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Former BlackBerry co-CEO Jim Balsillie. (Fred Lum/The Globe and Mail)
Former BlackBerry co-CEO Jim Balsillie. (Fred Lum/The Globe and Mail)

Why Canada’s tech companies fail Add to ...

Canada has few world-class technology companies such as BlackBerry Ltd., the company’s founder says, not because Canadian entrepreneurs lack “fire in the belly” but because the country is poor at managing intellectual property rights (IPR).

Jim Balsillie, who created Research in Motion (now BlackBerry) with his colleague Mike Lazaridis, said Thursday that Canada’s productivity and innovation issues have little to do with R&D spending, a small resource-based economy or the idea that “our entrepreneurs lack the fire in the belly to grow globally competitive businesses.”

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Indeed, Canada spends more on R&D as a percentage of gross domestic product than France, Norway, Japan, and Britain and the United States, yet its productivity and innovation continues to lag other OECD countries, he said at a conference sponsored by the Institute for New Economic Thinking and the Centre for International Governance Innovation.

Missing in Canada, though, are advanced skills related to intellectual property rights. At companies, sophisticated IPR capacity is a “precondition to commercially scaling innovative technologies,” he said, noting only U.S., Japanese and South Korean companies have been among the top patent filers in the United States. BlackBerry is the only Canadian company in the top 100.

Mr. Balsillie said Apple Inc. and Google Inc. spend more on acquiring intellectual property rights than they do on research and development.

IPR skills are crucial if Canadian companies are to compete internationally, he said, or else they will end up as a “lambs for slaughter” in the global marketplace. “They will never grow and Canada will continue to fall behind at a [national] level.”

In an interview after his speech, Mr. Balsillie said Ottawa’s role should be to “sophisticatedly understand how the game is played, particularly in the U.S. and Europe, and make sure that companies are trained to thrive in the game.”

He said currently there are no professors in Canada teaching the global patent system in law, business or engineering schools, and there is no training in the subject in the civil service.

Intellectual property is so important, Mr. Balsillie said, that bilateral issues concerning IPR will eventually overtake traditional trade irritants between countries.

Earlier at the conference, one of the world’s most respected economists said Canada’s federal government needs to work harder to ensure the benefits of the resource-based economy flow to all its citizens.

Joseph Stiglitz, a Nobel prize winner and a professor at Columbia University, said Canada has done moderately well in distributing resource wealth to all its citizens, but it needs to do more if it wants to be in the top ranks of resource-intensive countries.

Generally, economists talk of a “resource curse” where countries with an abundance of resources tend to perform poorly, Prof. Stiglitz said. That’s because the domestic currency tends to be high, impairing manufacturing and exports, and the resource sector can be subject to wide fluctuations in commodity prices.

Over all, resource-based countries also tend to have more inequality among their citizens, he said, despite the fact that there is substantial income that could be used for the benefit of society as a whole.

If governments put the effort into investing in people, social programs, infrastructure and technology, they can make sure this inequality is mitigated, Prof. Stiglitz said, citing Norway as an example of a country that does this more effectively than any other. Countries such as Nigeria are at the other end of the spectrum.

Canada, he said, “is better than the worst, but not up to the best.”

Canada has used its resource wealth to invest in a valuable public health system and a good education system, Prof. Stiglitzsaid, but has not made the same broad investments in innovation as Norway.

The political power of resource companies can slow the broad spread of resource wealth across the population, he said.

“It is easier for the politics to get captured by the natural-resource companies, the result of which is the benefits don’t go to the citizens.”

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