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Corresponding author:
1 Poltava State Agrarian Academy, Ukraine.
E-mail: zorya31031983@gmail.com
ORCID: https://orcid.org/0000-0002-5916-4689
ResearcherID: R-1681-2016
2 Poltava State Agrarian Academy, Ukraine.
E-mail: Serhienko.Volodymyr14@gmail.com

DOI: https://doi.org/10.30525/2661-5150/2020-3-6

THEORETICAL AND METHODOLOGICAL PRINCIPLES  
OF FORMATION OF INVESTMENT AND INNOVATION  

STRATEGY AT THE ENTERPRISE

Оleksii Zoria1, Volodymyr Serhienko2

Abstract. The purpose of the article is to develop and theoretically substantiate the mechanism of formation of 
investment and innovation strategy of the enterprise in the conditions of institutional transformations. It has been 
established that future competitiveness is associated with innovation, and for enterprises it is associated with their 
innovative activity. At the same time, the innovations themselves become objects of investment. Methodology. 
In the course of the research, scientific methods were used that took into account the laws and regularities of 
economic theory, agrarian economics, agrarian management, the dialectical and historical approach to scientific 
knowledge. Results. For enterprises operating in modern conditions, it is advisable to form an investment and 
innovation cross-functional strategy, which allows to coordinate tasks in the field of innovation and investment in 
achieving the goals of the overall strategy. The essence of innovation and investment strategy is based on limited 
resource provision of development processes, taking into account that investments act as an independent source of 
competitiveness and as a means for innovative development, but must be implemented in a better combination of 
investment directions. In addition, the investment and innovation strategy allows to provide the necessary cyclical 
processes of enterprise development in combination with the cyclical nature of the economy for a long period. 
Investment and innovation strategy must have a structural integrity in terms of resource use and impact on the 
enterprise as a whole. This strategy of the enterprise should be consistent with the overall strategy, contribute to 
the achievement of common goals, strengthen the competitive, financial, technological position of the enterprise, 
as well as create opportunities for further growth and development. The role of investment and innovation strategy 
is subordinated to the strategic goals of the enterprise and is transformed depending on the type and objectives of 
the overall strategy, can range from full focus on creating and implementing innovation to investment in support of 
current activities and sustainability. Practical implications. The practical significance of the study is that its scientific 
and theoretical results, proposals, conclusions and generalizations form the scientific basis for solving the problem 
of formation of investment and innovation strategy of the enterprise in modern conditions. Value/originality.  
The implementation of the proposed measures will increase the efficiency of enterprises of all sectors of the national 
economy and ensure the process of formation of investment and innovation development of the economy.

Key words: investment and innovation strategy, development, enterprise, efficiency, mechanism, management.

JEL Classification: D25, L26, O32

1. Introduction
The search for and implementation of various 

measures to support and improve the efficiency of 
enterprises is associated with anticipating changes 
in the future. Investments allow you to use the 
existing opportunities in the markets through the 
change or expansion of production, to maintain 
fixed assets at a stable production level, to create 

and develop the infrastructure of sales systems and 
much more. At the same time, as practice shows, 
investment alone to obtain unique competitive 
advantages is becoming insufficient in our time. 
Future competitiveness is now associated with 
innovation, and in the case of enterprises, with 
its innovation or innovation activity. At the same 
time, the innovations themselves become objects 



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of investment. Accordingly, there is a dilemma 
in the paradigm: investment or innovation is 
needed by the company to maintain current and 
ensure future competitiveness. An additional 
complication is created by the current production 
and economic situation at the enterprise, which 
may require the diversion of investment resources 
from development goals to solve current problems. 
All these processes take place in conditions when 
it is necessary to ensure a certain stability of the 
economic situation of the enterprise for the entire 
period of investment in innovation, the risk of which 
is traditionally significant. Management decisions 
made at the enterprise in these conditions require 
the use of a serious theoretical basis for choosing 
from a variety of alternatives and economic 
justification of current and future effects, taking 
into account possible risks. Traditionally, long-term 
decisions on setting goals of the enterprise and 
determining ways to achieve them are considered 
in the framework of strategic planning, as a result 
of which form a development strategy. However, 
the place and role of innovation and investment in 

the strategy of the enterprise in modern conditions 
requires rethinking, namely, what place innovation 
should play in changing technological systems, what 
share of investment resources should be directed to 
innovation and how, from the management point 
of view, to combine strategic decisions; in the field 
of investment and in the field of innovation.

2. The place and role of investment and 
innovation strategy in enterprise management

As you know, the starting point for developing 
a strategy is to decide what the company will earn in 
the short and long term: 1) a well-known product 
(by investing in increasing production, investing in 
diversification projects, penetrating new markets 
and etc.); 2) innovative product (by investing in 
the implementation of innovations) (Marmul, 
Ksonzhyk, 2011). Based on the conclusions that 
innovation cannot be carried out separately from 
the current activities of the enterprise and requires 
the cost of financial, labor, material resources, 
decisions in the field of investment and innovation 

Sphere of strategic decisions

The strategy is 
not formed 

A strategy is formed

Asset 
withdrawal 

and 
business 
reduction 
strategy

Strategy for 
using existing 
opportunities 

in existing 
business 

The strategy is based 
on the scaling of 

existing technologies 
(without innovation) 

The strategy is based 
on innovative solutions 

(there is a scientific, 
technical or 

organizational and 
economic novelty)

Reduction strategies
In the existing 
business, in the 
existing market

New markets 
(with existing 

product)

Existing 
market

New 
market

Strategies for growth, 
development, stability 

SPHERE OF INVESTMENT AND INNOVATION 
STRATEGIES

Figure 1. The scope of strategic decisions of the enterprise  
and the place of investment and innovation strategy



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strategy are superimposed on several functional 
strategies (Figure 1).

The role of investment and innovation strategy 
for each of the types of strategy (development, 
growth, stability and reduction) varies depending 
on the priorities of the owners and management 
of the enterprise and, accordingly, changes the 
contribution of this strategy to achieving overall 
development goals (Heiets, Semynozhenko, 2006). 
In the case of choosing a strategy of development, 
growth or stability, one of the tools to achieve 
strategic goals can be innovations of varying 
degrees of radicalism. Thus, the role of investment 
and innovation strategy may be as follows:
1) maintaining or strengthening the innovative 
(usually technological) position of the enterprise 
as a result of the introduction of innovations, which 
will affect the share of revenue received from the 
sale of products manufactured using innovative 
solutions;
2) maintaining or increasing market share by 
improving existing or bringing new products to 
market;
3) ensuring the necessary for the company the 
average return on investment;
4) ensuring the growth of the value of the 
enterprise on the basis of both investments with 
acceptable profitability for the enterprise, and by 
increasing operational efficiency provided through 
the introduction of innovations. The interests of 
business owners, regardless of the chosen strategy 
include both receiving dividends and increasing 
the value of available assets. Accordingly, when 
developing an investment and innovation strategy 
should take into account its impact on the value of 
the enterprise;
5) maintaining financial stability or strengthening 
it. When carrying out investment and innovation 
activities, significant funds can be diverted, which 
will increase the debt burden of the enterprise. 
An investment and innovation strategy is being 
developed as an integral part of the overall strategy 
and should not hinder the achievement of its goals, 
including in the field of finance.

3. The mechanism and elements  
of development of investment  
and innovation strategy of the enterprise

The development of investment and innovation 
strategy as a large and complex task can be done 
in different ways. In the field of strategic planning 
and management of investment and innovation 

activities, we can identify general elements of 
the mechanism for developing investment and 
innovation strategy:
1) elements aimed at the implementation of 
processes related to the preparation for the 
development of investment and innovation strategy, 
including approaches and methods of assessing the 
strategic position of the enterprise and approaches 
to the development of the overall strategy;
2) elements related to project evaluation and risk 
assessment associated with these projects;
3) elements related to the implementation of the 
strategy, which include the main stages of the cycle 
of strategic management of the enterprise, related 
to the implementation of the approved innovation 
and investment strategy.

In any case, it is important to keep in mind that the 
investment and innovation strategy is developed not 
only to achieve the objectives of innovation as such, 
but also the objectives of the overall strategy, which 
necessitates their coordination and linkage. On the 
other hand, the development of investment and 
innovation strategy should include the definition 
of the approach and sources of investment, without 
which the implementation of decisions will be 
impossible.

4. The main types of investment  
and innovation strategies of the enterprise

The development of investment and innovation 
strategies should take into account the need to 
ensure a balance of limited resources between 
investment, innovation and current activities. 
Under these circumstances, business owners and 
management of the enterprise in the presence of 
a number of potential projects and activities face 
the problem of choosing among them only those 
that should be implemented in the first place. 
Another important decision is to choose the type 
of strategy that the company will follow. Given 
that the implementation of any strategy requires 
investment resources, we can rely on the most 
well-known classifications of investment strategies 
(Balatskyi, 2004).

The following main types of investment and 
innovation strategies can be identified:
1) offensive investment and innovation strategy 
or strategy of the technological leader, which is 
characterized by the highest level of risk, growth 
of innovative activity of the enterprise and the 
possible introduction of basic innovations. Due 
to the large amount of research performed and 



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a significant increase in the technological level 
on this basis, the problem of reducing the cost of 
production, increasing market share, as well as 
ensuring the possibility of making a profit;
2) protective innovation and investment strategy, 
which involves following the market leaders 
in the field of innovation. The degree of risk of 
implementing this protective type of strategy is 
lower than the offensive, but the profitability of 
such enterprises, respectively, is lower than the 
technological leaders. Enterprises that have chosen 
this type of innovation and investment strategy are 
characterized by a fairly high level of technology 
and have a significant market share;
3) investment and innovation strategy of imitation 
provides a slight improvement of innovations 
previously released by competitors. At the same 
time, the introduction of innovations is the basis 
for increasing profitability;
4) traditional investment and innovation strategy, 
which assumes that investment in innovation is 
minimal;
5) absorption of investment and innovation 
strategy, which is based on the acquisition of 
licenses for the use of innovations of other 
enterprises. This type of strategy complements 
others because when implementing, for example, 
offensive investment and innovation strategy, the 
company can implement not only the results of its 
own development in its activities, but technological 
solutions of competing companies on the basis 
of a license. At the same time, it should be noted 
that if the typology of investment and innovation 
strategies is well developed, the approach to 
determining the type of strategy for a particular 
enterprise is a task that requires further research.

5. Ways to ensure consistency  
of investment and innovation strategy  
with the overall strategy of the enterprise

The tools for developing an innovation and 
investment strategy should ensure its coherence, 
which affects the following areas:
1) ensuring a balance between projects related to the 
implementation of innovations and, accordingly, 
not related. This balance is based on the ratio of 
planned profitability and the expected degree of 
risk of investment and innovation activities;
2) the cumulative effect of the implementation 
of investment and innovation strategy both 
from a financial standpoint, expressed as income 
from investments and from a market position, 

which involves strengthening competitiveness 
and increasing the value of the enterprise on this 
basis, should meet the objectives set in the overall 
enterprise development strategy;
3) consistency in the inclusion in the investment 
and innovation strategy of projects related to 
innovations of varying degrees of radicalism. 
The radicalism of the implemented innovations 
depends on the characteristics of the industry, in 
particular, the life cycle of the applied technologies. 
For those industries that are characterized by 
technology consistency, improving innovation is a 
priority over basic ones. Thus, when developing an 
investment and innovation strategy, it is necessary 
to analyze the industry in terms of life cycle to 
determine its type;
4) consistency of investment and innovation 
strategy implies coordination between qualitative 
and quantitative goals, determining what the 
competitive advantages of the enterprise in the 
future are based on, what the planned return on 
investment in investment and innovation activities 
is, what the basis for generating free cash flow 
or improving the quality of products is, which is 
carried out to expand market presence.

Achieving a balanced investment and innovation 
development of the enterprise is associated with 
solving a number of tasks, namely (Marmul, 
Ksonzhyk, 2011):
1) balanced development in time of traditional 
production and production, which is carried 
out with the use of innovations (management of 
investment processes to create innovative products 
with the prevention of temporary gaps in economic 
turnover);
2) problems of rational combination of innovations 
of various degrees of radicalism;
3) balanced investment in the main areas of creation 
of innovative products of the enterprise (from 
marketing to the consolidation of copyright);
4) problems of stock of investment opportunities 
of the enterprise.

Recognizing the need to develop scenarios 
and balance in the formation of investment and 
innovation strategy, it is important to determine 
how to achieve innovation and investment goals. 
Achieving goals is almost impossible without 
filling the strategy with essential content, which 
allows you to consistently implement investments 
and obtain the necessary effects. In modern 
management the project approach is used for this 
purpose, application of which both during strategy 



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development, and at its realization is the most 
expedient from the practical point of view. Projects 
included in the strategy should be selected based 
on the criteria of consistency and bring the greatest 
effect to the company.

6. Conclusions
Clarification of the essence and role of 

investment and innovation strategy of enterprises 
allowed to make the following conclusions and 
generalizations:
1) for enterprises operating in modern conditions, 
it is advisable to form an investment and innovation 
strategy, which is cross-functional and allows to 
coordinate tasks in the field of innovation and 
investment in achieving the goals of the overall 
strategy;
2) the essence of innovation and investment 
strategy is based on limited resource provision 
of development processes, taking into account 
that investments act as an independent source of 
competitiveness and as a means for innovative 
development, but must be implemented in a 
better combination of investment directions. In 
addition, the investment and innovation strategy 

allows to provide the necessary cyclical processes 
of enterprise development in combination with the 
cyclical nature of the economy for a long period;
3) investment and innovation strategy must have 
a structural integrity in terms of resource use and 
impact on the enterprise as a whole. This strategy 
of the enterprise should be consistent with the 
overall strategy, contribute to the achievement 
of common goals, strengthen the competitive, 
financial, technological position of the enterprise, 
as well as create opportunities for further growth 
and development;
4) the role of investment and innovation strategy is 
subordinated to the strategic goals of the enterprise 
and is transformed depending on the type and 
objectives of the overall strategy, can range from 
full focus on creating and implementing innovation 
to investment in support of current activities and 
sustainability.

The conclusions and generalizations are 
consistent with the provisions of economic policy, 
which provide for effective economic development 
through the comprehensive implementation of 
innovations and active investment activities of 
enterprises.

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