Sustainable Innovative Development of a Regional Enterprise:

Strategic and Operational Potential

Galina S. Merzlikina

, Olga S.Oleinik

and Natalya O. Mogharbel

Volgograd State Technical University, Volgograd, Russia

Volgograd Institute of Management, Branch of RANEPA, Volgograd, Russia

Keywords: Sustainable Innovation Development, Innovative, Strategic, Operational Potential.

Abstract: Innovations are a priori recognized as the main driver of economic growth of both the economy of a region,

a country, and an individual enterprise. Research on sustainable innovative development both abroad and in

our country is performed based on statistical observations of the innovation development of only a certain

territory (region, country). However, it is the regional enterprises (especially industrial), as fractals of the

regional economy, that determine the level of sustainable innovation development. The assessment of

sustainable innovation development of an enterprise is being studied by scientists, but there is no single,

generally accepted assessment methodology. This paper reveals, on the basis of the analysis, that the

sustainable innovative development of a regional enterprise is reduced to a certain adaptive response, which

is not supposed to be assessed; the author's definition of sustainable innovation development is proposed as

achieving a balanced innovative state, which consists in the formation and rational, active use of the

innovation potential of an enterprise, which allows to support the innovation process to achieve the set goals

and to solve problems and does not lead to a loss of economic development stability. It is clarified that

innovation potential means the totality of the enterprise resources, the territory required for innovation. A new

functional structure of innovation potential is proposed: material, production, human, financial, marketing,

intellectual, patent and digital potentials. Moreover, it is proposed to divide the innovation potential into

strategic (focused on achieving strategic goals, as a rule, non-financial) and operational (focused on achieving

operational goals, usually financial).

1 INTRODUCTION

Innovations are a priori recognized as the main driver

of economic growth of an enterprise. Indicators of

innovation activity are currently decisive in the

competitive struggle (maintaining competitiveness)

and the achievement of sustainable economic growth,

and in the indicators of success ratings (the

importance of economic entities, regions, countries).

The direct interest of enterprises in innovation (the

level of profitability and capitalization directly

depends on the level of development of science-

intensive and high-tech industries, (Branscomb et al.,

1998) remains only at the level of wishes and

implementation of innovative processes, although it

would seem that the need to maintain competitiveness

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requires this. An interesting conclusion was made in

one of the scientific works (Frenkel et al., 2015), it

turns out that classical competition cannot support the

creation of new technologies or innovative ways, and

it is business that must activate either its own

scientific research or initiate it. Realizing the

importance of innovation and innovative

development, business creates new “architectural”

structures - “co-existing” innovation systems

(integration of regional and sectoral enterprises)

(Meuer et al., 2015) and forms, at least, regional

innovation structures and regional innovation

patterns (Isaksen et al., 2017).

At present, sustainable innovative development is

of particular importance, i.e. stable, systematic

innovative development, not leading, among other

Merzlikina, G., Oleinik, O. and Mogharbel, N.

Sustainable Innovative Development of a Regional Enterprise: Strategic and Operational Potential.

DOI: 10.5220/0010593005010506

In Proceedings of the International Scientiﬁc and Practical Conference on Sustainable Development of Regional Infrastructure (ISSDRI 2021), pages 501-506

ISBN: 978-989-758-519-7

501

things, to an innovation crisis (either lack of

innovation, or “excess”, inability to implement

scientific developments). To assess sustainable

innovation development, enterprises need to use new

approaches based on the concepts of “sustainability”,

“balance”, and “adequacy”. Such techniques have not

yet been developed.

For the innovative development of an enterprise,

it is important to have an innovation potential (a well-

known indicator, often used); the structure of

indicators of innovation potential, as a rule, is

“functional”, and reflects the elements of the

economic potential of the enterprise (production

innovation potential, financial innovation potential,

etc). Unfortunately, most of the methods for assessing

the innovation potential lack indicators of its use,

apparently this is assumed by itself, but this is not the

case. The presence of innovation potential does not

solve the problems of innovation development; it is

necessary to highlight the concepts of “formation”

and “use” of innovation potential. The Fridag-

Schmidt dynamic management system, involving the

assessment of strategic (development) and

operational (use) capacities, can be useful in this case

(Fridag et al., 2007).

Thus, the assessment of sustainable innovation

development of an enterprise is currently in demand,

but requires taking into account the availability and

use of innovation potential.

The authors of the paper consider the innovation

activity of a regional enterprise as an object of

research. The subject of the research is the process of

innovation, identifying innovation strategic and

operational potential.

The purpose of the study is to analyze the

assessment methods and indicators of the innovative

development of a regional enterprise, to propose a

new structure of indicators for assessing the

sustainable innovative development of an enterprise

based on an assessment of its innovation potential,

and to distinguish between the concepts of innovative

strategic and operational potentials.

Study objectives:

 to analyze the definitions of “sustainable

innovation development of an enterprise”;

 to formulate the author's definition of the

concept of “sustainable innovation

development of an enterprise”;

 to conduct a comparative analysis of

definitions and methods for assessing

innovation potential;

 to propose a new functional structure of

innovation potential;

 to propose new types of innovation potential.

2 RESEARCH METHODS

In the research process, the provisions of the theory

of economic management of an enterprise, the theory

of innovative management, the concept of sustainable

development, the scientific foundations of strategic

planning and management, a balanced scorecard, set

out in the works of famous Russian and foreign

scientists, methods of statistical observation and

analysis, methods, mechanisms and tools of

economic management of enterprises, methodology

and tools for assessing the effectiveness of activities

and balanced management were used. All this made

it possible to substantiate the obtained results and

conclusions.

3 RESULTS OF RESEARCH

 The analysis of the definitions of “sustainable

innovative development of an enterprise” was

performed;

 the author's definition of the “sustainable

innovation development of an enterprise”

concept is proposed, based on the assessment

of the formation and use of innovation

potential;

 a comparative analysis of definitions and

methods for assessing innovation potential is

was performed;

 a new functional structure of innovation

potential was proposed;

 it was proposed to separate the innovation

strategic and operational potentials.

4 DISCUSSION OF RESEARCH

RESULTS

Sustainable innovation development. The innovation

development of an enterprise is closely related to the

peculiarities of the territory of presence, therefore, the

study of all aspects of the enterprise activities

regardless of the state and characteristics of the

development of the regional economy are doomed to

failure. The assessment of the innovation

development of a regional enterprise is carried out

according to various methods (statistical

compilations, author's methods are proposed by

various scientists), but they all rely on a “basic”

definition of the essence of innovation development

(as an object is always considered a region, a

country), which consists in the process

ISSDRI 2021 - International Scientiﬁc and Practical Conference on Sustainable Development of Regional Infrastructure

502

implementation. The dominance of the “process

approach” in the assessment of innovative

development determines the groups and a set of

indicators that essentially characterize the process in

which the result is “separated” in time from costs (for

example, today “costs for innovation”, and today the

“result of innovations” financed before that), in which

the performance indicator - the production of

innovative products exists outside of any connection

with innovations (production, marketing, financial

and others). There is no single best practice

methodology in this regard: it explores the use of a

diverse set of methodological approaches and makes

recommendations for the development of innovation

databases at the regional level (Nauwelaers et al.,

2005).

No less important is the study of sustainable

innovation development of the enterprise; the

adjective “sustainable” essentially defines a certain

“anti-crisis status” of such development (although

innovation is always a high risk and a high probability

of a crisis situation). Sustainable innovation

development of the enterprise is studied by many

scientists. For example, in the work (Yashin et al.,

2016), a detailed comparative analysis of methods for

assessing the sustainable development of an

enterprise was carried out (more than fifty sources

were analyzed) and its own, based on a set of a large

number of indicators, was clarified, the content of the

definition of the concept of “sustainability of the

innovative development of an enterprise”: the ability

of the economic system of an enterprise to establish

and maintain the necessary rates and parameters of

innovative and general development in a dynamically

changing macro and microenvironment for a certain

period of time” with which we can agree.

Let us note that the regional sustainable

development (as a set of economic entities located on

a certain territory) largely depends on the

sustainability level of the innovation development of

enterprises. Apparently, therefore, many economic

concepts and guidelines for sustainable development

of regions are inextricably linked with the

development of regional enterprises.

Thus, sustainable innovation development of an

enterprise is a well-studied category, but the essence

of sustainability is mainly reduced to some kind of

adaptive response not to be assessed. It is possible

only to assess the innovation activity of the enterprise

(the activity of innovative processes).

Let us clarify the content of the concept of

“sustainable innovative development of an

enterprise”: in our opinion, this is the achievement of

a balanced innovative state (Merzlikina, 2020),

consisting in the formation and rational, active use of

the innovation potential of the enterprise, which

allows to support the innovation process to achieve

the set goals and to solve problems and not leading to

the loss of stability of economic development.

The innovation potential of the enterprise.

Readiness for sustainable innovative development

can be assessed using the definition of innovation

potential (Zueva, 2016). Currently, the generally

accepted content of the definition of “innovation

potential” has not yet emerged. Sometimes, instead of

the concept of “innovation potential”, “scientific and

technical potential” is used, although these concepts

are different. As a rule, all researchers rely on the

concept of “innovation potential”, presented by M.

Porter (considered National innovation potential) and

K. Freeman (innovation potential that contributes to

the economic growth of the national system).

A detailed analysis of the definitions in (Yakovleva

E.A.). Let us consider some in details. Under the

innovation potential of an enterprise and a region,

various scientists understand: the ability of an

enterprise to get its own innovative product (Kultin et

al., 2018), as the degree of the enterprise readiness for

innovation transformations”, and not to a less specific

category of “enterprise capabilities” (Krymov et al. ,

2017). It is important that in most of the definitions of

innovation potential, even used in the resource

approach, the importance of using the potential,

assessment of the efficiency of innovation potential is

determined. It should be noted that the efficiency of

innovation and the efficiency of the use of innovation

potential are not equivalent concepts, which requires

its reflection in the structure and indicators of

innovation potential.

The assessment of innovation potential in the

world is performed according to several indices:

international innovation, global innovation,

Bloomberg Agency Index, Potential Innovation

Index, PII (Innovation Capacity Index, ICI) (Kultin et

al., 2018) and similar indices in our country

(Gokhberg et al., 2020). The composition of index

indicators to a certain extent characterizes the

structure of innovation potential, and it is usually the

region that is considered as an object of observation.

The list of indicators, used in the indices varies, but

the structure and benchmarks correspond to the well-

known European Innovation Index (The European

Commission, 2017) (EIS), which includes four types

of indicators, ten dimensions and 27 indicators

characterizing the “Conditions” (human resources,

young scientists and their scientific activity),

“Investments (financing and support of

innovations)”, “Innovation activity” (small and

Sustainable Innovative Development of a Regional Enterprise: Strategic and Operational Potential

503

medium-sized innovative business), “Patent activity”,

“Types of innovations”, “Export” of innovations.

Statistical observations are performed by country;

this is the complexity of the assessment and

comparative analysis of the innovative capacities of

enterprises - the inaccessibility of the entire

completeness of economic information on individual

enterprises (with the exception of certain large, but

not typical enterprises) for the implementation of the

necessary analytical procedures.

When assessing the innovation potential of an

enterprise, its structure is usually specified, for

example, a complex of intellectual, scientific and

technical, personnel, material, information,

organizational, financial and other types of resources

(Zueva, 2016), a synthesis of several types of

resources of an intellectual, financial, managerial,

technical nature. (Ustinova et al., 2017). In a

generalized form, the structure of innovation potential

that is most often used is presented in (Novikov et al.,

2009). In our opinion, the proposed structure of

innovation potential essentially copies the structure of

economic potential, which could be considered

necessary, but the innovation potential should have its

own specific structure based on its goal-setting and

the need to solve the corresponding problems.

The intellectual component of the innovation

potential is highlighted (some foreign scientists

define the innovation potential as knowledge capital

(Carayannis et al., 2015) (Carayannis, 2013), it is

proposed to highlight the innovation potential

(generation and development of knowledge) and

“absorption potential” (the ability to absorb new

technologies” (Meissner, 2012), which requires

clarification of indicators for assessing innovation

potential.

Thus, the concept of innovation potential has

many interpretations, similar in meaning, but

differing in “details”. The structure of the innovation

potential of an enterprise is mainly represented by

functional constituent elements: innovative

production, innovative financial potential etc. In our

opinion, the functional structure of innovation

potential should include: material, production,

human, financial, marketing, intellectual, patent,

digital potential, thereby reflecting the availability

and use of all the resources necessary for innovation.

We consider it necessary to highlight the

importance of additions in the characteristics - it is

important not only to assess the availability of

innovation potential, but also to assess its use.

Formation and maintenance of innovative potential is

a strategic task, at the same time it is necessary to use

the existing potential; this point of view on innovation

potential supposes a balance of management actions,

a kind of “ambidextric” use of the enterprise

resources for the formation, maintenance of potential

and its use.

Innovation potential: strategic and operational

potential.

Since in the author's definition of the concept of

sustainable innovative development is characterized

by the achievement of a certain balanced innovative

state, let us turn to the balanced system of indicators

(D. Norton, R. Kaplan) and its interpretation. H.

Fridag and V. Schmidt proposed a dynamic

management model (combining operational actions

and… identifying creative capacities through

strategic actions) (Fridag, 2007), dividing strategic

potentials and operational potentials. In their opinion,

when creating a balanced system of indicators

(assessment of management efficiency), forming an

enterprise development strategy, after specifying

goals and strategic guidelines, it is important to

identify and assess capacities (opportunities, abilities)

that will help achieve the goals. H. Friedag and V.

Schmidt recognize intellectual capital as the most

important for the development of the enterprise,

meaning by it a set of “spiritual” (apparently

intangible) and material capacities (this is human

potential, enterprise employees, their competencies,

level of education, capacities of technology,

equipment (technical, technological capacities), tool

(tool potential), material potential (apparently

resource), communication potential (participation of

affiliates), organizational potential, and even the

environment is recognized by them as a business

potential. The listed types of capacities can be called

functional varieties; it is important that they are, as it

were, a dispersion of the main resources of innovative

development. But, in our opinion, it is important to

select strategic and operational innovation potentials.

Traditionally, everything operational is associated

with solving problems and achieving “close” goals,

and strategic with solving problems and achieving

“distant” goals; but time guidelines are not suitable in

this case. The operational innovation potential (and

the corresponding instrumental support) will make it

possible to assess the effectiveness of the use of

today's potential (all available resources, primarily

financial) and the achievement of operational goals

(usually financial). Strategic innovation potential

should involve the formation of new capacities

(primarily scientific), ensure the achievement of

strategic goals (usually non-financial). Let us choose,

for example, from the abundance of indicators for

assessing the innovation potential of typical

representatives of strategic and operational potential:

ISSDRI 2021 - International Scientiﬁc and Practical Conference on Sustainable Development of Regional Infrastructure

504

the indicator of the availability and competence of the

company research personnel is an indicator of the

strategic potential; the volume of innovative products

is an indicator of operational potential.

In our opinion, the structure of innovation

potential should include fundamentally: strategic

potential and operational potential, the former should

reflect the presence/absence of strategic resources

(material, production, financial, marketing,

intellectual, patent, digital) necessary to achieve

strategic goals and operational potential should

reflect the use/non-use of available resources today

(material, production, financial, marketing,

intellectual, patent, digital). Thus, strategic and

operational actions and results can be divided in time

and space.

5 CONCLUSION

The main results presented in the paper are as follows:

 the analysis of the definitions of “sustainable

innovative development of a regional

enterprise” is performed, it is revealed that

sustainable innovative development is reduced

to a certain adaptive response, not to be

assessed;

 the author's definition of the concept of

“sustainable innovation development of an

enterprise” is proposed; achieving a balanced

innovative state, which consists in the

formation and rational, active use of the

innovation potential of an enterprise, which

allows to support the innovation process to

achieve the goals and to solve problems and

does not lead to a loss of economic

development stability;

 a comparative analysis of definitions and

methods for assessing innovation potential is

carried out, it is revealed that innovation

potential means the totality of the enterprise

resources, the territory necessary for

innovation;

 a new functional structure of innovation

potential is proposed: material, production,

human, financial, marketing, intellectual,

patent and digital potentials;

 it is proposed to separate the innovation

strategic and operational potentials; strategic

innovation potential is focused on achieving

strategic goals (as a rule, non-financial),

operational is focused on achieving operational

goals (usually financial).

Further authors research involves the formation of

instrumental support for the assessment and

management of sustainable innovation development

of the enterprise.

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