Investment In Innovation Activities Research Articles

How Do Auditors Respond to Corporate Innovation Activities <br/>—Evidence from Chinese Listed Companies

Innovation is the first driving force and often coexists with risks. As an important tool of risk control, audit plays an important role in preventing and managing such risks. Based on the relevant data of Chinese A-share non-financial listed companies from 2007 to 2018, this paper explores how auditors respond to the risks caused by enterprise innovation. The results show that when dealing with audit risk, in the study of the relationship between enterprise innovation activities and audit fees, the higher the investment in innovation activities and the expenditure on capitalized research and development, the auditors will significantly increase their fees. Only when dealing with capitalized R&D expenditure are auditors more likely to give non-unqualified audit opinions. In the study of auditor’s risk response attitude, it is found that auditors do not improve the degree of audit effort and audit quality, that is, the pricing strategy of audit response to enterprise innovation activities is only a way of charging risk premium, which leads to the conclusion that auditors do not adopt a positive attitude on the whole. This paper also further analyzes various environments to provide relevant suggestions for the formulation of system and audit supervision of relevant departments, and indirectly verifies the necessity and correctness of the formulation of regulations of CICPA requiring certified public accountants to audit innovative information.

The Impact of Innovation on the Firm Performance and Corporate Social Responsibility of Vietnamese Manufacturing Firms

Innovation is a complex process and has been shown to be influential towards different types of stakeholders. From the viewpoint of stakeholder theory, shareholders and creditors are more likely to be concerned about corporate financial performance. However, in the new era an enterprise’s responsibilities have to extend to other stakeholders, including its employees, suppliers and communities. This study aims to extend the literature by examining the individual effects of product and process innovations, and then their interactions with external collaboration, on firm performance and corporate social responsibility (CSR) activities in terms of local contributions for a sample of Vietnamese manufacturing firms during 2011–2013. Research findings suggest that process and product innovations are beneficial to firm performance in terms of market share, but not return on total assets. This implies that investment in innovative activities requires time to make positive changes in profitability, but it may help with winning customer loyalty. We also find evidence suggesting that innovation could make firms more obscure, especially when there are external parties involved. This motivates firms to send signals about their sustainability and goodwill through corporate social responsibility (CSR) activities. With regard to CSR activities, we are the first to provide a breakdown of categories of corporate social contribution towards the local well-being, and elaborate evidence on the effect of innovation on each category, rather than just a composite index of CSR as in some extant studies.

Creativity, innovation effectiveness and productive efficiency in the UK

PurposeCreativity is often referred to as a seedbed of innovation. As such it holds the key to better performance and the competitiveness of firms. To better understand how creativity influences birth and commercialization of innovations and productive efficiency of firms the paper investigates how hiring of employees with different creative skills impacts innovation process and productivity. The purpose of this paper is to determine the role of creativity in innovation behavior and productive efficiency of firms.Design/methodology/approachTheoretical framework of the paper rests on pillars of evolutionary, Schumpeterian and endogenous growth literature contributions to the economics of innovation. The multi-stage analytical framework is applied to examine contribution of creativity to the decision of firms to innovate, investment in innovation activities, commercialization of innovations and firm efficiency. The econometric techniques of generalized tobit and simultaneous equations framework are applied to confidential data from the UK Innovation Survey in 2010-2012 period.FindingsThe investigation broadens our understanding of factors and forces that shape innovation process and improve productive efficiency of firms. It provides empirical evidence on an impact of the effectiveness of innovation process on the productivity of firms. The results reveal that creative skills contribute to the generation of novel ideas and investment in research and development but the ability to meet customer requirements draws from other organizational skills such as marketing or organizational innovations. Differences are revealed among economic sectors with respect to the forces driving the innovation process.Research limitations/implicationsFurther research will be needed to investigate cross-country differences in management of creativity and its contribution to the innovation process and productivity. The limited availability of data on creativity and innovation activities of firms presents the most important limitation in this sense. The framework set by this paper can serve as direction for further investigations.Practical implicationsThe results provide implications to managers regarding the management of innovation process. First, the study reveals how creative potential of employees can be optimally exploited in different stages of innovation process. Second, the research highlights number of other factors relevant in this process from the utilization of information, subsidies and the general management of human resources. Finally, the results suggest that sectoral heterogeneity should be taken into account in management of innovation activities of individual firms.Originality/valueWhile the impact of creativity on innovation has been addressed previously, this paper is one of first attempts to examine the linkages between management of creativity, effectiveness of innovation process and productive efficiency of firms within a single framework. One of reasons for this is the fact that it relies on the confidential dataset of firms not easily accessible to researchers.

INNOVATIVE ENVIRONMENT IN UKRAINE: FORMATION AND EVALUATION OF DEVELOPMENT IN THE CONDITIONS OF THE BALANCED ECONOMIC GROWTH

The paper notes that the success of economic policy aimed at forming a new model of Ukraine's economic growth is facilitated by a clear choice of priorities, among which the main thing is to ensure high rates of sustainable economic growth. The main components of the innovative environment of the economy are determined. The analysis of indicators of innovative development of the countries of the world for the period 2011–2017 is carried out using the Principal Components and Classification Analysis method in the Statistica 10.0 software package. The factors of influence on the innovative development of countries are determined. The advantages of structuring the innovative environment are determination of the subordination of priorities for supporting innovations by the state, business and financial market. In the course of the research, methods of systemic, theoretical generalization, analysis, comparative comparison, tabular and graphical presentation of results are used, which allows the author to prove a low level of regulation of the innovation process characteristic of the Ukrainian economy. The problems of innovative development of groups of countries with low and above average level of income according to the World Bank classification are characterized by the lack of a developed innovative environment, the implementation of the secondary role of the state as a component of the national innovative system. The peculiarity of state regulation of high-income countries is determined by the balance of innovation policy instruments. The presence of a developed institutional environment (fundamental conditions) ensures the effectiveness of financial support of the business, obtaining high results from innovations and retaining the leading position on innovative development. At the decision of the enterprises of a group of countries with a level of incomes above the average for the implementation of investments in innovative activities and further innovative development, financial markets, commodity markets and the effectiveness of the legal system are of greatest importance. It is proved that for the low-income countries the variable "Market development" has a stimulating significance for economic growth. The above, as well as fragmentation, the definition of factors of innovative development according to the Global Innovation Index, provided grounds for the author to give recommendations (integral indicator) in determining the priority of development of the content elements of the national innovative system, highlighting the importance of the state, human capital, research, financial and commodity markets in economic growth of the country, identifying sources and priorities for financing innovative development.

Technology Forgiveness: The Different Institutional Resilience of Polymer and Metal Additive Manufacturing in Portugal

Institutional support can play an important role in supplementing private investment in innovative activities, especially in latecomer countries. This prospect can be particularly challenging in nations not leading the technological frontier, which suffer from higher resource scarcity than technology leaders. We study the case of the adoption of polymer (PAM) and metal (MAM) additive manufacturing technologies in the Portuguese molds industry, both of which offer important benefits for competitiveness. Leveraging archival data (about the history of Portugal and the technologies); insights from 45 interviews across academia, industry, and government; and 75 hours of participant observations, we develop insights about why institutional instability in Portugal affected the adoption of Polymer Additive Manufacturing (PAM) and Metal Additive Manufacturing (MAM) differently. In both cases, Portugal invested in the technology relatively early. While PAM has been widely adopted, including increasingly in high-tech applications, MAM adoption has been modest despite MAM’s potential to greatly improve the performance and competitiveness of metal molds. From the comparison between PAM and MAM, we generate theory about technological and contextual factors that affect ‘technological forgiveness’, defined as the resilience of a new technology’s adoption to institutional instability. We conclude by proposing a generalizable framework for ‘forgiveness’ in different industrial contexts.

Does business group affiliation encourage R&D activities? Evidence from India

The decision to undertake investment in innovative activities is an important strategic choice made by firms. This study investigates the relationship between business group (BG) affiliation and research & development (R&D) activities of Indian firms. Using an empirical approach that accounts for endogeneity and selection bias, we observe that BG affiliation has significant positive influence on the sample firms’ R&D activities. Employing various proxies for institutional development, we show that the effect of BG affiliation on R&D declines with the improvements in institutional and regulatory mechanisms. Further, this study explores the linkages between diversification strategies at the group level and R&D investments by firms affiliated with BGs. Results show that degree of related diversification is positively associated with the affiliates’ innovation efforts.

ИНВЕСТИЦИОННАЯ КОМПОНЕНТА СОЦИАЛЬНО-ЭКОНОМИЧЕСКОГО РАЗВИТИЯ РЕГИОНА

The target of this research is to develop scientifically based approaches to the management system of the investment process in innovative activities as the basis for the socio-economic development of the region. It is shown that the concentration of investment potential today acquires regional character, and therefore the concentration of all the sources of financing investment, including cost, their support and encouragement is an important element of the new investment and innovation strategy. Regional policy should be defined as a purposeful, scientifically grounded activity of local governments in attracting and efficiently using investment resources to solve the problems of complex socio-economic development of the region.  Highlighted the main directions of the mobilization of regional economic policy to improve the investment structure are identified: the development of a new strategic course for regional industrial investment and innovation policy; Activation of the innovation process in the direction of technical and technological improvement, reduction of energy and material consumption; the completion of the transformation of state ownership and management structure, tax system, product and financial markets, and other innovative mechanisms in the institutions of a market economy and the promotion of entrepreneurship in the regions.; An organic mix of investments with innovations to ensure structural adjustment, the introduction of new technology and technology, the development of industries corresponding to high technological structures; Restructuring of the technological and organizational-economic structure of inefficient business entities, with the allocation of enterprises and types of products subject to conversion, conversion or liquidation, incl. And through the mechanism of insolvency. It is proved that the investment activity should be carried out with the active new economic role of the state in these processes with the preservation of individual trends in the further decentralization of management in the sphere of investment and innovation, and to ensure the minimization of risks in capital investment in innovative activities.

The effect of process management on different types of innovations: An analytical modeling approach

We investigate the trade-off between R&D efficiency and creativity during the development of a new product. A firm’s ability to balance efficiency with innovation positively affects its capacity to maintain its competitiveness. Although the trade-off between efficiency and creativity has long been discussed in terms of practical application, little analytical research has been performed to enhance theoretical understanding. To redress this gap in the literature, we present an extreme value model that accounts for innovation type and competition intensity, and offer a set of theoretical and practical insights to demonstrate that the effects of process management depend on the nature of the innovation employed. We show that the inverse relationship between efficiency and creativity is more pronounced if R&D projects represent paradigm-shifting innovations rather than incremental innovations. We then demonstrate how competition drives firms to decrease investment in innovation activities and improve process efficiency to maximize profit. Our results suggest that process management activities are less recommended for firms that pursue radical innovation and the acceleration of growth.

Territorial innovation systems and strategies of collective efficiency

Purpose – The purpose of this paper is to show the relevance of territorial innovation systems approach for non-central regions’ development strategies. The research made allowed to identify actions of collective efficiency to strengthen endogenous capacity for regional innovation, and also to detect some institutional weaknesses that inhibit the innovation dynamics in a particular rural region (Tagus Valley). Design/methodology/approach – The research followed an interpretive case study, of explanatory type. Data collecting method comprised semi-structured face-to-face interviews with business agents and local government members, direct observation of innovation activities and documentary analysis. Statistical methods to analyse the firms’ innovation behaviour, as well as owners and managers’ perceptions, were also used in order to improve the trustworthiness of the research. Findings – The results show that innovation is positively associated to a diverse set of institutional factors that shape a territorially embedded innovation system, in which the firms’ innovation activity is chiefly based on localized learning processes. Moreover, a path of smart and creative diversification area is detected, but there are substantial differences between firms belonging to agro-food supply chain. While food industries and wineries show very interesting levels of investment in innovation activities and external knowledge synergies, farmers/producers depend greatly from producers’ organizations. Research limitations/implications – Given the absence of generalizability and some speculative argumentation, further research needs to be done, especially about the critical role of higher education institutions to promote innovation. Practical implications – The paper provides empirical insights about the role of actors belonging to the governance layer inherent to the territorial innovation system in discussion. Originality/value – The paper fulfils an identified need to systematize institutional factors able to affect non-central regions innovation.

Does Business Group affiliation encourage R&D activities? Evidence from India

The decision to undertake investment in innovative activities is an important strategic choice made by firms. This study empirically investigates the relationship between business group (BG) affili...

Technological and non-technological innovation and productivity in services vis-à-vis manufacturing sectors

ABSTRACTIn this paper, the links between investment in innovation activities, innovation outputs (technological and non-technological innovation) and productivity in services vis-à-vis the manufacturing sector are explored using innovation survey data from Uruguay. The size of firms, their cooperation in R&D activities, the use of public financial support, patent protection and the use of market sources of information are very important drivers of the decision to invest in innovation activities across sectors. The main determinants of technological and non-technological innovations are the level of investment in innovation activities and the size of the firm. The results indicate that both technological and non-technological innovations are positively associated to productivity gains in services, but non-technological innovations have a more important role. The reverse happens for manufacturing, where technological innovations are more relevant for productivity.

Innovation in Slovenian tourism organisations

The purpose – Slovenian tourism organisations must constantly focus on developing variety innovations for organisations. In this paper, we present a study conducted on innovation practices in Slovenian tourism organisations. Design/methodology – In a survey conducted on Slovenia tourism organisations, we obtained data and identified their innovation performance and the innovation climate in their area of business. There are three main hypothesis tested. Findings – The research sample of 41 organisations found that most innovation in tourism organisations came through the introduction of new services (90%), followed by innovation through new organisational methods (73%), and found a high-level climate for innovation. Worse was its assessment of research activity within organisations and cooperation with external institutions (eg. universities and research institutes) and investment in innovation activities within their research and development. Results obtained from the research showed a mean value for the innovation climate-instrument of 3.83 indicating a high innovation climate for the Slovenian tourism companies included in the sample survey. Mostly, (publicly known as) more innovative active organisations responded to our survey. From such results, we find that tourism organisations included in the survey are aware of the importance of innovation, teaching organisations to communicate well and network with other organisations, are adaptable to change and engaged with their own ideas in support of the organisation's management. Originality of the research – The contribution of the research is that it has applied the generic instrument for measuring innovation climate on tourism and the first time climate is measured in Slovenia.

Innovative Activities and Young Firm Growth

This paper seeks to untangle the role of managers’ growth willingness on investments in innovative activities, including R&D and market knowledge assimilation, and their subsequent roles in explaining growth in young firms. Using a longitudinal sample of 282 young Swedish firms, we find mediating relationships that help to better explain the innovation-growth relationship. Our findings highlight the importance of growth willingness and market knowledge activities in explaining innovative activities and growth in young firms, providing a novel perspective on the well- researched innovation-growth relationship. Implications for research and public policy are discussed.

Do Investors Value a Firm’s Commitment to Social Activities?

Previous empirical research has found mixed results for the impact of corporate social responsibility (CSR) investments on corporate financial performance (CFP). This paper contributes to the literature by exploring in a two stage investor decision-making model the relationship between a firm’s innovation effort, CSR, and financial performance. We simultaneously examine the impact of CSR on both accounting-based (financial health) and market-based (Tobin’s Q) financial performance measures. From a sample of top corporate citizens, we find that: (1) a firm’s social responsibility commitment (CSR) contributes to its financial performance; (2) after controlling for investment in innovation activities, CSR continues to have a positive impact on a firm’s financial performance; (3) the customer dimension of CSR has a positive effect on both CFP measures, whereas the employee dimension indicates a significant impact only on financial heath; and (4) the community relation dimension of CSR only affects the market-based CFP measure of firms with high innovation intensity.

Intellectual Property Laws vs. Anti Trust Laws

Intellectual Property Laws and Anti-trust Laws have never really gotten together hand in hand. They both subscribe to two totally diametrically opposite views. It is however ironic to note that both these branches of our legal framework aim towards economic welfare. Given the importance of intellectual property in fostering economic progress, one might wonder whether our economies might progress even faster if intellectual property was more freely available for others to use and build upon – that is, treated more like a public good than private property. To answer this question, we must look into the very rationality as to why IP laws were given so much thought by our lawmakers. We must take into account that erosion of intellectual property rights would be extremely improvident. There is a strong unanimity today that a strong intellectual property regime is needed to provide the requisite motivation to undertake costly and risky investment in innovative activities. It can be very expensive to conduct the research and development that is necessary to come up with new products and technologies, and there can be many failures before a successful innovation is achieved. There would be little inducement for firms to make such a risky investment in research and development if others could freely copy or use a successful innovation and prevent the inventor from substantiating well-earned rewards. Strong intellectual property rights are one of the most important means for providing those inducements. Through this paper, the authors will try to emphasize upon the need for stronger IP Laws to foster more research and development in the important fields of science and technology and also try to prove why Intellectual Property must be kept outside the ambit of the new age Anti-Trust Laws.

Environmental Policy Uncertainty and Innovation in Environmental Technologies

The effect of uncertainty related to environmental damages or technological change has on the optimal level of environmental policy stringency has been extensively analysed in the literature. However, empirical evidence on the innovation efforts of firms in the face of actual policy uncertainty has not been examined formally. Drawing upon real options theory, it is hypothesised that for any given level of environmental policy stringency, environmental policy uncertainty can serve as a brake on investment in innovative activities which can reduce the cost of meeting environmental objectives. By increasing the benefits of ‘waiting’, policy uncertainty will reduce incentives to identify innovative environmental technologies. Using patent counts as a measure of environmental innovation, preliminary empirical evidence has been presented which supports this hypothesis.

Managing innovation for competitive advantage: a global study

For innovation to be beneficial to the firm, it must lead to increased competitiveness. The 1996 Global Manufacturing Futures Survey conducted in over ten countries and/or regions examined the benefits from innovation, investment in innovation activities and manufacturing performance improvements. It was observed that organisations were applying innovation mainly to current product and process areas, suggesting that the majority of respondents were not presently adopting practices that are at the forefront of innovation for new products and new markets. Not all potential gains from innovation activities are being fully realised at this stage, but those companies that are serious in implementing innovation management can identify significant operational improvements in performance.

Government regulation and innovation in local telephone services

This paper studies the effects of government regulation of local telephone services in the United States on the introduction of new telecommunication technologies and services. The traditional regulatory philosophy emphasizes the sensitivity of costs to distance because of the necessity for physical wire paths between communicating parties, and also uses the natural monopoly argument as a reason to deny entrance to competitors. Emerging telecommunication technologies involve costs that are time sensitive rather than distance sensitive, and economies of scale are no longer a determining factor in industry structure. A model contrasting the effects of optimal versus current regulatory policy on innovation in local telecommunications is presented. A forward-looking regulatory philosophy encouraging investments in innovative activities is preferable to a philosophy which emphasizes the treatment of past investments.