Only one in six companies adopts the most successful strategy of
OTTAWA, July 17, 2013 /CNW/ - 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 2012 Survey Findings: The State of Firm-Level Innovation in Canada, published by The Conference Board of Canada's Centre for Business Innovation.
"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 of the Centre for Business Innovation. "Most Canadian firms prefer to operate within provincial or national
borders - or in North America - rather than competing in international
Fewer than 15 per cent of companies adopt a strategy to expand their
territory-market, even though these firms often have better financial
performance than the companies pursuing other innovation strategies.
Most prevalent challenges for innovation include lack of funding,
organizational culture, poor innovation training, fear of risk, lack of
executive focus, and lack of innovation measurement.
Internal cash is the source of innovation funding most used by Canadian
firms. Government financing is the second most frequently used source
of funds, ahead of private equity and bank financing.
There is a strong correlation between the intensity of innovation
efforts and company performance - but only if innovation activities are
The survey results indicate that more than half of Canadian firms
surveyed 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/territory
make more use of internal financing and less use of government funding
or private equity than do firms with user- or technology-driven
"It is not clear if use of internal cash is by choice or by constraint.
In any case, it is interesting that neither private equity nor
government financing is more readily available for territorial
expansion, given the fact that the companies with such innovation
strategies achieve higher average financial performance than other
firms do," said Michael Bloom, Vice-President, Organizational
Effectiveness and Learning.
The Conference Board of Canada's Centre for Business Innovation (CBI) is a five-year initiative launched in 2012 to help bring about major
improvements in firm-level business innovation in Canada.
The previous CBI report, Financing Innovation by Established Businesses in Canada concluded that many firms lack the knowledge and skills to present
their requests for innovation funding in a sufficiently appealing form
(including plausible risk management) to attract capital on terms that
are acceptable to the would-be innovator firms.
This report, The State of Firm-Level Innovation in Canada, is the second in a series of reports that go deep inside the firm to
provide insight into the status of firm-level innovation in Canadian
industry. It is based on an extensive survey of Canadian industry that
generated over 600 responses from leaders in firms of all sizes and
provinces. The next report will delve deeper into some of the metrics
used by firms to enhance their innovation outcomes.
Video with caption: "Innovation in Canadian Companies". Video available at: http://www.youtube.com/watch?v=ysRRYB8e7_4
Image with caption: "Most firms identified themselves with a user-driven innovation strategy, followed by a technology-focused strategy. Few firms pursued territorial market expansion. (CNW Group/Conference Board of Canada)". Image available at: http://photos.newswire.ca/images/download/20130717_C7671_PHOTO_EN_29033.jpg
Image with caption: "Firms whose innovation strategies aim to expand their territories and markets make more use of internal financing and less use of government finance or private equity than firms with other strategies. (CNW Group/Conference Board of Canada)". Image available at: http://photos.newswire.ca/images/download/20130717_C7671_PHOTO_EN_29034.jpg
SOURCE: Conference Board of Canada
For further information:
Brent Dowdall, Media Relations, Tel.: 613- 526-3090 ext. 448
The Conference Board of Canada
View video commentary by Bruce Good, Executive Director, Centre for Business Innovation
View image - Distribution of Innovation Strategies
View image - Sources for Funding According to Innovation Strategies