Features of capital investment in innovation: The case of industrial SMEs in the GUAM countries

Abstract

The article aimed to empirically substantiate the features of capital investment in innovation depending on financial stability for Industrial SMEs in the GUAM Organization for Democracy and Economic Development, which consists of four post-Soviet states: Georgia, Ukraine, Azerbaijan, and Moldova. We differentiated the levels of financial stability of industrial SMEs in the region: high, medium, and low. We have determined the positive effect of capital investments in innovation at all levels of financial stability using regression modeling. Regardless of financial strength and capital intensity, investing in innovation provides higher performance indicators for companies than investing in the renewal of fixed assets without modernization. The increase in the efficiency of capital investments in SMEs is more significant for financially stable and less capital-intensive companies than for companies with low financial stability and high capital intensity. Identifying the features of the relationship between the financial stability of SMEs and capital investment will allow the development of effective strategies for economic collaboration within the framework of the GUAM Organization.