Conceptual potential of smart specialization in the development of the innovative economy of small and medium-sized businesses in the regions

The interpenetration of global challenges and local threats accelerates the transition to more innovative and digital economic models, adopting a balanced approach that prioritizes economic growth, environmental protection, and equal access to resources, benefits, and opportunities for all members of society. In the extreme conditions of war, with limited resources and an urgent need for accelerated production, business plays a crucial role in supporting the economy and stability, demonstrating resilience, adapting to the external environment, retaining employees, and even planning for further development. Critically important for the regions is the small and medium scale of its operation, which stimulates economic growth, mitigates social tensions, and contributes to market saturation, supporting their livelihoods. Dynamic changes in the processes of forming a competitive environment, ensuring market flexibility, and introducing sought-after technologies focus the attention of small and medium-sized businesses, in addition to the need for state support for the regional economy, simplifying access to financing, improving infrastructure, the search for significant, yet unrealized opportunities, hidden strengths and prospects inherent in the chosen economic concept, which can be used to achieve specific goals or solve tasks of implementation and development or change. In this context, decision-making should be linked to regional demand from small and medium-sized businesses for 'smart tools' with the potential to promote comprehensive modernization, innovative development of competitive advantages in priority sectors in synergy with an integrated environment for knowledge generation, development of new technologies and products in various forms of partnership and joint management. For empirical analysis, the article uses official statistical reports from international organizations (EPC, CEPS, European Business Association, EU Science Hub − JRC, ICDT), analytical reviews of business publications (NV Business, Interfax-Ukraine, Stock World, UA-Region), scientific publications by leading authors, and the results of surveys and expert interviews conducted in different regions of the country. The study conducts a comparative analysis of the conceptual capabilities of the innovative and smart economy in ensuring the recovery and further development of regions in extreme external conditions. The article utilizes data systematization and visualization to clearly reflect the regional features of smart specialization in small and medium-sized enterprises. The results show that the application of the conceptual principles of start-specialization in the country's regions is becoming an effective tool for accelerating innovative development and increasing competitiveness, which contributes to the growth of small and medium-sized businesses with potential technological, social, and environmental advantages. The success of implementation depends on the level of partnership between the government, business, and science, with the main challenges related to resource constraints and the extreme conditions of a dynamic environment. Significant advantages of the innovation cluster as an effective form of integrating production, science, and the state, based on the principles of specialization, were also identified. The study demonstrated that the primary characteristics of an innovation cluster in the region include regional concentration of enterprises, scientific centers, and institutions related to the industry, characterized by intensive information exchange, a common specialized infrastructure, and innovative production with long-term competitive advantages.