Survey shows firms put faith in innovation

ALMOST TWO-THIRDS of Irish companies are planning to introduce new products and services as a way of combating the recession, putting them ahead of the European average, a survey by KPMG has found.

The European average is 50 per cent, according to the Continent-wide poll of medium-sized companies by KPMG.

However, Irish medium-sized businesses are less likely to focus on international expansion as a means of growing business, the survey found.

Currently, 27 per cent of Irish companies plan to look at overseas markets, compared to an average of 36 per cent in Europe.

“What we’re seeing is that Irish businesses are developing new products and services but that these are focused on the domestic market,” says KPMG’s Colin O’Brien.

“Given the importance of an export-driven economy to Ireland’s long-term growth, it is essential that Irish companies bring this innovation to the next stage and promote these products abroad.”

Some 400 indigenous Irish companies – most with a workforce ranging from 50 to 500 staff – participated in the survey of 3,200 privately owned companies, which was conducted last November.

On Friday, the Central Bank predicted that Ireland’s economic recovery, which it forecasts will gradually begin in the second half of 2010, will be led by growth in the export sector.

Danny McCoy of employers’ group Ibec, which jointly undertook the survey with KPMG, pointed out that while the survey’s figures show that there is “further scope” for Irish businesses in terms of export potential, exports in traded services have performed well in recent years, while exports of merchandise have remained relatively flat.

The survey also shows that Irish companies have focused more on cost reduction than European businesses. A total of 73 per cent of Irish companies surveyed pointed to cost reduction as the primary means by which they have tackled the recession, compared to a European average of 62 per cent. This is an encouraging sign, Colin O’Brien said.

“Ireland’s high costs have been a major impediment to economic growth, something that the National Competitiveness Council has highlighted for some time. This survey shows that Irish businesses have confronted the issue and acted quickly on cost competitiveness – an important step for economic recovery.”