The fog of economic uncertainty that has descended around the world is making it harder for companies to raise money for innovation – at the same time that internal corporate culture is becoming more risk-averse.
A new global survey of 2,800 executives in 22 countries suggests that innovation is taking a hit in these gloomy times. More than 75 per cent of executives said the economic crisis has caused their companies to reassess the risks of innovation, while two-thirds said it has become more difficult to obtain public and private financing, including venture capital.
The survey, commissioned by General Electric Co. and to be released Wednesday, has a slight silver lining for Canada. It found that Canadian executives are generally more optimistic about the culture of innovation than those in many other countries.
The 100 Canadian respondents are surpassed in their optimism only by those in Singapore, Sweden, the United Arab Emirates and Israel. Those most discouraged by their environments are in Japan, Russia, Poland and France.
GE Canada CEO Elyse Allan said in an interview that the Catch-22 is that it will take more innovation to help the global economy to recover. "Innovation is a key driver of prosperity, competitiveness and job creation," she said. "So [if]we pull back from innovative behaviour, that is a problem."
Ms. Allan said the relatively positive attitudes of Canadian executives may be a reflection of the message that has been pounded home since the recession – that Canadians must innovate if they want to succeed on world markets. "[Canadian executives]do see investing in capital equipment and new technology as a key way to be globally competitive."
Canadians also increasingly recognize that innovation is crucial to making companies more resilient in volatile economic environments, she added.
About 84 per cent of the Canadian respondents to the survey said they think support for innovation in this country has been increasing over the past five years. Canadians are also more enthusiastic than executives in other countries when it comes to the appetite for innovation among young people, the efficiency of universities in preparing innovative leaders, and the potential for R&D partnerships with universities.
But to boost innovation in their own companies, they said they need more creative people, more employees with technical expertise, and more support from public authorities.
Not surprisingly, the two sectors where Canadian executives believe more innovation will have a positive impact on job creation and profits are energy and health care.
While Canadian executives may feel relatively positive about our culture of innovation, Canada is not really on the radar screen of corporate bosses in other countries. Only 3 per cent of the global executives surveyed listed Canada as one of the world's top three innovative countries. The United States, Germany, Japan and China are the innovative "champions" selected by the most executives.
To improve innovation in Canada, governments should streamline regulations to move new products to market, help flush out more risk capital, and simplify its support programs, Ms. Allan said.