Subject The article considers the existing mechanisms to boost innovation development and offers additional measures for strategic management of innovation-driven growth for smelters. Objectives The aim is to diversify risks of innovation projects of smelters based on optimization of investment portfolio, consisting of traditional and innovation projects at a target level of investment yield; to consider approaches to, a rationale for and pros and cons of strategic partnership of smelters and other professional market players potentially interested in high risk-related and/or innovation project execution. Methods I employ logical and statistical approaches to data analysis, the Monte Carlo simulation and financial and economic modeling. Results It is crucial to further develop the existing mechanisms for strategic management of innovation at the metal industry enterprises. Special focus should be on financial and tax incentives at the government level, strategic partnership development of entities operating in the metal sector, and enhancement of economic mechanisms for strategic management of innovation programs and projects implemented by metal and steel companies. Conclusions There is a need to create a successful innovation road map of metallurgical complex enterprises accompanied by strategic partnership with government authorities, key industrial players, academic community and end-use industries. The paper proves the hypothesis about the possibility to apply the Markowitz portfolio theory and Monte Carlo simulation approaches as an economic mechanism for strategic management of innovation programs and projects of smelters. This will facilitate the optimal allocation of investment resources and mitigate risks inherent in innovation program implementation.
Keywords: innovation, investment portfolio, iron and steel industry, venture capital investment, strategic partnership
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