INSTITUTIONAL ENVIRONMENT OF INNOVATIVE ACTIVITY AS A FACTOR OF ENSURING ECONOMIC MOBILITY OF SMALL AND MEDIUM-SIZED ENTERPRISES IN THE REGIONS OF UKRAINE

Abstract

This article demonstrates that the institutional environment of innovation activity acts as a key determinant of economic mobility of small and medium-sized enterprises in Ukrainian regions under the conditions of war. The ongoing military aggression has intensified structural imbalances, disrupted value chains, and forced business relocation, thereby increasing the need for adaptive and innovation-oriented development models. The paper argues that the regulatory quality, digitalization of public services, and implementation of flexible policy instruments directly influence the capacity of SMEs to transform business models, diversify production, and enter new markets. Special attention is paid to the role of regional innovation infrastructure, including industrial parks, clusters, business incubators, and technology transfer centers, which facilitate spatial recovery, technological modernization, and integration into new networks of value creation. The author proves that financial and investment support mechanisms such as grants, guarantees, and public-private partnerships reduce wartime risks and strengthen resource-based mobility of enterprises. Moreover, the development of human capital, digital competences, and entrepreneurial skills enhances the ability of firms to generate innovative solutions and respond quickly to market and safety challenges. Institutional coordination between public authorities, business, academia, and international partners is identified as a critical factor for building trust, ensuring policy coherence, and expanding network mobility of SMEs. It is concluded that a comprehensive improvement of the institutional environment stimulates competitiveness, resilience, and structural adaptability of regional business systems, thereby creating foundations for innovation-driven postwar recovery and sustainable economic growth in Ukraine.