Abstract: - The method of researching the development of an innovative enterprise suggested in the paper

shows two possible ways to perform it: firstly, when the Competitiveness Commission regulates the excess

profits to avoid ageing of existing businesses, and secondly, when the process takes place without any

interference, leading to accumulation of fictitious capital and avoidance of obsolescence. The methods allow

calculating the pace of these processes. The method of researching the possible negative consequences of

corporate innovative development is suggested. The following two elements are the methodological basis of the

suggested method: development of the formalized economic conceptual framework and construction of

generalizing model of technical change by Hicks, Harrod, and Solow. Classical technical change models were

innovative activity in the singled-out conditionally closed system (industry, market, etc.) is outlined. The

conditions and causes leading to the emergence of financial crises when fictitious capital grows by a significant

amount are shown. The nature of the “dichotomy (duality)” of an innovative process is specified – the interests

of an enterprise do not meet the public interests, so the country has to prevent the conditions of financial crisis

emergence.

Obsolescence, Financial Crisis, Production Function.

Received: July 12, 2022. Revised: October 25, 2022. Accepted: November 26, 2022. Published: December 21, 2022.

attention to the development will certainly get into

difficult situations that may end up with

bankruptcy. Therefore, most economic studies on

the subject offer almost a single thesis – the need

for accelerated development of corporate

innovative processes.

Yet, the flaw of the approach lies in the fact that

the factors that can affect the overall condition of

the economic system – an industry, national

economy, etc. – are not considered. So the

achievements under appropriate conditions. In our

opinion, the global financial crisis observed in 2008

in most economically developed countries is an

example of such a course of events.

The main problem with managing the corporate

innovative development is that the process

generates the following negative phenomena:

fictitious capital accumulation and obsolescence of

fixed assets.

Nowadays, numerous economic studies address the

innovative process. О. Bilovodska et al. consider it

from the viewpoint of legal framework and creation

project considers corporate sustainability and

innovation in SMEs from a more general point of

study the practice of getting the information

sources at SMEs regarding various types of

innovations, [9]. The structure of organizational

innovations and the results of their implementation

in SMEs are examined by S. Laforet, [10].

Innovative strategies implemented due to process

and product innovations are outlined, [11], [12],

[13], [14], [15], [16]. New opportunities for

researching operations management (ОМ) are

presented by H.L. Lee, [17], who considers

that they belong to empirical studies because they

are based on the processing of reporting and

statistical data or surveys. Such studies are most

assuredly an important and necessary element in

the development of any sciences. Yet, there is an

inevitable need to transfer to the next stage – the

development of theoretical generalizing methods to

examine innovative processes.

There are also many studies on this subject but

they have some flaws related to the fact that

form of net income) – the higher is the value of

operating capital that can substantially exceed its

embodied form.

However, the research we have performed

shows that the growth of the value of functional

capital also has to have respective limits because

the conditions for the generation of fictitious capital

are created. The reason this capital, which has

nothing to do with the Marxist approach, is

accumulated is that the inflation process can

conditions of limiting the value of operating capital

to prevent the emergence of an inflation process on

the stock market. It leads to the situation when

most economists do not understand the complexity

of these processes, so they do not develop any

measures to prevent the repeat of 2008 financial

crisis (possibly, in tougher form).

The research aims to detect the causes of the

emergence of fictitious capital or obsolescence of

fixed assets, i.e. possible negative consequences

causes, in our opinion, are the most important and

prevent the transformation of economics into

theoretical science (the fulfilment of the latter

condition will make it theoretical-exact science).

The conditions of complex research of the

process of corporate innovative and investment

processes development were first described by us

in, where the law of saving the amount of

movement of an economic system was

substantiated [33]. The theoretical basis of these

2) considering an inertial conditionally closed

economic system (company, industry), where the

output is constant Output = const, P0 – the reference

limit value of profit flow; Тр – estimated period of

the use of the company’s fixed assets (Fig. 1):

The transition takes place the following way.

Three parameters are used in the PF: К – the cost of

fixed assets, L – the number of employees, and Y –

transformation of functions Y = f(K, L) → P0 =

i.e. the tangent lines to graphs intersect at the same

content of these points according to the PF

The major feature of suggested generalizing

observed in it (as in all preceding ones) –

value of the investment’s rate of return (RoR)

for the examined period must be observed: there

decision: the theoretical value of the investment’s

The following algorithm is suggested to

quantitatively research the parameters of

obsolescence of fixed assets and plan the efficiency

of corporate investment activity in a long.

determined by sectoral efficiency (capitalization)

coefficient, while, according to the suggested

(7)

is considered.

period of these enterprises. They are calculated

profitability” Ra, which is an economic acceleration

As a hypothesis, we assume that the rate for the

industry has a constant value (there are more

complex calculation methods when the new value

of the parameter can change as well).

calculated by

After the calculation, the law of saving the

amount of movement of an economic system takes

action: efficiency (turnover) of the conditionally

closed economic system (industry) remains

unchanged if the efficiency of its components

(enterprises) changes.

The flaw of this wording is that the basic

mechanism of its practical implementation.

Let’s consider the development options of the

exogenous innovative process by the following

input data (Table 3).

Based on the input data, the following should be

accomplished:

1) calculating the rates of obsolescence at the

first enterprise when the antimonopoly committee

is taking actions;

2) examining what happens if the antimonopoly

1.1. By formula (5), we calculate the initial

value of the industry coefficient of fixed assets

Conclusion 3: an operational period of the first

second enterprise tc is getting closer to termination

of the operational period of the first one Тр1, the

decline in prices can force the first enterprise to

cease its activities because, at new prices, it will

below the X-axis).

take any actions. In this case, the following

processes will take place.

2.1. No changes occur at the first enterprise.

Hence, no obsolescence takes place.

calculated by the formula (5) is

2.3. Industry efficiency will grow as well

2.4. As a result, inflationary money will begin to

accumulate at the enterprises in the amount of

Total amount of these money will be

Pinfl = 4.8412 + 7.0756 = 11.9168 m/y (23)

2.5. It will affect the stock market even more

because the fictitious capital will begin to

accumulate. If we assume that the bank interest is

Е% = 0.1 (10%), the capitalization of these

enterprises (value of their shares) can be calculated

by the traditional formula – the ratio of profit to

bank interest. For these enterprises, it will be

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So the amount of fictitious capital will be

The following conclusions can be made: if the

current amount of fictitious capital accumulation is,

for example, 10 monetary units, it substantially

grows on the stock market – up to 100 monetary

units; as a result, the fictitious capital, in case of its

Unfortunately, it has been almost impossible to

carry out economic-statistical research in Ukraine

since it gained independence in 1991. That’s

because the war with Russia started the moment the

independence was declared. The first phase was the

financial-economic one. Since all main banks were

public and the headquarters were in Moscow, all

deposits were transferred to Moscow (“stolen”),

taking advantage of the fact that Ukraine’s banking

a new national currency was introduced – hryvnya.

Canada helped Ukraine to issue its first hryvnyas.

Next, there were the financial crises of 1998 and

2008 and the beginning of military operations with

Russia in 2014, which grew into an active phase of

the war in 2022. During the entire period of

independence, Russia has never ceased its energy,

political, and information provocations against

Ukraine. All of the abovementioned did not

contribute to its economic development.

1) complex economic processes, including

maximize the amount of obtained excess profits by

implementing innovative activities and achieve

4) to substantiate the methods of public control

and regulation of economic profit amount (excess

profit) obtained in various industries, additional

research should be conducted with consideration of

the following factors: industry and market features

– monopoly (natural monopoly), oligopoly,

competitive market, etc.; whether an industry

(market) is new, starting to form and develop, or

exists for a long time; methodological

substantiation should be based on a unified

Innovation management of enterprises: Legal

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2021, pp. 89-96.

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