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Economic Analysis: Theory and Practice

A methodological approach to assessing the financial capacity of innovative development: The SOCAR oil and gas company

Vol. 15, Iss. 7, JULY 2016

PDF  Article PDF Version

Received: 24 February 2016

Received in revised form: 28 March 2016

Accepted: 25 April 2016

Available online: 27 July 2016


JEL Classification: H61, H63

Pages: 153-161

Aliev A.A. Plekhanov Russian University of Economics, Moscow, Russian Federation

Importance The article addresses a set of theoretical, methodological and practical issues of company's performance assessment on the basis of key indicators of efficiency and effectiveness, enabling to form an integral component to evaluate the financial potential of innovative development.
Objectives The aim is to identify factor variables affecting the innovative development of the oil and gas company under analysis, based on the model of assessing the financial potential of innovative development (Ipfpir).
Methods The paper rests on general scientific principles and methods, namely, analysis and synthesis, induction and deduction, collection and generalization of theoretical bases for a balanced scorecard development, their comparison with practical application. I also applied grouping and comparison, computational and analytical methods, a factor analysis of SOCAR accounting data based on Ipfpir.
Results I identified ranking indicators and assigned their weights using the Fishburn rule (criterion), defined the source and normalized indicators, which served as a basis for vector values, and developed an integral assessment of the financial potential of companies' innovative development.
Conclusions The study reveals a downward trend by the combined indicator of financial capacity of the company's innovative development. A decrease in the total Ipfpir by 0.2 on the average is observed, which characterizes the decline in the efficiency of use of financial resources for company's innovative development by 25%. The study also shows the dependence between the amount of R&D funding and the increase in the financial dependence indicator. The findings may be useful for developing the financial and investment policy of SOCAR and other oil and gas companies.

Keywords: financial strength, innovative development, integral assessment


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