Influence Of Political Instability And Business Environment On Firms’ Performance And Decision-making In Ukraine

In this paper we examine how political instability and other determinants of business environment in Ukraine relate to firm performance and decisions, using firm-level data on851companies from a World Bank Enterprise survey. We examined impact of different obstacles for doing business, based on perception of companies’leaders. Our finding shows that political instability has a significant negative relationship with capacity utilization of firms and the probability to create a new product. These findings are consistent with previous studies on political instability, which has a negative impact on firm performance. The one different result is that corruption is found to have a positive impact on new-product development, which may be explained by the fact that corrupted officials might close their eyes on some procedures connected with the development of a new product.