Companies who invest in innovation – which could be a new product, a new service, new data systems or technology, or a change in the way they run their business – can have significant productivity gains over those that don’t, a new study reveals.
In its Innovation and Productivity report, ANZ looked at 49 manufacturers that had received Government co-funding grants for R&D activities through Callaghan Innovation. They were benchmarked against 504 other businesses operating in the same sectors.
The research found the 49 firms generated a median Return on Invested Capital (ROIC) over four years of 14.1%, compared to 10.9% for the control group of 504 businesses. They also grew sales revenue faster, achieving a median result of +9.3% per annum relative to the control group at +6.4%.
ANZ commercial & agri general manager Penny Ford said embracing technological change and investing in processes, R&D and technologies are key drivers to lift productivity.
“We understand that innovation can seem risky and a big leap for some businesses,” Ford noted. “But we believe it is something to be encouraged.
“We are seeing great examples of New Zealand businesses that have invested in innovation and, as a result, are recognising significant productivity gains over those that haven’t,” he said.
Ford also highlighted that New Zealand’s competitors are embracing change and investing in innovation.
“If we don’t act, New Zealand risks sliding further down the global productivity rankings,” he added. “Moreover, New Zealand businesses will find it harder to compete.”