German companies are increasingly lacking in innovative strength. Investments have continued to fall, especially during the pandemic years. That could become a problem for the entire economy.
The proportion of innovative companies in Germany has fallen significantly. As can be seen from the study published today by IW Consult on behalf of the Bertelsmann Foundation, only every fifth company can currently be described as particularly innovative. In 2019, this still applied to every fourth company. At the same time, in the past three years alone, the proportion of companies that are not actively looking for innovations has increased from 27 to 38 percent.
“This development will have serious consequences for the position of German companies on the world markets,” said the economics expert at the Bertelsmann Foundation, Armando García Schmidt: “Our prosperity is at massive risk if fewer and fewer companies see themselves as technological pioneers or no longer take on profound Dare to innovate.”
Pandemic slows change
Apparently, the corona pandemic in particular slowed down the joy of innovation: more than a quarter of all companies had already postponed planned innovation activities during the pandemic years or canceled them entirely, as the study shows. Companies that are far from innovative have become even more risk-averse during this time: 42 percent of companies in sectors that already had a rather reserved innovation profile postponed or canceled their innovation activities during the pandemic.
“If the German economy does not manage to become more innovative across the board again, there is a risk of serious repercussions,” warned Schmidt: “Those who are less innovative are less competitive and less resistant to crises. Loss of prosperity will be the result.” Because the study also shows that the net return on sales in sectors that are particularly innovative is 27 percent above the average for all companies.
Climate protection needs innovations
In addition, the sustainability transformation will not succeed without changes. “We currently need many technological solutions in the field of climate neutrality – example: heat pumps,” says the expert. “German companies still have the chance to be at the forefront worldwide and to set technological standards for circular solutions. But to do this, they have to strengthen their innovation profile now.”