SMALL companies spend large amounts of scarce money on research and development and are highly innovative, according to research by venture capital company 3i. Contrary to the conventional wisdom that smaller outfits slip-stream major corporations for new products, 17pc of companies in Europe spend over 5pc of turnover on research.
Even service companies do research, and only 19pc of all smaller companies spend nothing, according to a five-nationstudy. The most intensive research in small companies was in Germany and Italy, with Britain and Spain around the average, and small French companies spending least.
Neil Cross, international director of 3i, said: "It is encouraging to see the high proportion-81pc-of smaller and medium-sized companies willing to spend money on innovation through research and development." As an indication that the aim was genuine innovation, says 3i, over half the product launches were to get ahead of the competition, as opposed to finding ways of catching up. Ideas forthese new products came principally from keeping close to customers and "the leastimportant source for these firms is external consultants and designers".
Success in innovating came also from obsession with the product and service and continuous comparison with the competition, says the 3i report. But a large number of companies did not bother to test their ideas or do market research - at most they discussed the innovation with key customers. About 40pc "prefer to launch a new product and let the market decide".
