to keep your promotional efforts fair and

transparent to your customers).

8. Promoting a business online, [13].

Pursuing the goal of using all the power of

existing information technologies, it is obvious that

it would be worthwhile to abandon the old

processes, rethink the content of work, radically

restructure the processes and give businesses a new

format of cooperation. These circumstances

determine the need to ensure the variability,

dynamism and adaptability of economic

development processes, based on the digital context

and innovation. The development of production

processes in terms of their digitalization and

innovation of the economy can be divided into the

following stages: standardization, adaptability, and

prediction. In the early twentieth century,

automation laid the foundation for standardization,

during which there was an improvement in

efficiency, consistency and productivity. As the

standardization progressed, the processes became

automated, and this made it possible to reduce costs,

increase speed and improve quality. Today, positive

shifts can be expected for business by changing the

content of the work itself. To achieve this, owners

of all types of businesses need to attract investments

in information technology as quickly and in such

large volumes as possible, but not in the automation

of the traditional methods of work.

Top management and time management should

realize that it is impossible to obtain a positive

effect by applying the methods of the past in the

context of the digitalization of the economy. The

reason for this is that many existing procedures, job

descriptions, a number of work processes, control

mechanisms and organizational structures are not

compatible with the latest information technologies

available. To use modern information and

communication technologies to their full potential, it

is necessary to abandon old processes, rethink the

content of work, radically restructure the process

and give businesses a new format of work, both with

the external environment and within the

organization.

As a result, organizations will have new

opportunities to ensure variability (dynamism) and

adaptability of processes based on the context. That

is, constantly assimilating and processing new

information taking into account the current business

context is a chance for businesses to adapt processes

during their implementation. This very stage is quite

complicated and completely new methods of doing

business are used on it. Transformation of processes

enables companies to become more flexible and

faster. In addition, at any time, it is easy to adapt to

behavior, taking into account the tastes and needs of

customers and employees. This ability to adapt is

based on Big Data and an algorithm for enhanced

digitization of processes.

New processes open up new opportunities for

companies to adapt to the changing environment

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and the “digital landscape”. They meet the

following requirements of digital time, namely:

“innovation”, “speed”, “service”, “individuality”

and “quality”. But there’s a period coming when for

business work in the system of “real-time changes”,

as they say “changes along the way”, will be lagging

behind. This is what will lead to the emergence of

the next stage of development of processes – their

prediction, both existing and new ones. An

organization will need to identify information, make

decisions, and proactively adapt its processes based

on what may occur. With the development of

algorithms, digitization and implementation of IoT,

it will be possible to “extract” reality from big data,

as a result of compiling a complete psychographic

and behavioral map of any person, [9].

The ways and tools that will accelerate the

formation of the Industry 5.0 are as follows:

- Developing of a roadmap for the

implementation of special conditions for accelerated

development and attraction of investments for all

medium and high-tech sectors;

- Approval of new innovative and industrial

strategies and their harmonization or, if necessary,

transparent and direct correlation;

- Accelerated clustering based on innovation

hubs in the 5.0 and 4.0 area at all levels of economic

aggregation, internationalization and integration into

the global innovation space 5.0;

- Implementation of sectoral strategies within the

framework of the Export Strategy of Ukraine. So, if

to take the IT sphere as an example, we realize that

in the global space they have been talking for a long

about specific digital sectors that have industry links

– as FinTech (digital finance), MarTech

(marketing), MilTech (defense), CleanTech (green

technology) and alternative energy), AgriTech

(precision agriculture), the Industry 4.0 (production

processes in industry, energy, infrastructure). In the

Ukrainian Digital Agenda, which was presented in

2018 by the Cabinet of Ministers, all these issues are

presented quite reasonably, namely:

- launching of a digital platform, which is

designed to facilitate the integration of the national

startup ecosystem into the global space;

- Institutionalization of the development of

industrial high-tech at all levels of economic

aggregation, that is, complete synchronization of

industrial, innovation and 5.0 strategies;

- Profiling and engaging in cooperation in

government programs of both governmental and

non-governmental institutions.

Digital technologies are needed to increase the

efficiency of Ukrainian industry, and in some

sectors, they are becoming the basis for product and

production strategies. Their transformative power is

changing traditional business models, value chains

and driving new products and innovations.

Digitalization for Ukraine is positive because it is

focused on improving the quality of social welfare

infrastructure and social services, organizing

transparency and targeting social assistance, and

thus reducing costs, [12].

The main characteristics that determine the

formation of the smart industry, smart business, and

smart services include:

- A comprehensive focus on services, where it is

expected that not only the interaction between

devices and systems will be traced, but also there

will be deep coherence in terms of cooperation

between ecosystem participants and individuals;

- Virtual reality, which in Industry 5.0 creates

virtual copies of intelligent physical objects (scaling

from a small device to a factory or factory);

- Launch and effective operation of various

mechanisms of simulation, economic modeling,

digital expert assessment of the real state of the

economy;

- Decentralization, which in the Industry 5.0

allows in some cyber physical systems to make their

own decisions and interact qualitatively with

another more optimal way;

- Interoperability, which allows individuals to

effectively connect cyber physical systems and

smart lines of plants / factories;

- Modularity, which allows flexible adaptation of

smart factories to external institutional changes

through easily changeable individual modules of the

management system;

- Temporal reality, as all data and their analysis

can be obtained in real time.

4 Conclusion

Summing up the conducted study, it is worth noting

that a focus on industrial innovation and investment,

a special focus on digitalization and sustainable

development, building global value chains,

inclusiveness and prioritizing investment should, in

our opinion, become key topics for further research.

In addition, in practice, a broad coalition should be

created with educators, officials, analysts, high-tech,

economists, industrialists, scientists who will fully

join the formation of the Industry 5.0 based on

digitalization and innovation. In the course of our

research, we came to the conclusion that Industry

5.0 represents a new approach to organizing

production in a virtual reality environment, which is

based on highly intelligent integrated newest

products and digital ecosystems that form a

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completely innovative digital value chain, adding

new competence and implement deep cultural

changes in the direction of the formation of a new

virtual reality. “Living” devices, smart assets, smart

services, data management are the foundation of the

Industry 5.0 concept.

We are convinced that the digital transformation

opens fundamentally new horizons and

opportunities for the formation of added value in

virtually all areas of the economy. The digital

transformation is not only about technology, but

also about the business strategy towards the

formation of the Industry 4.0 and 5.0. It is possible

to accelerate the formation of the Industry 5.0 in the

context of innovation and digitalization of economic

relations in the gig-economy if the following

mechanisms are implemented in practice and tools

are applied, including: the formation of a list of

public-private partnership projects for investments

in digital infrastructure (among the priority areas

should be energy, digital technologies,

infrastructure); starting work in venture capital

studios as platforms that provide startups with the

necessary expertise and infrastructure for the

purpose of innovative digital development, testing

the viability of projects, attracting investments and

creating “greenhouse” conditions that are best suited

for turning a startup into an independent digital

business.

The updated approach to the concept of the

Industry 5.0, taking into account the digitalization of

economic relations in various modifications, will be

used in all sectors of the national economy and will

transform the economic system, modernize

production and digitize entrepreneurship, and thus

have a positive effect on strategic socio-economic

development and financial systems, achieving a

high level of national security and financial

independence of Ukraine. The presented ways and

tools to accelerate the emergence of the Industry 5.0

in virtual reality can be used in the military sphere,

in particular to identify gaps in the functioning and

development of strategic facilities. This, in turn, will

avoid the loss of economic potential and lay the

foundations for financial stabilization in the future.

The research results will be of practical significance

for critical infrastructure, industry, medicine,

agriculture, education, IT sector, financial system.

Given that the Industry 5.0 is a digital rethinking

of all manufacturing, in which businesses use new

digital technologies to digitally transform their core

processes and functions, interact with customers and

employees, and ultimately their business models, so

it makes sense new systems and products, new

approaches to processes, the ability to obtain data

from sensors and sensors that are now everywhere,

and innovative technologies such as artificial

intelligence allow us to achieve new levels of

efficiency in R&D, engineering, manufacturing and

back office functions, thus requiring additional

costs, research and proper scientific attention. In

addition, hyper personalization, augmented reality

and virtual mobility are fundamentally changing the

way businesses interact with their customers and

even their own employees. Smart products, services

and entire production lines based on the new

Industry 5.0 ecosystems open up previously

unavailable business models and sources of profit

through the quality of digital entrepreneurship.

As a result of the research conducted in the

article, we came to the conclusion that design of

technical and social conditions should be carried out

so that technological efficiency and humanitarian

aspects do not contradict each other. This fact is

evidenced by the existing scientific approach of

Sociotechnical systems (STS). After all, we are

talking about the study of the interaction of

infrastructural elements of society and the

infrastructure of the Industry 5.0 and the Industry

4.0, the substantive realizations of society, on the

one hand, and human behavior – on the other hand.

In addition, the sociotechnical system is formed by

such subsystems as: technical subsystem includes

devices, tools and technologies that convert input

into output, a way to improve the economic

efficiency of the organization and a social

subsystem that includes employees (knowledge,

skills, mood, values, settings, attitudes to the

functions performed), management structure, system

of incentives.

We are convinced that in the near future, Ukraine

will become high-tech and post-industrial and will

be integrated into global technological value chains,

producing unique engineering services and high-

quality products in them. Further research and

development are necessary to direct to find the ways

to implement the operational objectives and

strategic goals of the Government of Ukraine and,

accordingly, the nature and content of socio-

economic policy in the digital economy.

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Contribution of Individual Authors to the

Creation of a Scientific Article (Ghostwriting

Policy)

-Kateryna Kraus, research innovative digital

technologies of Industry 4.0 and Industry 5.0,

visualization of the presented material, writing

conclusion, writing methodology.

-Nataliia Kraus, formulation of the purpose and

tasks of research, research the content of the

Industry 5.0 concept and prerequisites for transition

to it, present breakdown of the formation of the

Industry 4.0.

-Oleksandr Manzhura, researched the experience of

Ukrainian companies in implementing the concept

of Industry 4.0.

-Inna Ishchenko, wrote an annotation of the article,

research the latest technologies of modern society.

-Yuliia Radzikhovska, wrote introduction of the

article, literature review, drawing up a list of

references.

Sources of Funding for Research Presented in a

Scientific Article or Scientific Article Itself

No funding was received for conducting this study.

Conflict of Interest

The authors have no conflict of interest to declare.

Creative Commons Attribution License 4.0

(Attribution 4.0 International, CC BY 4.0)

This article is published under the terms of the

Creative Commons Attribution License 4.0

https://creativecommons.org/licenses/by/4.0/deed.en

_US

WSEAS TRANSACTIONS on BUSINESS and ECONOMICS

DOI: 10.37394/23207.2023.20.93

Kateryna Kraus, Nataliia Kraus,

Oleksandr Manzhura, Inna Ishchenko,

Yuliia Radzikhovska

E-ISSN: 2224-2899

1029

Volume 20, 2023