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Christian LE BAS, Mindaugas LA UŻIKAS

Figurc 1. Arcas in which Lithuanian IT companies cncouragc innovati»n (imestigation period: 2004-2008)

Product innovatJon
Marketing and sates mnowattott
Support group innovatlon
Breakthrough innouatien	■ 6

0    15    30    45    60    75    90

Number oł answers

(Souice: Sutvey on the combination of innovalion and human resource strategies in Lithuanian information technology companies; LEFI, University Lyon 2, 2008)

engaged in longer-term irmovation activities, such as the basie R&D or technology watch. The reason for such a situation may be a Iow level of cooperation with educational institutions and intermediaries.

Our survey has shown an inereased engagement in innovation activities in Central and Eastem Euro-pean countries (CEEC): 5 8% out of 92 companies un-der investigation encouraged incremental innovation during the imestigation period (see Fig. 1). Given insufficiently encouraged marketing and sales (47%) and support group innovations (17%), breakthrough innovations were poorly supported by Lithuanian IT companies (7%). However, this clearly shows the ex-isting potential of Lithuanian IT companies to switch from incremental to breakthrough innovation and to intensify efforts in inereasing marketing and sales as well as support group innovations. The results of the suney have also proved that large enterprises were morę likely to engage in various forms of innovation activity and encouraged innovations in morę areas than smali ones. Such a situation seems natural, as large companies allocate morę human and financial resources to innovation projects and use morę ad-vanced managing techniques, which create a better innovation climate in the company.

2. Identification of Factors Preventing

Innovation-related Activities

An important aspect of policy analysis is the identification of the factors constraining the abil-ity of enterprises to engage in innovation. These can include obstacles that the enterprise encounters during the process of innovation as well as factors preventing innovation. The companies under inves-tigation were asked about the rangę of constraining factors and the extent to which these factors affected the ability to engage in innovation. As w'e expected, two main groups of factors preventing innovation in Lithuanian IT companies were identified: available human and financial resources.

A particular vulnerability to innovation cost, especially in smali and medium enterprises, was observed. This could be explained by the fact that Lithuanian IT companies face a necessity to inerease generał and administrative expenses in order to or-ganically grow their businesses, to expand their ser-vices to a larger and highly competitive market as well as to regularly update its technologies in order to respond to the higher requirements of the custom-ers. Currently, the majority of Lithuanian IT companies are focusing on growing revenues, while the bottom linę and margins are insufficient to boost the innovation culture. In particular, obtaining afford-able finance w as morę often a problem for smali and medium firms than for larger enterprises.

Among other factors constraining the innovation culture, the lack of qualified personnel, which is not unusual in emerg-ing countries facing the “brain drain” phenomenon, w as men-tioned. Financial and human resources were followed by the excessive perceived eco-nomic risk: 33 companies felt constrained by economic cir-cumstances. The third group of heavily influential factors was related to informational issues, such as the lack of information on markets and technolog}' as well as the lack of customer responsiveness. These factors have been mentioned by 24, 22 and 7 companies respectively. The impact of regulations and standards and orga-nization rigidities were not thought to be substantial barriers to innovation (6 and 5 answers out of 92 companies under investigation).

3. Main Contributions from Investment in Research and Development

Many economists believe that among the main pattems of the Soviet model of innovation we could