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Incentives to innovate in response to competition: The role of agency costs

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  • Bessonova, Evguenia
  • Gonchar, Ksenia

Abstract

This paper investigates the role of managerial ownership and incentive payment as potential drivers of innovation decisions by firms and as shifters of the competition-innovation link in the Russian manufacturing industry, where poorly protected property rights and a path-dependent market structure (typical for many transition economies) lead to a variety of outcomes. We use recent survey-based microdata for nearly 2000 non-listed companies in Russia. Our results suggest that managerial ownership, which initially evolved as a means of protecting against and resisting dysfunctional institutions, may stimulate decisions to undertake R&D and risky product innovations. Further, managerial ownership and competition are complementary motivations for R&D and innovation. Incentive payment to hired managers is a positive commitment instrument but has no impact on the competition-innovation link.

Suggested Citation

  • Bessonova, Evguenia & Gonchar, Ksenia, 2017. "Incentives to innovate in response to competition: The role of agency costs," Economic Systems, Elsevier, vol. 41(1), pages 26-40.
    • Handle: RePEc:eee:ecosys:v:41:y:2017:i:1:p:26-40
    DOI: 10.1016/j.ecosys.2016.09.002
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    Cited by:

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    3. Bertrand, Olivier & Betschinger, Marie-Ann & Brea-Solís, Humberto, 2022. "Export barriers for SMEs in emerging countries: A configurational approach," Journal of Business Research, Elsevier, vol. 149(C), pages 412-423.
    4. Eleftherios K. Soleas, 2020. "Leader strategies for motivating innovation in individuals: a systematic review," Journal of Innovation and Entrepreneurship, Springer, vol. 9(1), pages 1-28, December.
    5. Fernanda Ricotta & Victoria Golikova & Boris Kuznetsov, 2021. "The Role Of CEO Characteristics In Firm Innovative Performance: A Comparative Analysis Of EU Countries And Russia," HSE Working papers WP BRP 251/EC/2021, National Research University Higher School of Economics.
    6. Sánchez-Vidal, F. Javier & Ramón-Llorens, M. Camino & La Rocca, Maurizio, 2024. "Corruption and intrapreneurship," International Business Review, Elsevier, vol. 33(1).

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