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Innovation and competition under weak institutions: An empirical analysis of Russian firms

Author

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  • Yigitali Zokirov

    (Central Bank of Uzbekistan, Tashkent, Uzbekistan)

  • Daichi Yamada

    (Hokkaido University, Sapporo, Hokkaido, Japan)

  • Masato Hiwatari

    (Hokkaido University, Sapporo, Hokkaido, Japan)

Abstract

This study examines the relationship between competition and innovation of Russian firms. We mainly explore (i) the role of competition in stimulating or suppressing product and process innovation and (ii) if the relationship is affected by institutional conditions, such as court fairness, corruption, and informal competition. The results show that innovation, particularly process innovation, has an inverted U-shaped relationship with competition but that product innovation is negatively associated with competition. Further, the negative relationship with product innovation is observed only among firms confronting problems in institutional conditions. The results imply that, whereas the promotion of competition can both encourage and discourage innovation, depending on the initial competition level, an improvement in institutional conditions can mitigate the negative effect of competition on innovation.

Suggested Citation

  • Yigitali Zokirov & Daichi Yamada & Masato Hiwatari, 2023. "Innovation and competition under weak institutions: An empirical analysis of Russian firms," Russian Journal of Economics, ARPHA Platform, vol. 9(1), pages 33-56, April.
    • Handle: RePEc:arh:jrujec:v:9:y:2023:i:1:p:33-56
    DOI: 10.32609/j.ruje.9.97916
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    Keywords

    innovation competition institution Russia.;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • O - Economic Development, Innovation, Technological Change, and Growth
    • O3 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights
    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

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