Innovation management in Kazakhstan

1.1 Innovation in the enterprises competitiveness increasing system

Conscious desire of Kazakhstan to integrate into the world economy requires the use of generally accepted in the international community indicators of country participation in the global process of world economic development, and the competitiveness which is mentioned several times by the President of the Republic of Kazakhstan is in the first place. [1]

The notion of competitiveness have different meanings and requires a review of the definition from the various points of view to compete in the global market.

Currently, by the Republic of Kazakhstan mainly natural resources are produced into the world market, and according to L.I. Bekenova increasing oil production slows the growth of other parts of the oil industry - transportation, processing, and the solution of socio-economic and environmental problems in the industry [2], which can not have an impact on its competitiveness.

The lack of products of the oil industry in the global market led to the fact that the country with the enormous reserves of strategic raw materials could not withstand the global financial crisis of 2007 - 2008 years.

The term "competitiveness" quietly, but rather quickly entered our everyday life. At the present time, more and more researchers pay attention to the study of competitive products of companies, cities, regions, countries and even regulations [6, p. 234].

Competitive relations in the economic sphere appeared together with commodity production, as a mechanism of regulation of the market economy. The first theoretical studies of the competition appeared in the works of economic theory classics in the middle of the XVIII century. In general, we can say that in the middle of the XX century the general idea about the nature and driving forces of competition was formed. The four of its classic models are monopoly, oligopoly, completed and monopolistic competition. These theories are summarized in the work of Adam Smith's "An Inquiry into the Nature and Causes of the Wealth of Nations" (1776). [10]

The novelty of the competition theory of Adam Smith is that he was the first:
1) to formulate the concept of competition as a rivalry which raise and reduce the prices;
2) to formulate the basic principle of competition - the principle of the "invisible hand" according to which "pulling" the strings of puppets – entrepreneurs; "hand" makes them to act in accordance with some "ideal" plan for economic development and relentlessly drive out not engaged in the production of needed market products firms;

3) to develop the theory of flexible mechanism competition that balances the industry profit, resulting in the optimal allocation of resources between sectors. Subtlety of competition mechanism is that while reducing demand for the product, the greatest difficulties experience firms which produce bad quality or too expensive products. Flexibility of competition mechanism is manifested in its instant reaction to any changes in the environment.

4) to define the basic conditions for effective competition, including the large number of buyers and sellers, who waste the information, mobility of using resources, the inability of each seller to have a significant effect on the market goods prices (while maintaining its quality or the quality of service);

5) to develop a model for strengthening and development of competition and to prove that in the market conditions there may be maximum satisfaction of consumers needs and the best use of resources.

A certain contribution to the development of competition theory of Adam Smith made Ricardo, D. Mial, J. Robinson, J. Keynes, Schumpeter, P. 'Heine, FA Hayek, F. Knight, KR McConnell, SL Bru, M. Porter, GL Azoev, YI Korobov, L. Ramenskii, A. Yudanov etc.

To understand better the nature of the competition, we will give the definition formulated by some authors.
"Competition is the desire as much as possible to meet the criteria for access to rare goods", said the modern American economist Paul Heine [11]. In our view, this definition did not accurately reflect the nature of competition because not all companies operate in the field of rare goods.

J.F. Knight defines competition as a situation in which there are many competing units, and they are independent[12]. K.R. McConnell and S.L. Brue consider that competition is the presence of a large number of independent buyers and sellers, an opportunity for buyers and sellers freely to enter and leave the market. This definition in our opinion, is not entirely accurate. [13] Schumpeter defined competition as a contest of old and new with innovation. [14] In our opinion, the rivalry is the basic position of the concept of "competition" between old and new products, old and new management techniques, old and new knowledge, and etc.

Nobel laureate in economics in 1974, an Austrian scientist Friedrich A. von Hayek notes that competition is the process by which people receive and transmit knowledge. According to him, “the market only because of competition hidden becomes clear” [15. p. 30-31]. At the same time, modern scholars presume that perfect competition is the present form of the abstract. On this point there can be given the number of statements by authors as M.N. Chepurin, E.A. Kiselev. They claim that "surely, competition in its purest form is never ever existed. It can be seen as a kind of abstraction, analysis of which, however, is necessary, as a first step to understand the principles of the functioning of the market mechanism "[16, p. 107].

Significant increase in the global competition in the last quarter of the XX century, due to the fundamental changes in competition (the causes of which are, above all, scientific-technical development and a rapidly growing globalization) demanded from the European and American theoreticians new concepts of effective retention of market superiority.

In the second half of the XX century in developed countries started a new stage of competition. The reasons for the changes were the rapid acceleration of technological progress and increased price competition. The last makes its own rules in order to "stay afloat" we must always provide the highest level of scientific and technical products.

Therefore, the most important indicator of the progressiveness and competitiveness of firms was research intensity of enterprises. It shows the percentage of R & D expenditure in the total production costs.

In the second half of the XX century profound changes in science and techno- logy were so close that led to the scientific and technological revolution. It represents a radical qualitative transformation of the objective and subjective conditions of economic development on the base of science change into the leading factor of production.

The technological revolution in its present stage caused a radical change in technology production. Instead of traditional machine industry technology a fundamentally different set of methods of manufacturing useful things are being created.

Machineless technology—essentially new ways of processing items, electron beam, fiery, pulse, radiational, membrane, and other chemicals are being firstly created. Electronization and
integrated automation leads, ultimately, to the creation of uncrowded and unmanned production.

Another important improvement in technology is resource economy. Economical types of steel production, synthetic and other progressive metals are used, and the quality of products are improving. Better utilization of raw materials enables to create a low-waste and non-waste production.

If environmental contamination is typical for traditional methods then the "high tech" is environmentally friendly. The closed system of water use, closed production cycles are used there and recycled materials and industrial waste are widely used also. This provides rise of economic and social effectiveness of business.

In the last decades of the XX century and at the beginning of the XXI century there were important changes in the national innovation systems in major industrial regions of the world economy, for instance, in the U.S., Japan and Western Europe [17, p. 39].

Some countries (the U.S., EU, Japan) followed the model of technological leadership. The high level of science and technology provides leadership in the creation of innovative technologies in the field of mechanical engineering, automation of complex processes, artificial intelligence development, alternative energy usage, clean technologies, new products with new consumer properties and quality levels. Thanks to the practical use of discoveries and technologies, developed resource base does quick production of new products to the market.

Thus, modernization takes place in a highly competitive market today. Consequently, the priorities of economic modernization is the creation and development of potentially competitive industries. An important area of modernization is further innovative development [19, p. 10].

Innovative processes of different scale are the basis of all development processes of social systems, introducing elements of randomness which change homogeneity and generate adaptation processes [21, p.7].

It should be noted that the regulations of the Republic of Kazakhstan widely interpret the concept of "innovation" which along with technical innovations provides organizational, financial, and economic decisions. In our opinion, the encyclopedia dictionary edited by A.G. Porshneva [22] gives the definition of "innovation" as the main feature of the results in the concept of "uncertainty" unreasonably. The uncertainty exists only during the development of a product, and "innovation" is embedded product which was approbated.

B.T. Ereshev [26] N.N. Shapova [27] equate innovation with novelty. Therefore, theorists of innovative development equate "innovation" and "novelty". This identity appears also in the works of scholars of Soviet times, which has the identification of factors that determine the dynamics of the innovations extension, were the factors that influence the rate of extension of innovations are not considered. Consequently, our scientists in the Soviet time identified a process of "novelty" and "STP".

In addition, these scholars identified only a few factors in the development of innovations. They were demands for the products of the industry, the volume of production and the structure of capital investments, direction of the industry upgrade production facilities and decommissioning of old funds, STP promoting factors, scientific and technical potential of the industry including technological features of its production. Thus, we can conclude that the studies carried out in the period of 1965 - 1980 witnessed with the development of the scientific - technical progress in terms of exposure to stimulating factors (material incentive) without bringing research to the final result - the release of new products, new organizational structure for the introduction of new technology, the technical possibilities of the industry. Due to this, the appropriateness of the approach of some authors to the definition of "innovation" and the identification of the concept of "innovation" with the "STP" put us in doubt.

In this regard, we agree with Utebayev A.B. that "The paradigm of the national innovation system in the late 20th century logically replaced the paradigm of science and technology based on the importance that acquired innovations as tools of scientific and technological progress and movement of economy of the developed countries to innovative information stage "[28, p. 7-8].

Ereshev B.T. notes that innovation is an integral part of STP related to the applied usage of fundamental results of science and technology. This is a form of materialization of scientific and technical knowledge. Their relationship is symbiotic. Without the continuous development of science and technology base for innovation would have been narrowed, reduced to the use of empirical factors, acquired in the individual plants and their subsequent diffusion in the economy. In turn, innovation, providing access to the practice of science, forms a material medium and experimental facilities to test scientific hypotheses and results. Between these categories there is no complete unity because they reflect different levels and social production improvements [26, p. 9].

Firstly, innovation is the final result of intellectual activity expressed in the practical application of the latest achievements of science, technology and creativity to improve the efficiency of a process regardless of its use.

It should be noted that the social phenomenon is a kind of culture of the society, which in our opinion is necessary to train. An example of this is the rapid growth of some Asian countries (Japan, South Korea, Singapore, etc.), where innovation developed as a component of national culture, where there is a gradual shift from the development of industries which rely on cheap labor force towards the development of high technology industries.

There are other definitions of the concept of innovation, and they are constantly evolving as we gain new experiences.

In researches of the market economy authors, there are critical comments in interpretation of the definition of "innovation". Initially, officials have created several systems of concepts on how to successfully implement the "Strategy of Industrial and Innovation Development of Kazakhstan for 2003 - 2015 years", "The concept of technoparks", "The concept of venture capital industry", "The concept of national innovation system", and only after that there will be the discussion "What is 'innovation?'". [21]

Based on these studies we can say that innovation is the essence of simultaneous manifestation of two worlds, the world of technology and the business world. Criticizing the definition of innovation as a process aimed at the use of research results in producing new products and creating new technologies, such as one-sided and insufficient, especially in terms of identifying the forms and scope impact this activity. Innovation without changes in business processes are doomed to failure, and the evidence of it is the post-Soviet experience of innovative activity. The most important specifics of the innovation process conjugacy interaction of two processes:

-the application of new scientific - technical solutions;
-the change of forms and methods of organizing and conducting business.

Manpower is important in innovation. Currently, under the influence of STP, much more attention is paid to the so-called "human factor", qualification level and discipline [31, p. 9]

Based on the concept of "innovation" as defined by J. Schumpeter, we present author's interpretation of the concept of "innovation". "Innovation" is the realization of new combinations based on the use of new materials and components, the introduction of new processes, opening of new markets and new organizational forms, new thoughts.

The positive experience of a number of industrial countries shows the crucial role of innovation in improving competitiveness. Impact of innovation on competitiveness of company highlighted by many researchers. Arthur A. Thompson and A.J. Strickland propose the development strategy of the organization (company) based on analysis of industry and competition to identify the key factors for its success, including the quality and characteristics of the products, the reputation, production capacity, the use of technology, dealer network and distribution capabilities, innovation capabilities, financial resources, costs compared with competitors, customer service [32]

In doing marketing research E.P. Golubkov offers to assess the competitiveness of the organization to use 16 effectiveness factors of it (image, product concept, product quality, the level of business diversification, the total market share of the main types of business, power of research and design facilities, power of production facilities, etc ), which he explains and supplements by factors of competitiveness of products and the effectiveness of marketing activities. [33]

Thus, the current state of competition of companies is not only the desire to have the capital and material resources, but it is how to be able to develop and innovate it in their companies. Currently competitiveness is discussed in terms of the efficient use of its available manpower, material and financial assets for the production of any goods or services at the lowest cost. Competitiveness depends on the ability to innovate, to do research, to deliver new products, services, to improve quality.

Research which is done in this paragraph led to the following conclusions:
- A scientific theory is impossible without taking into account the variety of existing trends in the economy. Since the category is dealt in different ways (in political economy as an element of industrial relations, in "neo-classical" as a part of the market mechanism and market structure, in institutionalism as an institution), it is important to prevent electrical mechanical summation.

Precise and systematic development of the basic theoretical and formative elements can not be achieved by speculative arguments and separate from historical moments in the formation of the economy. In this case there can’t be a gap between the historical experience and theoretical research. Arbitrarily constructed models are large and, unfortunately, they are mistakes. This new stage of the analysis also can not be mastered being separate from the real economy.

- On the basis of the analyzed theory of competition, we believe that concept of "competition" should be considered more widely and deeply. The competitiveness is not only between producers of manufactured products, but manufacturers and buyers also, it is a competition between the workers and the employers, it is a competition between countries. From the mentioned above definitions, "competition" should not involve only the producers. The competitiveness between the old and the new is important. Due to this, we propose the following definitions of "competition".

Competition "is not constant," and not a historical phenomenon, as its "neoclassics", historical expression of economic competition between the employers to increase profits in the period of capitalism and technological civilization.

"Competition" is on the one hand, the economic competitiveness of commodity producers in higher economic conditions to maximize profit, on the other hand, the competitiveness in the marketing of products between the producer and the buyer, competition among countries for higher levels of economic development. / Definition of the author /

Based on this definition, we believe that the main field of our research will be in the direction of:
-Competition in the higher economic conditions;
-Competitiveness in the marketing of products;
-Competitiveness among countries with higher rates of economic development.