Business innovations and structure of corporate ownership in Ukraine

Abstract

Purpose of this paper is to test a link between the type of corporate ownership and business innovation activities, with application to Ukrainian joint stock companies. This objective is achieved through conducting a series of observations of 42, the largest companies of metallurgy and machine-building industries for the years 1998-2001. The theoretical scope of the paper is to identify motives of owners in Ukraine, affecting their views on an innovation policy of companies they own. We found that approaches of various groups of owners to the innovation policy differ and depend on the motives of their behavior at the market for corporate control. Thus, executives, owing companies, try to keep the control in their hands to set an abnormally high remuneration. This leads to the lack of funds to finance innovation project because of cash flows reduction and absence of intentions to issue equity. The value of this paper is that this explains an impact of ownership structure on market opportunities of companies via an impact on the business innovation parameters.