Industry Innovations: Development versus Adaptation

Abstract

The paper addresses the problem of the technological standard and innovations in Russian manufacturing companies. It is based on the most recent firm level data. The analysis shows that the industry is seriously segmented in this respect. Empirical analysis proves that the technological standard and innovations are closely linked to productivity growth and competitive stand of enterprises. In turn they depend on company size, quality of management, finances of the firm. The innovation activity is higher than expected, though only a minor portion of firms targets international market, few innovate nation-wide. We discuss that opposing technological upgrade to product innovation and adapted products to originally designed ones is misleading. In real business these processes are interrelated, happen consistently, almost always require in house development. In the end some policy advice based on the results of the study are provided.