Propuesta de Mapa Estratégico para la distribuidora Disensa

The lack of finance can hamper innovation activities in several ways. On the one hand, firms might be forced to prolong existing innovation projects resulting in a delay of the intro- duction of new products and processes. On the other hand, firms might decide to abandon in- novation projects or not even start planned projects. In both cases firms sacrifice innovation due to lack of finance. The second set of questions in the 2014 survey asked firms whether they have refrained from innovating due to the lack of finance and if so to characterize the in- novation projects that were not implemented. The questions related to the impact of lack of finance were newly introduced in the 2014 survey. Thus, they cannot be compared with pre- vious waves.

Due to the lack of finance, 13% of all firms have refrained from implementing at least one

(additional) innovation project in the period 2011-2013 (see Figure 5-3).8 _{This does not imply}

that the share of innovators would have increased by 13 percentage points. Among these firms are those that were still were able to implement at least one other innovation project. Indeed, the share of firms that have given up innovation projects due to insufficient financing is high- er among innovative firms than among non-innovative firms. 18.5% of innovative firms have sacrificed additional innovation projects compared to 8% of non-innovative firms which have abstained from innovating.

A previous study using MIP data has shown that financial constraints do not depend on the availability of internal funds per se but that they are driven by innovative capabilities through increasing resource requirements. That is especially those firms with high innovative capabili- ties are financially constrained (Hottenrott and Peters, 2012). Innovative capabilities describe a firm’s ability to generate and pursue new innovation project ideas. Hence, it is not surpris- ing that firms in R&D-intensive manufacturing most frequently refrain from implementing (additional) innovation projects (25%), followed by firms from other manufacturing (14%). In knowledge-intensive services, every tenth firm has sacrificed (additional) innovation due to lack of finance.

With respect to firm size, a u-shaped pattern sticks out. That is, we find an equally strong impact of lack of finance for small firms with 5-19 employees and large firms with more than 1000 employees. In both groups, roughly every sixth firm has not implemented innovation projects due to financial constraints. In particular, the group of small innovative companies sacrifices additional innovation projects. About 22% of innovative firms with 5-19 employees have given up additional innovation projects due to lack of finance.

Figure 5-3. Not implemented innovation projects due to lack of finance 2011-2013, by main sec- tor and size class

25 14 11 10 13 16 9 9 10 10 10 16 13 0 5 10 15 20 25 R&D-intensive manufacturing Other manufacturing Knowledge-intensive services Other services 5-9 employees 10-19 employees 20-49 employees 50-99 employees 100-249 employees 250-499 employees 500-999 employees 1000 u.m. employees Total Share of firms (%)

Source: ZEW, Mannheim Innovation Panel.

When firms are forced to give up (additional) innovation projects due to the lack of finance, they mainly sacrifice product innovations that are associated with entering new market seg- ments or thematic areas. These innovation projects are usually associated with extraordinarily high risks as firms might also lack relevant know-how about the demand, market and/or tech- nology when they act outside their usual product market. They furthermore often lack a good competitive position. On the other hand, by opening up new market (segments) these innova- tions could offer a great potential for firm’s future profitability. Nearly half of all financially constrained firms (49%) report that they have refrained from implementing (additional) inno- vation that mark entry into new market segments or thematic areas, for an additional 25% of financially constrained firms this partly applies (see Figure 5-4).

Pursuing the strategy to enter new markets is often associated with addressing new custom- ers need. Hence, it is not surprising that high market and customer proximity is placed second in this ranking of innovation characteristics. Although, of course firms can also introduce new products on their usual product market that are particularly tailored towards customer’s needs. 44% of firms have given up innovation projects that were aimed at better serving customer’s needs. For an additional 37% of firms this partly applies. Taken together, market and custom- er proximity is even more important than entering new markets (75%).

40% of the firms indicated that the innovation projects they have refrained from due to fi- nancial constraints were characterized by a high degree of technological novelty. A higher degree of technological novelty is in general associated with higher innovation costs. Less

frequently financially constrained firms have given up innovation projects that are character- ized by high uncertainty about feasibility or market acceptance (32%).

Figure 5-4. Characteristics of innovation projects not implemented due to lack of finance 2011- 2013 40 32 44 49 31 30 37 25 29 38 19 25 0 10 20 30 40 50 60 70 80 90 100

Higher degree of technological novelty

High uncertainty about feasibility / market acceptance High market/customer proximity

New market segments

As share of firms refraining from innovation due to lack of finance (%) Fully applies Partly applies Does not apply

Source: ZEW, Mannheim Innovation Panel.

As Figure 5-5 shows, there exist sector-specific differences in the type of innovation pro- jects firms sacrifice due to the lack of finance. Whereas firms from R&D-intensive manufac- turing (50%), other manufacturing (58%) and other services (49%) most frequently refrain from implementing innovation projects that are associated with entering new market segments or thematic areas, knowledge-intensive service most often give up innovation projects aimed at better serving customer’s needs (44%). Taking also those firms into account for which the attribute partly applies, this pattern just reverses. To conclude, in all sectors firms innovations that are aimed at entering new markets or better addressing customers’ needs are most affect- ed by financial constraints. Other manufacturing is an exemption in a sense that renunciation of innovations with a high degree of novelty is in second place. In all four sectors firms least frequently abstain from implementing innovation that are characterized by a high degree of uncertainty about feasibility and market acceptance.

Financial constraints hamper market entry activities in particular among smaller firms with up to 99 employees. Roughly 50% of financially constrained firms in this group have given up innovation projects aimed at entering new markets or new thematic areas. In contrast, only 42% of the large constrained firms decided to give up innovations into new markets or the- matic areas. The smallest proportion of firms, however, is found among medium-sized firms. Only 38% of financially constrained firms with 100-249 employees decide not to further pur- sue high-risk innovations into new markets or thematic areas. Furthermore, small and medi- um-sized firms more frequently give up innovation projects that are associated with a high degree of technological novelty. Summing up those firms for which this attribute fully or part- ly applies, the renunciation of innovations with a high degree of novelty becomes the most

more employees are most likely to refrain from innovation better addressing customers’ needs.

Figure 5-5. Characteristics of innovation projects not implemented due to lack of finance 2011- 2013, by main sector 21 28 38 50 47 33 45 49 32 34 44 37 48 32 46 58 45 27 43 21 28 31 39 23 35 33 24 34 23 28 43 24 0 10 20 30 40 50 60 70 80 90 100

Higher degree of technological novelty High uncertainty High market/customer proximity New market segments Higher degree of technological novelty

High uncertainty High market/customer proximity New market segments Higher degree of technological novelty

High uncertainty High market/customer proximity New market segments Higher degree of technological novelty

High uncertainty High market/customer proximity New market segments

R&D int e ns iv e manuf ac tu ri ng Oth e r ma nufacturi n g Kn o w ledg e-i n ten s iv e ser v ices O the r se rv ic es

As share of firms refraining from innovation due to lack of finance (%) Fully applies Partly applies

Source: ZEW, Mannheim Innovation Panel.