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The 2005 Georgia Manufacturing Survey shows that companies basing their competitive strategies on the development of innovative products or processes enjoy higher returns on sales, pay better wages and have less to fear from outsourcing than do manufacturers relying on other competitive strategies.
The survey of Georgia manufacturers, part of a periodic study begun more than a decade ago, was conducted by the Office of Economic Development and Technology Ventures and the School of Public Policy at the Georgia Institute of Technology.
Georgia manufacturers that rely on innovation for their competitive edge reported returns on sales 50 percent higher than companies that compete by providing low cost products – a gap that grew substantially since the last survey in 2002. Innovative companies paid workers a third more than the average Georgia manufacturer and were 40 percent less likely to lose work to outsourcing than were companies competing on low cost.
“Innovation, whether in products or processes, or in organization or services to customers, is one of the main paths through which manufacturers can become more distinctive, secure market premiums, satisfy customers, expand sales, reward workers and improve their bottom line,” explained Phil Shapira, a professor in Georgia Tech’s School of Public Policy and a study co-author. “Companies that do not continuously innovate will find themselves under increasing pressure from low-cost producers in the United States and globally.”
Offering innovative products gives companies a competitive edge that provides protection against outsourcing and allows them to charge a premium – which creates higher margins and allows higher wages, notes Jan Youtie, a researcher in Georgia Tech’s Office of Economic Development and Technology Ventures and another study co-author.
Sources
- Georgia Tech News Release
- The Georgia Manufacturing Survey 2005 website
- Full Text of 2005 Georgia Manufacturing Survey in PDF format
Via www.businessinnovation2005.com