Business profits in South Africa and elsewhere

I spend a large amount of time interviewing and engaging with private sector enterprises. This fieldwork is sometimes like a roller coaster ride, because you can go from seeing a cutting edge business to seeing a business on the verge of collapse within one morning.

While even I have often lamented the state of competitiveness of our South African manufacturing sector, I am often amazed at how profitable many businesses are. If so many of our enterprises are so profitable, why are we complaining? Oh, perhaps it is also good to ask that if so many enterprises are so profitable, why are they not also competitive? Can less competitive enterprises still be profitable? Lastly, a business person recently asked me what I mean with profitable. His argument was that it is better to keep the cash for the “thin years” than to invest now.

So even uncompetitive enterprises can still be profitable. A enterprise that is not “price” or “performance” competitive can still be profitable because they are one of few firms that provide a particular product or service. While many quantitative measures of competitiveness concentrate on measurable indicators, softer indicators such as service, good relations, free (embedded) advise, etc. are not measured. Hence it is possible for an enterprise that could be measured to be uncompetitive to still be profitable. Back to the main argument.

Lets look at those enterprises that are competitive (using some or other objective measure) and they are profitable. Why are so few of them not investing, and treating their current profitability as a short term (if you can call 8 years short) phenomenon? Firstly, many business people comment that earning only 21% gross profit is not good compared to the margins of 15 years ago. No comment. Secondly, many business people in RSA are uncertain about the future and the overall investment climate. News reports about the unsustainable consumer spending also reinforces the message that current demand is unhealthy, unsustainable, or even undesireable. No wonder business people only expand their operations AFTER they get longer term orders.

In general, our developmental challenge is that it is hard to say just how many of our enterprises are profitable. Most of the press coverage and academics research either focus on the listed companies, or on micro enterprises. Take a look at the editorial in the South African Business Day for some of the explanations behind why it is easier for listed companies to be analysed. Of course, their data is publicly accesible.

But perhaps there is another reason. While many of our publicly listed firms are larger firms with many smaller subsidiaries, these listed firms cannot sit and wait for the economic climate to change. Their investors wants continuous financial returns, and hence these firms are constantly trying to find new markets, new niches and new ways to earn a return on their investment. Businesses with private investors behave in the same way. But the rest of the businesses that are “owner managed” do not have this same pressure, and hence they are under less pressure to find innovative ways of investing their profits and earning a return. This is where the underinvestment (despite higher profits) are the most pervasive. If a listed company generates profits, they pay a divident, but the rest of the profits are invested after a while. Financial experts don’t like huge piles of cash doing nothing…

So perhaps another way to get our businesses to treat the current trend as an expansion opportunity would be to get more firms to list on the alternative or development exchanges, or for more private investors to buy into owner-managed enterprises. I know this is easier said than don

My frustration is that smaller (profitable) businesses are not seeing the profitable trend of the last few years continuing into the future. Perhaps we need some stronger leadership in government so that we can unleash investment in the private sector by the private sector. But perhaps that would be shifting the responsibility of forming a vision of the future to government. Actually, the private sector also has a role to play in shaping the future that goes beyond lobbying and advocacy. Often advocacy and lobbying includes painting a bleak picture, so we might just be shooting ourself in the foot if we dont also focus on the bright side and the profitable opportunities that can pursued in South Africa.

By getting the private sector to invest their profits back into the country is the only way that we can use what we already have (clever and brave business people with some capital) to address what we don’t want (unemployed people becoming restless because they feel sidelined).

 

Technology: what do we mean?

In development practice reference is often made to technology as being about hardware (equipment) and software. “Software” is borrowed from information technology to mean the invisible stuff that makes things work, in other words knowledge especially in its coded (tacit) form. This is clumsy. There is a close relationship between innovation and technology, and that is why this confusion matters and should be addressed.

Frequently, innovation is thought of as a new product or hardware artefact, or an improved process made possible by new technology. This error limits technology to hardware, and neglects the other aspects of technology.  It is necessary to understand technology from a much broader perspective.

As alluded to earlier, the narrow definition of technology refers to technical artefacts or hardware (with some supporting documents and instructions). However, complementary factors, without which the employment of technical artefacts makes no sense, are above all qualification, skills and know-how (of the people who work with artefacts), and organisation (i.e. the process of tying artefacts into social contexts and operational sequences). The organization part refers to being able to optimize the way the technology is integrated into other processes, and also how other processes must be changed to exploit the advantages of the new organization.

Meyer-Stamer (1997) formulates three conclusions based on the definition provided above:

(1)    Technology should not be seen in isolation from the environment in which it emerges, or from the organisational structures in which it is used. Technology does not come about in a vacuum; it always develops in concrete social contexts. It is therefore never neutral, and is always developed on the basis of given (economic, social, political) interests.

(2)    Technology often embodies organisational factors. A closed process in the chemical industry or a production line in the metal-processing industry, for instance, consists not only of technical knowledge of individual processing sequences, it also implies organisational knowledge about possible transitions between these sequences.

(3)    Any narrow definition of technology, looking at hardware only, accompanied by the view and approach that go along with it, can thus be tantamount to a guarantee that projects will fail – in development cooperation no less than in many international high-tech corporations.

In the discussion on development policy and the field of development cooperation in recent years, there has been a general acceptance of the broad definition of technology, one that does justice to the problems outlined here. This definition includes four components originally described by Enos (1991:169) illustrated in the image on the right:

(1)    Technical hardware, i.e. a specific configuration of machines and equipment used to produce a good or to provide a service.

(2)    Know-how, i.e. scientific and technical knowledge, formal qualifications and tacit knowledge.

(3)    Organisation, i.e. managerial methods used to link hardware and know-how that includes integrating all the elements into an organization.

(4)    The product, i.e. the good or service as an outcome of the production process.

 

The advantage of the broad definition is that it can help to avoid barren discussions in that it prevents, for instance, any equating of technical artefacts with technology. To this extent it mirrors experience gained, for example, in development cooperation – in view of this definition it is obvious that technology cannot be transferred in package form by for instance combining hardware with manuals and some field training. At the same time it is, against this background, easier to comprehend that technology is involved whenever production goes on – even when seemingly primitive technical artefacts are utilised in the process, for “no country is without technology, not even the most primitive” (Enos, 1991:169). So even a simple manual activity like using a shovel to dig a deep hole involves multiple elements and processes of different technologies. However, the absorptive capacity of countries, regions within countries and between different firms differs vastly.

Practically speaking, this means that practitioners must be careful when describing technology in relation to hardware that they do not neglect the other dimensions. For instance, when trying to understand where ‘new technology’ comes from in a value chain, make sure that respondents are not only identifying equipment suppliers. A second line of enquiry may be to get respondents to consider other kinds of technology related to know-how, or how to configure a specific process or organisation.

If a broader definition of technology is accepted, it becomes clear that there is a close relationship between technology and various forms of knowledge and also between technology and learning.

 

ENOS, J. 1991.  The creation of technological capability in developing countries. New York: Pinter.

MEYER-STAMER, J. & DEUTSCHES INSTITUT FÜR ENTWICKLUNGSPOLITIK. 1997.  Technology, competitiveness and radical policy change : the case of Brazil. London ; Portland, OR: Frank Cass.

 

Linking to Complexity

If you are interested in the topic of complexity then surf over to Marcus Jenal’s page where he provides some insights on the topic. Marcus is a very good thinker and practitioner I always enjoy the questions he asks.

Also take a look at Aid at the Edge of Chaos and Owen Abroad blogsites for more insights on complex adaptive systems and development.

My dictionary for economic development practitioners

At any point in time I am coaching several development experts and learners around the world. I have a short list of words that when I see them in any document I see red flags. However, there are also several words that when I see them I know we are on the right track.

I share my list with you. Some refer to this as Shawn’s Dictionary for Economic Development.

Synergy NOT compromise. Synergy you focus on using the strengths of different ideas, people, organisations.

Collaboration NOT cooperation through control. Get organisations to work together yet independent. Do not try everyone to sing from the same hymn sheet. Rather allow for some jazz.

Balance NOT single minded or focus. Balance allows you to work with contradiction, conflict and seemingly opposing ideas.

Catalytic NOT incidence or isolated. I know that focus is good in an office environment. But in development focus on a specific incident can easily ignore the bigger system.

Stimulate NOT achieve. Try to find ways of getting the people to work better. Energize the system, don’t just fix the problem.

Identify patterns NOT problems. The patterns tell you about the system, the problem is a symptom.

Explore NOT prescribe. Get the people in the system to better understand what is going on.

Crowd in NOT filter out. By excluding elements in the system by creating artificial filters (like gender, wealth or social status) you weaken the system.

People and relationships NOT products and technology.  This one I have to frequently remind myself about. In the end it is about the process that we use to get people to work and thing together, not about the technology or products. The latter is always temporary.

Now I know that there may be certain contexts where my dictionary might not work, but that is why a red flag goes up when I see these “wrong” words. When I see one of the wrong words I must immediately ask some deeper questions.

Which words do you red flag?

Lets build a list and have a debate!

Job creation for electronics contract manufacturing

I know some readers are waiting for the continuation of the series on the services sector. Apologies for the delay.

In the meantime, here is a link to a lead editorial that I wrote for the EngineerIT Journal in Southern Africa. The article is informed by my ongoing work in the electronics sector in South Africa. Advanced sectors such as electronics are often overlooked in developing countries because they don’t seem to absorb low-skilled staff.  However, these advanced sectors play a critical role in upgrading our economy, drawing out different kinds of suppliers, experts and even customers.

Perhaps our greatest asset for the advanced manufacturing sectors in South Africa is that we have some very demanding customers here and in the region. These demanding customers wants sophisticated products that solve problems that are rather unique.  For instance, the depth of mining in the region requires much more robust products that can work for long periods in tough environments. Also, the sophistication of the international crime cartels in the region place stringent demands on the police force in terms of communication technology. I can cite many other examples of how demand shapes the development of certain sectors.

New series: the role of the service sector in economic development

It is time for me to venture into one of my other favourite topics: the service sector and its role in economic development. With this I am not shifting into promoting  like DVD rentals (don’t worry), I am mainly interested in the knowledge intensive business sector (a.k.a KIBS) and how it enables economic growth and productivity enhancement [1].

Let me start my story.

From an economics perspective, the service sector did not receive much attention from the classical theorists, and it only really came to the fore in the twentieth century. If you are interested to know more about the history, then I can post something on this later.

The service sector is becoming increasingly important in the economies of developed and developing countries. This is not unique to South Africa. While some countries have recognised the importance of strategies to further stimulate the productivity and growth of the service sector, other countries have not yet recognised that the service sector is constrained by a variety of challenges that are unique to this sector. In fact, many countries hope that services will go away. This sector is already a large contributor to jobs and Gross Domestic Product worldwide (not only in OECD countries).

Services are different from goods and require different strategies for development than the primary and secondary sectors which have been traditionally given attention. Although not everybody agrees on how to classify services, it is generally agreed that services are becoming very important in economic development. In some cases manufacturing will not become more productive without more specialised services.

A challenge we face as development practitioners is that data on the service sector in developing countries is unreliable, if it exists at all. For instance, in many countries the engineering services offered by a small engineering firm are recorded under the clients industry in the national accounts. Thus engineering services used by a mine are recorded as mining financial data (thus inflating the primary sector and deflating the tertiary sector in the national accounts). The implication is that the role of the service sector could be much bigger than the formal statistics suggest.

For the manufacturing sector, the service sector, especially knowledge-intensive and business services, is being increasingly recognised as important levers for growth and development of the economy. Knowledge intensive service providers are not only carriers of specialised knowledge; they are also connectors, technology transfer agents and problem solvers.

In many cases developing countries undermine the development of knowledge intensive business services through poorly designed public sponsored business services. Often these services are too generic to really stimulate the growth or increased productivity of the manufacturing sector.

The service sector is also more prone to market failures for many reasons. One of the reasons why poorly developed public services harm the development of knowledge intensive business services is that it is very difficult to compare and value different service offerings (not only between private providers, but also between public and private providers).

Developing countries face the additional challenge that the producer service sector tends to favour countries with higher skill levels or human capital, and shuns countries with large pools of unskilled labour. Due to the close relationship between the service sector and the manufacturing sector, low sophistication of the service sector will also restrain the growth and development of the manufacturing sector. Services often accompany goods in global trade, and service firms are affected by this wherever they are. Thus both the service sector and the manufacturing sector must be upgraded at the same time to overcome the low equilibrium that exists.

The next few posts will delve a little deeper into the service sector

[1] For those that don’t know, my PhD thesis was about market failures in knowledge intensive business services.

Identifying firms to work with to induce upgrading of industries

This post was revised in February 2018.

When working on the improvement of innovation systems in developing countries, we have to work with firms. These firms have several roles, and there are three units of analysis:

  1. The firm is an important unit of analysis of innovative practices (product, process, business model).
  2. The firm is also a unit of analysis in terms of cooperation and collaboration, thus its ability to cooperate with rivals is an important consideration when we design interventions.
  3. Working with the right firms also provides an important source of technology and knowledge spillovers. This is where the challenge comes in for development practitioners.

Generally, firms that are able to lead the way, or could be good role models, are difficult to involve in development programmes for a variety of reasons. I won’t discuss that right now. What is important to remember is that most firms not only absorb or use technology and knowledge, they are also the main sources of knowledge and technology. This is both from a supply perspective (equipment suppliers, technical or specialist sources of knowledge, etc.) and from a demand perspective (demanding customers, sophisticated demand). Whether firms are aware of their role as disseminators of knowledge of technology is another story!

I will rather focus on how to identify the firms that we can work with to improve innovation and competence in all three units of analysis discussed above. Remember, our objective is to find ways to improve the dynamic in innovation systems that will result in the modernisation and technological upgrading of industries and regions.

More than 25 years ago Bo Carlsson and Gunnar Eliasson described a concept called “economic competence”. At the time they defined economic competence as “the ability to identify, expand and exploit business opportunities” (Carlsson and Eliasson, 1991). This is a useful definition as we have to remember that we cannot innovate on behalf of a broader industry. Somehow we must work with those firms that are able to innovate, imitate, adapt and integrate new knowledge and ideas.

According to Carlsson and Eliasson, economic or business competence has four main components:

  1. Selective (strategic) capability: the ability to make innovative choices of markets, products, technologies and overall organisational structure; to engage in entrepreneurial activity; and especially to select key personnel and acquire key resources, including new competence. This aspect has been amply illustrated in recent years as many companies have struggled to define their corporate identities and strategies as distinct from their competitive strategies in each individual business unit (Porter, 1991).
  2. Organisational (integrative, coordinating) capability: the ability to organise the business units in such a way that there is greater value in the corporate entity as a whole than in the sum of the individual parts.
  3. Technical (functional) ability: this relates to the various functions within the firm, such as production, marketing, engineering, research and development, as well as product-specific capabilities. These are the areas of activity in which firms can compare themselves to their peers or leading competitors.
  4. Learning ability, or the shaping of a corporate culture which encourages continual change in response to changes in the environment.

Economic competence must be present in sufficient quantity and quality on the part of all relevant economic agents, users as well as suppliers, government agents, etc. in order for the technological system to function well. This is both true at a local or regional level, our a national or sectoral level.

If the buyers are not competent to demand or use new technology – or alternatively, if the suppliers are not able or willing to supply it – even a major technical breakthrough has no practical value or may even have negative value if competitors are quicker to take advantage of it.

I think that this business approach of choosing the entrepreneurs that we work with is very relevant to finding the people who can absorb new ideas and make them work in a developing country context. I would also go so far as to state that I do not believe that it is feasible to select “change agents” according to social criteria such as gender, age, etc. – but that we recognise that change within economic systems happens because of the economic competencies of the people who are recognised in the system (regardless of their demographic data). The reality is that you cannot be competent on behalf of other people!

I challenge you to review the firms that you are working with to see if they are economically competent!

Sources:

Carlsson, B. and Eliasson, G. (1991). The nature and importance of economic competence. Working Paper No. 294, The Industrial Institute for Economic and Social Research (IUI).

Porter, M.E. (1991). “Towards a dynamic theory of strategy“, Strategic Management Journal, 12 (Winter Special Issue), pp. 95-117.

The difference between academic and industrial science

One of my favourite authors on the topic of science is the late John Ziman. Ziman played an important role in popularising science and its role in the technological evolution of societies. We have some of his books on our Mesopartner bookstore (You can also click on the images on the right of the screen) .

In his last book, Real Science, he made an important distinction between science in academia, and science in industry. This is relevant to me because I am assisting universities to conduct more relevant scientific research that will benefit industry. At the same time I am assisting industries to intensify their scientific research.

According to Ziman, academic science works towards the Mertonian norms introduced by Robert K Merton in 1942, also known as CUDOS. Merton advanced our understanding of the ethos of the scientific process. I like Ziman’s (2000) discussion of the Mertonian principles. CUDOS is as an acronym that denotes good academic research and stands for:

  • Communalism – fruits of academic science should be public knowledge (belongs to the whole scientific community), and the communication and dissemination of results are as almost as important as the research itself,
  • Universalism – researchers and scientists relate to each other regardless of the rank and experience of the researcher. The norm of universalism requires that scientific findings are evaluated objectively regardless of the status, race, gender, nationalism or any other irrelevant criteria,
  • Disinterestedness – academic scientists have to be humble and disinterested. Work is done in a neutral, impersonal and is often recorded in the passive voice. It disassociates with the personal or social problems, and focus on advancing knowledge or solving a very specific problem in an almost clinical way.
  • Originality – every scientist is expected to contribute something new to the archive, while building on the knowledge of predecessors. Unfortunately this also sometimes constrains how creative academic research can become. “new” could mean new data, questions, methods and insights.
  • Scepticism – This norm triggers important brakes on scientists, as it involves critical scrutiny, debate, peer review and contradiction before being accepted. It is important as it deepens understanding and knowledge from different research perspectives, and should not seen as being completely negative, rather it should be seen as being necessary.

 

Industrial science works towards what Ziman (2000:78-79) calls PLACE:

  • Proprietary – the knowledge is not made public (or at least as little as necessary is made public),
  • Local – it is focused on local technical problems rather than on increasing general understanding,
  • Authoritarian – Industrial researchers act within a hierarchy and must work to please senior management, in other words, it is not serendipitous,
  • Commissioned – it is undertaken to achieve practical goals rather than to just improve knowledge, and
  • Expert – industrial researchers are employed as expert problem solvers, rather than for their personal creativity and writing or teaching skills.

 

Ziman argues that when universities undertake contract research for industry, they somehow cross the boundaries between these two approaches to research. For instance, industry is more interested in solving a specific technological challenge and would prefer that senior researchers work on a problem. In the last 50 years it has increasingly become necessary for universities to raise 3rd stream income, so it a universally accepted practice that universities undertake research for and in cooperation with industry.  However, a university must prioritise the development of interns and junior researchers (and achieve other social goals). Furthermore, industry may not be interested in registering a patent (immediately), otherwise their secrets gets shared with the whole world. Academic researchers on the other hand, are expected to deliver publications when they cannot deliver patents or licenses, thus there is another conflict of their objectives. Perhaps a last comment is that universities are under pressure to solve social problems that are deemed “relevant” by prevailing political pressures, while industry prefer to solve problems that are immediate, relevant and that may even be in contrast with the desires of the prevailing political and social debates. Practically this means that at the moment industry may need to automate to remain competitive, thus incurring job losses, while government and the society may be demanding job creation for people with little or no technical education.

 

Universities must understand this tension, and must operate within and between different modes of conducting research. Current legislation perhaps assumes one standard approach to university research, that always results in something that can be published and or patented (licensed), and it further assumes that the value (and cost) or research is known at the time of start of the research or after completion. Practical experience indicates that this is not always the case. Sometimes the value of research only becomes apparent when it faces market forces.

 

Sources:

ZIMAN, J.M. 2000.  Real Science: what it is, and what it means. Cambridge: Cambridge University Press.

 ZIMAN, J.M. 2003.  Technological Innovation as an Evolutionary Process. Cambridge Cambridge University Press.

Innovation is not linear

You would think that everyone would know this by now.

You are wrong.

Frequently, policy makers, universities and technological supporting institutions erroneously describe innovation according to a linear model that assumes that innovation is applied science. It is assumed to be ‘linear[1]‘ because it is believed that there are a series of well-defined stages that innovations go through, starting with research (science), followed by development and then finally production and marketing. In this linear model scientific research is deemed to be the most important step as it is the first step in the process. Although there are some cases that have followed this route, they are in the minority.

A softer version of the linear process of innovation is where it is assumed that the knowledgeable people are in the academia or business support structures, and that the task of policy makers is to devise ways to transfer the knowledge flows from universities and supporting structures to businesses. The main perceived limitation is the inability of business people to learn by themselves or to absorb knowledge from the system around them.

In the real world, innovation is dynamic and it is complex. It sometimes starts with a clever idea by an entrepreneur about an unmet need in the market. At other times it starts with a customer complaining to a service technician. Often it starts with a problem or obstacles, and in a few cases it is the result of brainstorming. Wherever it starts, innovation is definitely not neat and tidy. In fact, it is quite chaotic.

But there are elements of the innovation process that may appear linear, like a product development process (product innovation). But this scarce and mainly happens in professionally run firms. For most of us, innovation is not a structured process.

Again, it is important to understand that innovation in a systemic context often arise due to the interaction between different social actors like enterprises, technical specialists, suppliers, customers and maybe the odd academic.

Notes:

[1] The ‘linear’ innovation process was first criticised by KLINE, S. & ROSENBURG, N. 1986.  An overview of innovation. In The positive sum strategy: harnessing technology for economic growth. Landau, R. & Rosenburg, N. (Eds.), Washington, DC: National Academies Press, pp. 275-305.

The difference between invention and innovation

This post is copied from a chapter in a book that I am working on about the fundamentals of innovation systems. I am responsible for the thematic area of innovation systems within the knowledge consultancy mesopartner that I am a partner of. If you want to stay abreast of the work I am doing on this topic then I urge you to subscribe to my blogsite so that you can receive an e-mail every time I add some content (click on the sign me up button on the top right).

We often find that development practitioners, business people and policy makers are not clear about the distinctions between innovation and invention.

A widely accepted distinction between invention and innovation is provided by Fagerberg et al. (2005:4). According to Fagerberg et al., invention is the first occurrence of an idea for a new product or process (first to the world), while innovation is the first attempt to carry it out in practice within a specific context (by, for instance, introducing a machine from another country into a local manufacturing process). Thus invention and innovation could be closely linked, although in most cases they are separated in time (sometimes decades or centuries), place and organisation. However, the fact that innovation typically emerges within a complex system is often overlooked. For instance, as Schumpeter (1964/1911) explained, the innovator who invented the steam engine still had to wait for others to develop the different aspects of the rail system before it could be commercially viable. The steam engine was initially invented in a completely different context, again illustrating how inventions are dependent on the context in which they arise.

While many innovations can be linked to well-funded research programmes, funding is not a pre-condition for innovation. In fact, in many cases a lack of resources could stimulate people to innovate. Firms usually innovate because they believe there is a commercial benefit to the effort and costs involved in innovating. This commercial benefit could be measured in terms of return on investment or profits, but it could also be about cost saving, resource optimisation, solving a recurring problem or responding to the demands of a customer. Often increased competition, changes in market structure or market demand, or changes in technological performance also affect the innovation process. However, innovation requires taking or at least managing risks. Therefore, firms with low capital or with tied up resources are less likely to innovate.

To turn an invention into an innovation, a firm typically needs to combine several different types of knowledge, capabilities, skills and resources from within the organisation and the external environment (Schumpeter, 1964/1911). The interaction between knowledge and learning will be discussed in more detail in the next section.

The willingness of an individual to tinker and explore better solutions is influenced in part by the organisational context of the innovator, but also by factors such as education, qualifications, meta-level factors such as culture, personal characteristics (such as patience, inquisitiveness or tolerance of failure) and the institutional environment. Other factors such as competitive pressure, problem pressure, or social and economic incentives also play a role. Locations with a more diverse economic and social make-up are more likely to be conducive to innovation, as actors interact with people with similar and different interests. The proximity of other actors and the density of interactions make imitation, cross-pollination of ideas, learning from others and the combination of different ideas into new products and services more viable (and less expensive). This feature could explain why urban areas are often hotbeds of innovation – there are more people with different ideas and perspectives that stimulates and often absorbs new innovations.

Why does this matter? Well, many countries (including South Africa) over emphasize “invention” (even when they say “innovation”). Many financial incentives, loans and support programmes prioritize novelty as opposed to absorption. Absorption is important for innovation, as it indicates how ready firms, industries or societies are to not only learn from their own mistakes (and success), but to also learn from the mistakes and the success of others.

Therefore innovation stimulation is about getting our developing countries ready and willing to absorb insights and ideas from others, as much as it is about getting our entrepreneurs to be creative.

As someone famous once said: “why re-invent the wheel?”. With our small budgets we are highly unlikely to out-invent our international peers on many of the topics that are now seen as “sexy” like climate technology etc.

Our priority should remain to get our entrepreneurs and enterprises to be innovative at product, process and business model level. Only once we improve our absorptive capacity will we be able to become inventive.

Sources:

FAGERBERG, J., MOWERY, D.C. & NELSON, R.R. 2005.  The Oxford handbook of innovation. Oxford ; New York: Oxford University Press.

SCHUMPETER, J. 1964/1911.  Theorie der wirtschaftlichen Entwicklung. Eine Untersuchung über Unternehmergewinn, Kapital, Kredit, Zins und den Konjunkturzyklus. Berlin: Duncker und Humblot.