This is definitely the last in this informal series on Canadian innovation with an occasional foray in the nanotechnology scene. I have commented more frequently in my postings on government funding of R&D (research and development) but Canadian business should also be included in the equation.
Canadian businesses don’t tend to invest as much in R&D as their counterparts in other countries. From the Mobilizing Science and Technology to Canada’s Advantage report issued in 2007 by the Industry Canada,
Businesses in Canada need to do more to improve their productivity. Canada’s private-sector R&D as a proportion of GDP is below levels in Japan, the US, Germany, and France. Similarly, the number of patents produced in Canada is low compared with many other OECD countries. Canadian firms also invest less in new machinery and equipment, which embody the latest innovations, than do many of their competitors.
Whether you agree with current patenting laws and trends or not, it is a standard measurement for innovation. Konrad Yakabuski’s article in the Globe and Mail’s Report on Business, which kicked off this series, notes this Canadian business R&B investing,
Between 1981 and 2000, Canadian companies’ expenditures on R&D grew by almost 10 per cent annually. But since 2001, they have been flat in real, after-inflation terms and have declined by fully one-fifth when expressed as a percentage of gross domestic product.
Yakabuski’s article goes on to paint a bleaker picture of Canadian business investment in R&D.
There are many reasons for these problems as noted in the Industry Canada 2007 report. However there’s one reason that I didn’t see mentioned and it may be due to geography.
I live in British Columbia (Canada) and the Vancouver area has a very active technology community where I worked for some years as a technical writer. My observation (it’s not unique but I note it because I haven’t seen any analyses which mention it) is this: the business plan for most of these companies (over 90% and I think I’m being conservative) is simple.
- Get an idea for a technology.
- Start up a company.
- Get some R&D funding from the government.
- Get some interest from the media.
- Sell the product and grow the company to a few million dollars in revenue.
- Now, sell the company to another larger business (usually from the US) and retire.
The local branch of PricewaterhouseCoopers produced a BC TechMap (the version I saw was produced in either 2004 or 2005) that depicts visually the number of technology companies started in BC and the assimilations and mergers over the years. There were hundreds of companies and it was extraordinary to see that most had been acquired. (I think the map starts in the 1980s and the 2004/5 version gave viewers information valid to 2003.) To summarize brutally, the business plan is to sell the business not grow it or invest in it for longevity. I suspect that where BC and nanotechnology are concerned that the same business plan will apply.
Tomorrow, science’s exquisite corpse.
hey Frogheart – I think your point about geography (and ‘philosophy’ – startup, buildup, sell to MS or Intel or Sun or whoever) is not confined to Canada or BC; it seems to have become the ‘fashion’ in business over the last few decades. Mergers and acquisitions, with one large corporation (Google, Microsoft, Nestle or Unilver in food, L’Oreal with beauty products – I could go on) buying out interesting small firms, often keeping the brand without customers necessarily being aware that the quality has changed. I wonder, though, how it is that the academy, traditionally the arena for innovation and ‘pure’ research isn’t really a part of the discussion. (Unless it’s that so many universities now seem like branches of business, with the x corporation school of this and that .. )
We seem to have gradually changed our value system along with our economic and political landscape; innovation and creativity – with utility being the end product.
Hi BaxDoc! I see what you’re saying. I didn’t make myself very clear, I think that the situation in BC is more exaggerated than elsewhere but that’s a gut feeling based on working on the tech industry at a particular time. I was once hired by a company on Thursday and by Monday, the company’s name had changed due to its acquisition and about a year or two after I left, it was acquired again. So that’s my data set, gut feeling.