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FINANCIAL STABILITY IS A FACTOR OF THE EFFICIENCY OF INNOVATIVE PROJECTS
Batirova Nilufar Sherkulovna
Dotsent of the Department of Islamic Economics and Finance,
PhD, Pilgrimage Tourism, International Islamic Academy of Uzbekistan
Annotation.
Indicators of financial stability of enterprises are considered as one of the important
factors in assessing the efficiency of their innovation and investment activities. The financial indicators and
the practice of their analysis in assessing the effectiveness of innovation and investment projects of
industrial enterprises were clarified in the article. The features of the development of enterprises, the
necessity of companies to support their innovative activities, as well as the main reasons for their
development at different levels were covered. Indicators of the innovative potential of enterprises were
analyzed in sequence. A number of examples were also taken from foreign experience in supporting
innovation. In conclusion, a set of measures implemented to improve the efficiency of innovation and
investment projects of enterprises was presented.
Keywords:
Financial stability, business incubator, transfer center, innovation, investment, project,
efficiency, financial indicators, credit, enterprise.
Introduction.
It is believed that the level of growth of industrial enterprises and their contribution to the market
should not be considered as the most basic indicators at assessing their development. It was noted that
these indicators are not reliable indicators that clearly indicate the demand for possible cash flows and
financial instruments, as well as the competitive strategy takes an important place in the effective
functioning of industrial enterprises. From the first industrial revolution to the present day, the world
economy has been developing cyclically. It requires innovative development to increase the
competitiveness of industrial enterprises.
Literature analysis.
Since the first industrial revolution over the past 200 years, the world economy has developed
cyclically. Due to the theory of long waves by N.D. Kondratyev, the evolution of industrial enterprises is
associated with a change in technological modes. In his opinion, technological modes are integrated
production groups
(Block, 2015)
.
Within each technological mode there is a closed production cycle, which includes all stages of
extraction of primary resources and their processing, as well as the production process of the finished
product. Technological modes have a complex internal structure. S.Y. Glazyev considers that the main
technological units form the core of the technological structure. The technological innovations involved
in the creation of such co
res are denominated as the “key factor”. Therefore, inventions are part of the
intensive factors of increasing the competitiveness of enterprises. Based on the assessment of the
innovative potential, the innovative capability of the enterprise is evaluated. In the researches of
O.A.Romanov, F.V.Vazagov, V.I.Zinchenko, R.E.Preobrazhensky
(Vazagova, Kilchukov, 2015)
, A.Lewis,
R.Solow, A.Voltes, V.N.Gunin, V.P.Barancheev, N.P.Maslennikova, V.M.Mishin
(Barancheev, 2015)
,
B.A.Begalov, H.T.Muhitdinov, A.Kenjabaev
(Batirova, 2019)
, the concept of innovation potential was
considered from the point of view of a systematic approach, and the level of preparation for the
implementation of an innovation program or a project of strategic changes was defined as a stable
industrial production and readiness for innovation.
Material and method.
In the course of the research work, such methods as observation, comparison, systematic and
comparative analysis were used. Studies on this topic have been studied and analyzed in the domestic
and foreign literature on several topics. The current trend on this topic was evaluated.
II SON - IYUN, 2023
30-36
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Analysis and discussion of the results.
The enterprises are expected to increase labor productivity using the achievements of science and
technology. It indicates that the use of innovative achievements in the development of enterprises is
claimed to be an important factor. Respectively, technological development, along with organizational
changes carried out at enterprises, constitutes as a driving force of economic growth. Features of the
development of innovative and investment potential of enterprises include a set of measures,
particularly:
1. Enterprises should be focused on the production of products that require knowledge;
2. High contribution of goods with high added value to the production of enterprises;
3. To support the implementation of new technologies and the demand for them;
4. High labor intensity and the formation of a working group interested in the development of
these industries;
5. The industries that are the basis for modernization should be oriented ultimately to the world
market and afterwards to the domestic one.
6. The formation of evidently concentrated clusters on the territory: biotechnology, information
technology, chemistry, restoration of energy and resource-saving resources.
7. The reformation of the personnel training system, changing the nomenclature of specialists in
accordance with the selected leading directions of science development.
8. The formation of scientific and technological centers, allocation of areas for these centers
supplied with equipment for conducting research work for graduates of higher educational institutions.
The importance of innovation for the economic development and technological prosperity of
enterprises is based on the experience of foreign countries.
According to the experience of foreign countries, innovative development is a time-consuming
process that takes a lot of time. During this period, there is a need to create the necessary conditions for
the innovative development of enterprises. The import of technologies makes a great of importance
(Maslennikov 2017)
. It is based on the principle that in the process there is not a transfer of innovative
achievements from other countries, but a reduction in the cost of using existing achievements in the
implementation of new enterprise projects.
Table 1
Reasons for the development of enterprises at different levels
№
A set of reasons
1
Differentiation of the level of economic development of enterprises
2
Variety of levels of innovative activity of enterprises
3
Availability of enterprises that falls short of an innovation base
4
A variety of resource capabilities of enterprises
5
Staffing issues (do not allow the implementation of an innovative strategy)
6
Low incentive to implement innovative developments in many enterprises
7
Underdevelopment of the innovation financing system by commercial banks and venture
capital structures
An effective development of the production process of enterprises, integration with science in the
constant implementation of their activities takes a special place. It requires the creation of innovation
centers, scientific and technical parks, business incubators and clusters near enterprises. Innovation
centers, on the other hand, have the task of combining ideas with capital and entrepreneurs and
contributing to attract financial resources at the initial stage of the activity of innovative enterprises.
Business incubators are also an important element in enhancing the efficiency of entrepreneurial
innovation and investment. In particular, it provides small innovative industrial enterprises with the
opportunity to use competent advice and other consulting services, providing production facilities,
administrative buildings and equipment, the possibility of using scientific, technical and other types of
information, provides services for finding potential investors for resident enterprises. In order for
services to be provided by these centers, it is also necessary to assess the possibilities of innovative
development of enterprises. Moreover, special attention will be paid to definite indicators:
1. Indicators that highlight the financial aspect (available funds at the enterprise, the possibility
of disbursement of loan and capital assets, fixed assets and intangible assets, and others). In order to
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implement innovative activities, it is essential to assess financial resources. The best situation is
considered to be the availability of free funds that can be spent on innovative developments. Considering
the problems with self-financing of enterprises in the region, the best option for innovative development
is their integration strategy.
2. Production and potential capabilities (availability of a personnel management system, high
qualification of labor resources). A.I. Anchishkin [2] characterized production
potential as “a set of
resources turning to the form of a production factor in the production process”. In turn, G.B.Shanazarov
believes that production potential is the most important component of economic potential. Due to this
concept, the production potential takes into account production assets, as well as various resources that
characterize its capacity.
3. Human resources employed in industry (high intellectual potential of employees of R&D
departments, the existence of skilled technologists at enterprises). The personnel potential is regarded
as the level of qualified training of employees, the possibility of employment of the population.
Personnel potential refers to the level of qualified education of employees, the working ability of the
population.
4. Intellectual potential (technological documents, patents, licenses, business plans for the
development of innovations, innovation program of the region). Intellectual potential is considered as a
set of intellectual abilities pointing out the development of knowledge, skills, information, values and
skills of workers employed in industrial enterprises, as well as the possibility of their implementation,
development in new developments.
The factors influencing the general parameters of innovation potential are presented in diverse
ways in different sources, and as a whole they combine the system of indicators given in Table 2. In the
structure of indicators, it is considered that the financial indicators of enterprises have a priority feature.
These indicators play a significant part in calculating liquidity indicators, profitability, as well as
analyzing the state of fixed assets that provide innovative production. Notably, there is a significant high
percentage of fixed assets utilization, this indicator characterizes their technical condition. The
conventional standard of this ratio is calculated above 0.5. In addition, the cost of fixed assets for the
employed population in the industry also indicates the potential of industrial production. The ratio of
renewal of fixed assets in this case is also significant, and the decrease in this indicator for years leads
industrial enterprises to a state of depreciation of the material and technical base.
Table 2
Indicators of innovative potential of enterprises
(Kochetkova, 2016)
№
Indicator of
innovation
potential
Structural compositions
1
Financial
indicators
1. Own funds
2. Debt funds
3. Investment funds
4. Budget funds
5. Grant funds
2
Production
indicators
1. Refund of funds
2. Profitability of production
3. The level of renewal of fixed assets
4. The total amount of the deposit of fixed assets for a period of up to 10 years
3
Human resources
potential
1. The level of qualification of employees of industrial enterprises
2. Contribution of qualified labor resources under the age of 30
3. Contribution of labor resources involved in innovative projects
4. The level of wages of persons working in the scientific and technical sphere
5. The indicator of effective production management
4
Intelligent
1. Contribution of new products to the structure of gross industrial product
2. Contribution of new technologies
3. Contribution of costs aimed to R&D in relation to production costs
4. The level of intellectual property ownership
5
Market
1. Competitiveness of industrial products
2. Profitability of innovative products
3. Market contribution
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The data illustrates that the process of updating the fixed assets goes slowly. An increase in the
ratio of renewal of fixed assets means that industrial enterprises will increase the share of new
machinery and equipment in the structure of fixed assets. It provides facilities for increasing the volume
of production of new products, improving their quality and competitiveness. The higher the ratio of
renewal, the higher the technical potential of industrial enterprises. Another resource of industrial
enterprises is human resources. In terms of quantity and quality, the personnel structure plays an
important role in the development of the industry.
As it can be seen from the data in Table 2, ensuring the reliability of the results of the analysis of
the level of innovative development is based on the indicators of the financial statements of industrial
enterprises. Specifically, the need to analyze and calculate a group of indicators of investment
attractiveness lies in the fact that innovative projects require a large amount of financial investments. It
demands additional investments for implementing them.
Therefore, if the country has a stable political situation and stable functioning economic
conditions, it will be effective to introduce innovations at industrial enterprises with any type of
development. Moreover, it is necessary to concentrate on innovation and financial infrastructure, as well
as scientific potential. Innovative development of industrial enterprises in any country is not formed
independently only by the private sector, the state plays a leading role in the development of this system.
The government encourages intersectoral association of enterprises belonging to a particular industry.
It refers to cluster development. It provides for the formation of a cluster around each industrial sector,
which includes a manufacturing enterprise, service centers, retail chains, scientific and educational
institutions. It allows for the conclusion that it is necessary to develop a strategy for the innovative
development of industrial enterprises, as well as mechanisms for its implementation. It makes out on
the example of foreign countries. The USA has used the following financial instruments to support the
innovation activities of industrial enterprises
(Rjapuhina, Zarkovic, 2015)
:
1. Tax incentives for large enterprises: company income tax is reduced to 20 percent of the
increased research costs. The increase of costs is determined by comparing the average for the previous
three years.
2. The basic research programs of universities carried out under contract with enterprises
included a 20 percent benefit on income tax in the ratio of expenses.
3. The tax rate is reduced from the income from the sale of their shares.
4. Accelerated depreciation of machinery and equipment: the depreciation period is set at 5 years.
(3 years for equipment in R&D).
The “Triple Helix” model is widely used in the development of innovations in industrial
enterprises - a theory proposed by the American scientist Henry Etzkowitz, a professor at Stanford
University. A special emphasis is given to the interaction between universities, business and the state as
the basis of the innovation system. It also considers the industry of the region as one of the leaders in
the role of universities in the development of innovation. Furthermore, the “Triple Helix” model includes
the following basics:
1. Strengthening the functions in the interaction of universities with industry and government in
a society based on science.
2. University-Business-Government. It is achieved at the mutual desire of the three institutions,
and not at the will of the state aimed at cooperation and innovative development.
3. In addition to the traditional functions, each of the three institutions also perform each other's
functions
in a certain way.
A special place in the development of innovations of industrial enterprises in the USA was
occupied by the importance of universities. They were charged with the following liabilities:
1. To provide the government with information about any grants allocated for research funded by
grants.
2. To provide information about organizations that finance developments.
3. To pursue an active technology commercialization policy.
4. To prevent the right to use inventions to third parties without the permission of state
organizations.
5. To sell inventions primarily to industry and small businesses.
According to Henry Etzkowitz, a university is not just an educational institution, but also an
institution tha
t applies the accumulated knowledge in practice. In 1846, William Barton Rogers Bergan’s
idea of a long-
term “University
-
production” relationship became the key topic of the event. As a result,
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150 universities that have taken high positions in world rankings have become the basis of the USA
National Innovation System. Among the universities are Brown, Harvard, Yale, Columbia, Pennsylvania,
Preston. The universities of Berkeley, Stanford, the Massachusetts Institute of Technology, and the
University of Wisconsin have also become major scientific and educational centers. An important role
in the successful development of the “Triple Helix” in the USA was played by the amendment of patent
and trademark legislation, known as the Bayh
–
Dole Act in 1980. The law affords an opportunity to
universities, small businesses and non-profit organizations within the region to assume the rights and
responsibilities to manage inventions funded from the state budget. Due to the accounting book of the
American Association of University Technology Managers, from 1991 to 2009 the cost of government
funding for research in the USA accounted for $ 588 billion. As a result, 249 thousand inventions were
made, 51 thousand of them were patented. By 2009, there were 38,030 active licenses, which led to the
creation of 6,272 startups and 300,000 additional jobs. At the same time, research costs and the main
income from the commercialization of research results accounted for only a few universities. Thus, as
an important element of the “Triple Helix”, it can be distinguished that local government agencies are
actively involved both in the development of university activities and in creating a favorable
environment for innovative enterprises.
From the experience of the USA, it indicates that due to state support for industrial enterprises in
the development of innovations, special attention was paid to a well-established mechanism for
commercialization of innovative products and the provision of advanced technologies from the public
system to the private sector for the secondary use and distribution.
Table 3
Forms of innovation support
Forms of
innovation
support
Superiority
Shortage
Buying innovations
1. Obtaining the economic effect of the
implementation
2. The ability to quickly implement
3. In order to improve the skills of
employees of the enterprise, in many cases
for its effective use in the sale of innovations,
the qualification of employees of the
enterprise is also provided.
4. The possibility of changing innovations
5. The possibility of obtaining for a lease
1. An old innovation can be bought
2.Non-compliance of innovations with
customer requirements
3. Difficulties with the adjustment of
enterprises to innovation
Purchase of a license
1. Obtaining the economic effect of the
implementation
2. The ability to quickly implement
3.The possibility of changing innovations
1. An old innovation can be bought
2.Non-compliance of innovations with
customer requirements
3.Difficulties with the adjustment of
enterprises to innovation
Acquisition of an
innovative
organization
1. The possibility of mastering new types of
products and technologies
2. Strengthening its position in the market
3. Improving efficiency
4. Market orientation to new segments
5. Profitable investment of finances
1. The possibility of a negative attitude of
employees to making changes in the
enterprise
2. The probability of loss of effect from the
development
The launch of many new opportunities equipped with modern technologies, the existence of
factors relevant to the entire cycle at the enterprise, from the preparation of raw materials to the
production of finished products, determines the superiority of this enterprise. The support of innovative
activity by enterprises can take various forms.
Forms of innovation support contributes industrial enterprises to make a search for partners from
other enterprises for technological cooperation [4]. The development of technology transfer at the
enterprise level ensures the formation of a large-scale technology base in trade, necessary for the
transfer of the results of scientific and technical activities, the interaction of all enterprises involved in
production, the organization of mutual assistance within the relevant industry. The purpose of
technology transfer is to promote systematically effective tools of technology commercialization and to
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form the transition of the development of the national economy to an innovative path. Also, the creation
of scientific and technological centers in balance with transfers performs scientific and technical,
marketing, legal, financial, advisory, educational, administrative tasks to support industrial enterprises.
Moreover, the organization of the centers will increase the level of technical research, lead to the
integration of universities and research centers into a consortium of concerned scientific education. The
objectives of these centers should include:
- to develop information and analytical data ensuring the implementation of programs and
strategies for the development of enterprises;
- to implement projects for the development of industrial enterprises.
Table 4
Technology transfer center objectives
(Rastvorseva, 2020)
№
Center objectives
The work being implemented in terms of the objective
1
Scientific and technical Management of innovative projects, selection and examination of intellectual
property objects
2
Marketing
Market analysis, development and implementation of marketing strategies
3
Legal
Solving issues due to the protection of intellectual property rights
4
Financial
Development of business plans, searching investors, budget management
5
Administrative
Implementation of patenting, licensing and certification processes
6
Advisory
Provision of educational and consulting services in the field of scientific and
technical expertise and development of innovative developments
It is worth to allocate subsidies to these types of centers within the framework of various
programs. An increase in the num
ber of enterprises using the center’s services leads to the creation of
jobs with modernized high-performance production. Due to innovative production technologies,
innovative products are produced that replace foreign counterparts. This reduces specialization in raw
materials. Nevertheless, due to the fact that the introduction of new technologies is an important factor
in the development of industrial enterprises, a need arises to put emphasis on modern production funds
that ensure the production of products at high-tech stages. In many ways, the use of outdated
technologies and equipment negatively influences the efficiency of production and labor productivity. If
there is a shortage of own funds for the development of enterprises, it allows to attract financial
resources, namely, loans.
Conclusions and suggestions.
The initiated proposals and the measures developed within their framework make it possible to
increase the efficiency of industrial enterprises.
The first direction
in this area is the active support of investment projects by the government.
Definitely, this is due to the fact that the investor reduces the corporate income tax. It makes sense to
provide organizational support during the complex processes that occur during the implementation of
investment projects. Unlike traditional investment projects, the credit risk associated with the
development and implementation of innovative projects is much higher. If the private sector considers
innovation risks excessive, the government should take these risks on itself and invest in new innovative
projects. The main sources of financing can be budgetary funds, extra-budgetary funds, own funds of
enterprises, loans, investments in innovations, special funds, innovative foreign loans, grants, insurance
funds (direct sources), tax benefits and discounts, credit facilities, equipment leasing, customs facilities,
depreciation allowances. Currently, one of the advanced forms of innovation financing is venture
financing. In this area, it is necessary to develop a system of venture financing with the involvement of
commercial banks, insurance companies, etc.
The second direction
is the process of training workers, specialists and managers for industrial
enterprises. Consumers entry into the markets of the country and neighboring countries is a critical
factor for the development of a number of strategic sectors. Priority measures to strengthen innovative
factors of long-term growth should be system-based and cover three main areas of multiplicative impact
on the entire economy,
Policy measures taken in this direction include state financing of innovative projects, tax
incentives for research projects, support for technology transfer initiatives in the form of cooperation
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in R&D, joint research, cooperation between science and industry and the involvement of researchers,
as well as regulatory support, intellectual property reform and standard setting.
It is required to create an innovative structure, namely, a set of scientific, industrial, financial and
other public organizations that are directly involved in the process of creating and successfully
implementing innovations. Nowadays, the existing structures are limited by standard recommendations
on the realization of the innovative factor of industrial development. Achieving the necessary quality of
the work of state institutions is an important condition for the transition to an innovative development
model. In addition, innovations should be focused on the experience of supporting small businesses,
including the formation of an innovation infrastructure that will allow overcoming certain regional
imbalances in the future, particularly, to stimulate it in various ways.
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