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When a good science base is not enough to create competitive industries: Lock-in and inertia in Russian systems of innovation

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  • Narula, Rajneesh

    () (Henley Business School, University of Reading)

  • Jormanainen, Irina

    () (Department of International Business, Helsinki School of Economics)

Abstract

Despite a well-developed science and technology base and considerable industrial capacity during the soviet era, Russia has largely failed to create a competitive industrial sector despite two decades of transition. This paper seeks to understand why Russia has not succeeded despite having relatively favourable initial conditions. We develop an understanding of its innovation system and the interplay between the firm and the non-firm sector. We argue that, in any economy, when political and economic regimes were rapidly reformed, there is considerable structural inertia associated with complex interdependencies between the state, domestic firms and the formal and informal institutions that bind them together. In the case of Russia, this inertia has resulted in a system-wide lock-in, and industrial enterprises continued to engage in routines that generated a sub-optimal outcome. Market forces did not result in the western-style innovation system, but a hybrid one, with numerous features of the soviet system. A significant segment of industry maintains a Soviet-style dependence on "top-down" supply-driven allocation of resources and a reliance on external (but domestic) network of sources for innovation and capital. At the same time, "new" firms and industries have also evolved which undertake their own R&D, and utilise foreign sources of capital and technology, and at least partly determine their production and innovative activities on the basis on market forces.

Suggested Citation

  • Narula, Rajneesh & Jormanainen, Irina, 2008. "When a good science base is not enough to create competitive industries: Lock-in and inertia in Russian systems of innovation," MERIT Working Papers 059, United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT).
  • Handle: RePEc:unm:unumer:2008059
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    File URL: https://www.merit.unu.edu/publications/wppdf/2008/wp2008-059.pdf
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    References listed on IDEAS

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    1. Damijan, Joze P. & Knell, Mark & Majcen, Boris & Rojec, Matija, 2003. "The role of FDI, R&D accumulation and trade in transferring technology to transition countries: evidence from firm panel data for eight transition countries," Economic Systems, Elsevier, vol. 27(2), pages 189-204, June.
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    Cited by:

    1. Mihailova, Irina, 2015. "Outcomes of learning through JVs for local parent firms in transition economies: Evidence from Russia," Journal of World Business, Elsevier, vol. 50(1), pages 220-233.
    2. Gregory Brock, 2010. "Growth in Russia's federal districts, 1994-2003," Post-Communist Economies, Taylor & Francis Journals, vol. 22(1), pages 19-31.

    More about this item

    Keywords

    innovation systems; R&D; Russia; inertia; institutions; research and development; lock-in; transition; competitiveness;

    JEL classification:

    • O32 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Management of Technological Innovation and R&D
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • P31 - Economic Systems - - Socialist Institutions and Their Transitions - - - Socialist Enterprises and Their Transitions
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

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