Assessing the Impact of Innovation Strategies and R&D Costs on the Performance of IT Companies

Innovative activity of companies differs due to their sphere. This paper will focus on companies operating in the IT (Information Technology) sphere, whose business success depends on innovations more than the success of companies in any other sector. Innovations for manufacturing hi-tech products, for example, computer equipment, demand more intense (narrower) focus on product innovations owing to the fact that the basis of viability and financial well-being of hi-tech companies is demand for their products. Therefore, innovations in such companies are mostly directed at creation of new products or modernization of the already existing ones. As a consequence, in order to define the activity of IT companies more precisely we should use specific classification of innovation strategies. The innovative behavior of IT-companies is one of the main sources of competitiveness, business survival and economic growth. It is therefore important to identify and understand the factors that determine innovation behavior among IT enterprises. Innovation behavior depends on innovation capacity and is realized in a particular innovation strategy. This paper attempts to show the mechanism of choosing the most appropriate innovation strategy and the most accurate project estimation. Using the data collected on IT companies, the correlation between innovation strategies and company's performance was found.