Visionary SMBs exporters and importers are innovating to compete and leverage the global market as their playground.
Innovation versus invention
Schumpeter was the first describing “innovation” in 1912 in the Theory of Economic Development: “The role of innovative entrepreneur consists in transforming the product routine, by exploiting an invention or an original technical possibility”. Innovation is the integration of a new resource into a product, a service, or a process offered to a market.
People often confuse innovation with inventions. Inventions are usually enclosed in R&D labs and rely on principles, ideas, theories but can forever been disconnected from a market.
The usual flow is an idea becoming an invention (aka working prototype but can not yet be launched on the market), followed by an innovation phase (aka a product or service finding its market).
Innovations can fall into several categories, namely:
- The production of a new product / service
- A new production method for an existing product / service
- The exploitation of a new raw material source
- The conquest of a new market
Two conflicting hypotheses
One of the questions at stake is if companies learn innovation by exporting or whether they invest in innovative activities to become more productive before they decide to penetrate new markets.
The link between export and innovation has been the subject of many different studies over the 15 last years especially due to the important source of data on the topic.
In the case of companies becoming more productive to penetrate new markets, the essential idea is to leverage innovation as a mean to generate additional revenues, and leverage these to pay for the transportation cost, distribution or marketing costs, and the cost to tailor their products to foreign countries.
The other hypothesis, namely learning by exporting argues that export markets provide an opportunity for exporters to improve their performance and innovate due to higher levels of competitions globally and the potential for additional knowledge from abroad consumers
Key take away
As often in this complex situation, there is not “one best approach fits all”, it is up to CEO or to the export department to figure out if local innovations is a way to finance exports or whether exporting early, and acquiring knowledge is the most efficient solution. Modern data platforms such as PrimeTarget can definitely help making this decision.
How Prime Target can help you with your internationalization and identification of potential markets:
Prime Target offers to assist companies in the selection of markets to target. Our solution is delivered in the form of a top 5 to 20 countries with fully customized recommendations. Click here to find out more
