The Impact of Financial Capital on Innovative behavior of Industrial Companies

The authors empirically assessed the impact of the availability of industrial companies to financial capital on their innovative behavior. The relevance of the study is due to the need to develop new analysis tools and stimulate the innovative development of industrial companies in an unfavorable external environment. The aim of the study is to assess the relationship between the availability of financial capital for industrial companies and the possibility of transforming their innovative behavior into a more advanced innovative regime. The authors applied the method of regression analysis of survey data in 648 Russian industrial companies for 2015-2019 to test the three following hypotheses: 1. The financial performance of industrial companies depends on the model of innovative behavior; 2. Financial capital has a significant positive effect on the choice of a more advanced innovative behavior and on the performance of industrial companies; 3. Different availability restrictions to financial capital have a different impact on the choice of innovative behavior and the performance of industrial companies. The authors analyzed two types of restrictions on financial capital: light, when the rate of return from the company’s activities is below the lending interest rate; and strict, when the company does not have access to the credit market. The authors proved that the choice of a particular model of innovative behavior depends on the availability of financial capital of industrial companies. The conclusion is that different types of financial capital constraints affect the choice of a model of innovative behavior in different ways. The authors suggest allocating resources for innovation, development and launch of new products on the market even in conditions of limited access to financial capital. Alternatively, in the context of extremely limited financial capital, it is to develop imitation innovations in new or existing markets.

1. Abdikeev N. M., Bogachev Yu.S., Bekulova S. R. Investment potential of the manufacturing industry. Finansy: teoriya i praktika = Finance: Theory and Practice. 2019;23(4):24-42. (In Russ.). DOI: 10.26794/2587-56712019-23-4-24-42

2. Sapir E. V., Karachev I. A. Challenges of a new investment policy: Investment promotion and protection. Finansy: teoriya i praktika = Finance: Theory and practice. 2020;24(3):118-131. (In Russ.). DOI: 10.26794/25875671-2020-24-3-118-131

3. Shestak V. P., Moreva E.l., Tyutyunnik I. G. Financial management of innovative activity. Finansy: teoriya i praktika = Finance: Theory and Practice. 2019;23(6):63-75. (In Russ.). DOI: 10.26794/2587-5671-2019-236-63-75

4. Faiazova S. I. Innovation influence on export activities: Empirical analysis of Russian companies. Strategicheskie resheniya i risk-menedzhment = Strategic Decisions and Risk Management. 2020;11(1):56-69. (In Russ.). DOI: 10.17747/2618-947X-2020-1-56-69

5. Trachuk A. V., Linder N. V. Innovations and productivity: An empirical study of growth constraints using longitudinal analysis. Upravlencheskie nauki = Management Sciences in Russia. 2017;7(3):43-58. (In Russ.).

6. Miles I. A disrupted future? Foresight and STI Governance. 2020;14(1):6-27. DOI: 10.17323/25002597.2020.1.6.27

7. Desyllas P., Miozzo M., Lee H.-F., Miles I. Capturing value from innovation in knowledge-intensive business service firms: The role of competitive strategy. British Journal of Management. 2018;29(4):769-795. DOI: 10.1111/1467-8551.12273

8. Janger J., Schubert T., Andries P., Rammer C., Hoskens M. The EU 2020 innovation indicator: A step forward in measuring innovation outputs and outcomes? Research Policy. 2017;46(1):30-42. DOI: 10.1016/j.respol.2016.10.001

9. Hatzichronoglou T. Revision of the high-technology sector and product classification. OECD Science, Technology and Industry Working Papers. 1997;(2). URL: https://www.oecd-ilibrary.org/docserver/134337307632.pdf?expires=1607426322&id=id&accname=guest&checksum=E01367CEBFB6EB387091A90D98DF7F85

10. Pavitt K. Sectoral patterns of technical change: Towards a taxonomy and a theory. Research Policy. 1984;13(6):343-373. DOI: 10.1016/0048-7333(84)90018-0

11. Pyka A., Nelson R. Schumpeterian competition and industrial dynamics. In: Nelson R., Dosi G., Helfat C., Pyka A., Saviotti P., Lee K. et al. Modern evolutionary economics: An overview. Cambridge, New York: Cambridge University Press; 2018:104-142. DOI: 10.1017/9781108661928.004

12. Malerba F., Nelson R., Orsenigo L., Winter S. Innovation and industrial evolution. In: Malerba F., Nelson R., Orsenigo L., Winter S. Innovation and the evolution of industries: History-friendly models. Cambridge: Cambridge University Press; 2016:1-21. DOI: 10.1017/CBO9781107280120.004

13. Van den Bergh J. Technological evolution. In: Van den Bergh J. Human evolution beyond biology and culture: Evolutionary social, environmental and policy sciences. Cambridge, New York: Cambridge University Press; 2018:290-318. DOI: 10.1017/9781108564922.011

14. Faria L., Andersen M. M. Sectoral dynamics and technological convergence: An evolutionary analysis of eco-innovation in the automotive sector. Industry and Innovation. 2017;24(8):837-857. DOI: 10.1080/13662716.2017.1319801

15. Laborda J., Salas-Fumas V., Suarez C. An endogenous approach to the cyclicality of R&D investment under credit constraints: Firms’ cash flow matters! Journal of Open Innovation: Technology, Market, and Complexity. 2020;6(3):33. DOI: 10.3390/joitmc6020033

16. Mintzberg H. Patterns in strategy formation. Management Science. 1978;24(9):934-948. DOI: 10.1287/mnsc.24.9.934

17. Beneito P., Rochina-Barrachina M.E., Sanchis-Llopis A. Ownership and the cyclicality of firms’ R&D investment. International Entrepreneurship and Management Journal. 2015;11(2):343-359. DOI: 10.1007/s11365-014-0320-9

18. Gokhberg L. M., Kuznetsova T. E., Rud’ VA. The analysis of innovative modes in the Russian economy: Methodological approaches and first results. Foresight and STI Governance. 2010;4(3):18-30.

19. Miles I., Belousova V., Chichkanov N. Modes of innovation companies in the sector of intellectual services. Foresight and STI Governance. 2017;11(3):94-102. DOI: 10.17323/2500-2597.2017.3.94.102

20. Trachuk A. V., Linder N. V. The impact of technologies of the industry 4.0 on increase of productivity and transformation of innovative behavior of the industrial companies. Strategicheskie resheniya i risk-menedzhment = Strategicheskie resheniya i risk-menedzhment. 2020;11(2):132-149. DOI: 10.17747/2618-947X-2020-2-132-149.

21. Trachuk A. V., Linder N. V. Innovations and their industrial classifications: Approach to building a new typology. Strategicheskie resheniya i risk-menedzhment = Strategic Decision and Risk Management. 2019;10(4):296-305. DOI: 10.17747/2618-947X-2019-4-296-305

22. Mannasoo K., Merikull J. Credit constraints and R&D over the boom and bust: Firm-level evidence from Central and Eastern Europe. Economic Systems. 2020;44(2):100747. DOI: 10.1016/j.ecosys.2020.100747

23. Loof H., Nabavi P. Innovation and credit constraints: Evidence from Swedish exporting firms. Economics of Innovation and New Technology. 2016;25(3):269-282. DOI: 10.1080/10438599.2015.1076196

24. Beneito P., Rochina-Barrachina M.E., SancMs A. Foreign capital, credit constraints and continuity of firms’ R&D. Applied Economics Letters. 2016;23(3):157-161. DOI: 10.1080/13504851.2015.1061635

25. Kang T., Baek C., Lee J.-D. The persistency and volatility of the firm R&D investment: Revisited from the perspective of technological capability. Research Policy. 2017;46(9):1570-1579. DOI: 10.1016/j.respol.2017.07.006

26. Cruz-Castro L., Holl A., Rama R., Sanz-Menendez L. Economic crisis and company R&D in Spain: Do regional and policy factors matter? Industry and Innovation. 2018;25(8):729-751. DOI: 10.1080/13662716.2017.1355231

27. Armand A., Mendi P. Demand drops and innovation investments: Evidence from the Great Recession in Spain. Research Policy. 2018;47(7):1321-1333. DOI: 10.1016/j.respol.2018.04.015

28. Archer L., Sharma P., Su J.-J. Do credit constraints always impede innovation? Empirical evidence from Vietnamese SMEs. Applied Economics. 2020;52(44):4864-4880. DOI: 10.1080/00036846.2020.1751049

29. Spescha A., Woerter M. Innovation and firm growth over the business cycle. Industry and Innovation .2019;26(3):321-347. DOI: 10.1080/13662716.2018.1431523

30. Giebel M., Kraft K. The impact of the financial crisis on capital investments in innovative firms. Industrial and Corporate Change. 2019;28(5):1079-1099. DOI: 10.1093/icc/dty050

31. Anon-Higon D., Manjon-Antolm M., Manez J. A., Sanchis-Llopis J. A. Does R&D protect SMEs from the hardness of the cycle? Evidence from Spanish SMEs (1990-2009). International Entrepreneurship and Management Journal. 2015;11(2):361-376. DOI: 10.1007/s11365-014-0329-0

32. Silvestri D., Riccaboni M., Malva A. D. Sailing in all winds: Technological search over the business cycle. Research Policy. 2018;47(10):1933-1944. DOI: 10.1016/j.respol.2018.07.002

33. Trachuk A. V., Linder N. V. Liquidity limitation influence on industrial companies’ investments in investigations and development, and effectiveness of innovative activity. Effektivnoe antikrizisnoe upravlenie = Effective Crisis Management. 2016;(1):80-89. (In Russ.). DOI: 10.17747/2078-8886-2016-1-80-89

34. Skrondal A., Laake P. Regression among factor scores. Psychometrika. 2001;66(4):563-575. DOI: 10.1007/BF02296196

35. Salas-Fumas V., Javier Ortiz J. Innovations’ success and failure in the business cycle. Sustainability. 2019;11(15):4187. DOI: 10.3390/su11154187

36. Belyaeva T. V., Shirokova G. V., Gafforova E. B. Firm performance during the economic crisis: The role of strategic orientations and financial capital. Rossiiskii zhurnal menedzhmenta = Russian Management Journal. 2017;15(2):131-162. (In Russ.). DOI: 10.21638/11701/spbu18.2017.201