Product Innovations and Russian Companies Restructuring: An Ural Region Example

Abstract

In the article we analyze key factors of product innovations for Russian companies based on the study of 160 enterprises of Ural region that we organized in 2003. We split the factors into three groups: competition effects, vertical linkages and technology transfers. Results of the econometric analysis demonstrate that competition from Russian companies stimulates product innovations but reduces product variety at the other national companies. Our analysis shows insignificance of competition and vertical linkages with foreign companies in the process of product innovation at Russian companies. We propose the hypothesis about Russian market segmentation that national companies operate on the narrowing market segments where consumers just slightly differ in their preferences toward variety and quality of the products.