How Does Institutional Environment Affect Innovations in Russia? Beyond Doing Business Rating.

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    • Subject Terms:
      RUSSIA
    • Abstract:
      The aim of our paper is to assess the impact of human capital on innovation depending on institutional conditions. We use the data from the Business Enterprise Performance Survey (BEEPS) for the period from 2012 to 2014 for 1564 Russian manufacturing firms from 37 regions. In addition to financial and innovative indicators, the survey contains a rich set of institutional indicators. Based on the probit model, we analyze the interaction term between personnel training performed by firms and the institutional indicators that go beyond Doing Business rating. In addition, we include components of Doing Business in the model using principal component analysis and compare the effects of the institutional indicators. Our main hypothesis is that trained employees of firms located in unfavorable institutional conditions experience difficulties in innovation activities. The results show that trained employees contribute less to innovation, when crime, transport and inadequate employee education are serious barriers to firms' activities. Our research shed light on the aspects of business environment not taken into account in Doing Business Index but still affecting business activity. The results will be useful for the local and regional authorities interested in improving the institutional environment in which firms operate, as well as for the business analysts. [ABSTRACT FROM AUTHOR]
    • Abstract:
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