The company’s product and service range may have changed a lot. The withering of the market may also have forced change.
Industry switching is surprisingly common in Finnish companies, according to a study by Etla, the Finnish Business Research Institute. According to the study, as many as a quarter of companies that continue to operate have changed their industry.
Some companies are renewing their product and service offerings to such an extent that it will lead to a change in the entire industry.
“The change in the company’s industry is a big change. In a change of industry, the company’s goal may be to achieve stronger growth or the fact that part of the company’s business has withered away either due to a shrinking market or a lack of competitiveness, ”estimates Etla’s researcher. Natalia Kuosmanen in the bulletin.
According to him, barriers to entry may also affect companies switching to new markets. Switching should therefore be identified as a form of market entry.
Research according to the change in the industry has mostly had a positive effect on productivity. The quality of the impact depends on both the industry in question and the timing of the change.
The main message is that large, radical industry changes have generally had a positive effect on productivity in the company. However, if the change in sector is not radical but gradual, it will in turn have had mainly negative productivity effects.
In innovation policy, the provision of research and development funding is an important means of encouraging innovation. Thanks to successful R&D, companies will be able to renew their offerings.
The key is R&D projects aimed at radical reforms, which will change the company’s offering more thoroughly than just individual products or services.
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