Canadian companies that focus on expanding into competitive global markets outside of North America — and orient their innovation efforts to compete globally — reap the best bottom-line results. However, only about one-sixth of Canadian firms adopt an innovation strategy that focuses on competing in international markets, according to a report by the Conference Board of Canada.
“Few companies pick the most successful innovation strategy of expanding to provide products and services to new international markets, even though these firms earn between 10 and 30 per cent more net income than their counterparts using other approaches,” said Bruce Good, executive director at the Conference Board’s Centre for Business Innovation.
“Most Canadian firms prefer to operate within provincial or national borders, or in North America, rather than competing in international markets.”
The survey results indicate that more than one-half of Canadian firms pursue a user needs-driven innovation strategy, in which they obtain new ideas stemming from customers’ needs as the basis for developing products and services.
About one-third of responding firms adopted a technology-driven innovation strategy that relies on exploiting advances in technology to gain a competitive edge.
Just 14 per cent of the survey respondents said they made territorial expansion the focus of their innovation strategy.
Funding for firm-level innovation was identified as a challenge among survey respondents. Internal cash — from within an operation or obtained from the headquarters of the corporation — is the most frequently-used source of funds, followed by government funding. In addition, firms that look to expand the size of their markets or territory make more use of internal financing and less use of government funding or private equity than do firms with user- or technology-driven innovation strategies.
© Copyright Canadian HR Reporter, Thomson Reuters Canada Limited. All rights reserved.