The impact of the ownership structure on the innovative activity of Russian companies

Abstract

Capital structure determines a company’s growth prospects by affecting its investment activity. The article examines what type of capital, foreign or state-owned, stimulates a company’s innovative activity as measured by its number of patent applications. The study was carried out using data from 238 public Russian companies in the period 2012–2020. The results of the study show that state and foreign investors influence innovation to different degrees: state capital positively affects the number of patent applications filed, while foreign capital does not. The impact of political connections and board structure on research and development was investigated. The political ties of the CEOs and the board chairs are expressed by the experience of working in the public service. The presence of such experience in the company’s management increases the company’s innovation activity. However, political connections are effective only in companies with state capital, or in specific industries. The company’s state capital and political connections have a positive impact on the number of patent applications filed in the energy and industrial sectors. The presence of political ties has a positive impact on the role of foreign capital in innovation. The share of foreign directors has a positive effect on patents. Also, the presence of patents from previous years, as well as the age and size of the company, affects the receipt of patents in the future. The younger and larger the company, the more patent applications there will be.