A Proposal for a Standard With Innovation Management System

Finding Risk Factors of Innovation Activity Enterprises
Oleg Golichenko and Svetlana Samovoleva
Central Economics and Mathematics Institute Russian Academy of Sciences
(CEMI RAS), Moscow, Russia
golichenko@rambler.ru
svetdao@yandex.ru
Abstract: High risk creates a powerful disincentive for innovation activity. The risk is considered not to be a
threat of expected return failure but rather an obstacle to involve enterprises in innovative activity. To analyse
innovation bottlenecks, a five-stage procedure is proposed. At the first stage, the system of innovation activity
factors is determined. The second stage of the procedure identifies the factors that have a negative impact on
innovation activity, e.g. the risk factors. The system of innovation activity factors suggests that its elements are
attached to the components of the innovation process. At this stage, the set of the risk factors is distinguished
according to their specificity. In other words, the factor system is divided into two non-overlapping subsystems.
The first system includes factors determined by the nature of the innovation process and is directly related to
innovation activity. The other subsystem consists of the factors generated by the framework conditions of the
innovation activity. At the second stage, to identify factors hampering the innovation activity, data from
enterprises innovation surveys is applied. The approach of the study is of a subjective nature. Taking as a whole
all the innovation projects of a firm allows one to consider bottlenecks associated with the typical behaviour of
enterprises. At the third stage, the data of the innovation survey is completed by additional information to obtain
indirect estimates of missing factors. To determine the relative scope and magnitude of the risk factors, their
ranking takes place at the fourth stage. In addition, the mapping of risks and risk factors is the subject of the fifth
stage. This stage leads to the construction of relevant problem spaces for innovation management and
regulation. Under the conditions of adjustment of feedbacks between enterprises and the state, the map obtained
provides opportunities for offering policy measures (at both state and enterprise levels) to mitigate, and
compensate for, risks of innovation activity.
Keywords: risk factors, innovation activity, enterprises, hampering innovation, map
1. Introduction
The importance of risk attitudes in enterprises is attested by great attention to this subject in economic
literature.
In decision theory, choice is based on a trade-off between risk and expected return. The theory
assumes that decision makers deal with risks by first calculating and then choosing among the
alternative risk-return combinations that are available (Pratt 1964; Arrow 1965).
The risk management approach is often associated with the concept of identifying risk causes. These
causes could be in the fields of economy, policy, technology, etc. Corresponding studies might be
grouped according to two topics: disaster (Perrow 1984; Roberts 1990; Weick and Roberts 1993) and
risk analysis (Cooper and Chapman 1987; Short and Rosa 1998; Evans et al. 2002, Chapman and
Ward 2003). The processes of hazard origin and incubation are a subject of the former studies. The
topic of the latter group of studies is measurement of the risk associated with each variant to choose
the least risky one.
Managers see risk in ways that are different from risk as it appears in decision theory and the above
mentioned literature (Shapira 1995). Studies by Shapira (1986) and MacCrimmon and Wehrung
(1986) provide some observations on managers’ attitudes toward risk, and how they deal with risk.
According to the studies, among managers there is little inclination to equate the risk with the variance
of the probability distribution of possible outcomes that might follow the choice of the alternative. For
most managers, risk is not primarily a probability concept and risks are possible to deal with, while
uncertainty is an event or a situation that was not expected to happen. They take into account
uncertainty as a factor of risk, but the magnitudes of possible bad outcomes seem more important for
them. A risk, as a majority think, could better be considered in terms of amount to lose (or expected to
be lost) than in terms of moments of the outcome distribution. The managers interviewed by
MacCrimmon and Wehrung (1986) and by Shapira (1986) believe that risk is manageable (see also
Sarasvathy et al., 1998). They construct relevant problem spaces and look for alternatives that can be
managed to meet targets, rather than assess or accept risks.
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