Conditions for Innovation in KIBS: Evidence from Russia

The development of service industries in emerging economies has been attracting more attention in recent years, but to date there have been few studies of knowledge-intensive business services (KIBS) in these countries. (The main exception is the case of a specific sector – software and related Information Technology services, with most focus here being on India. KIBS as a whole have received little examination.) This paper aims to study how conditions for innovation influence innovation activities in KIBS in one of the largest emerging countries, Russia. The study draws on survey data from firms belonging to ten KIBS subsectors, based in major Russian cities in 2015. The results contrast with those generally reported in Western developed economies. In this particular emerging economy, firms experiencing negative market and knowledge conditions are actually more liable to undertake nontechnological innovations. We consider various explanations for this apparent anomaly. The institutional framework appears to be less essential for KIBS than has been earlier documented for manufacturing enterprises in Russia. Implications for innovation management and policy are outlined: both government and corporate, strategies here would benefit from more attention to these sectors.