Canadian firms aren’t competing globally

Only one-sixth of Canadian firms adopt an innovation strategy that focuses on competing in international markets, according to a survey by the Conference Board of Canada’s Centre for Business Innovation.

Read: Canadian businesses must think globally

“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% more net income than their counterparts using other approaches,” says 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 markets.”

The survey finds more than half of Canadian firms get ideas for developing products or services based on customers’ needs. One-third adopted a technology-driven innovation strategy. Just 14% say they made territorial expansion the focus of their innovation strategy.

Read: Canadian business confidence endures Lack of funding is the biggest challenge. 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. Also, firms that look to expand the size of their markets 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.

“It is interesting that neither private equity nor government financing is more readily available for territorial expansion, given the fact the companies with such innovation strategies achieve higher average financial performance than other firms do,” says Michael Bloom, vice president, Organizational Effectiveness and Learning.

Read: Canadian businesses cautiously optimistic

Other challenges include: organizational culture, poor innovation training, fear of risk, lack of executive focus, and lack of innovation measurement.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.