Medium Enterprises to lead productivity boom through innovation
Mid-size companies hold the key to boost Australia’s innovation record and narrow the global productivity gap, according to top-ranking economic official.
Jonathan Coppel is the economic counselor to the Secretary-General of the Organisation of Economic Development (OECD), a role which contains a particular focus on preparing the OECD’s contributions to the G20.
He said the small and medium-sized enterprises are “squarely on the G20 agenda”.
Visiting Sydney from Paris recently to address the Global Access Partners National Economic Review 2010, Mr Coppel said while Australia has performed well in improving its overall GDP standing, a significant gulf exists in relation to labour productivity, or GDP per hour worked.
“There’s still a gap of around 15 per cent between the top labour productivity countries in the OECD and Australia. It is an issue.”
Mr Coppel believes improvements in innovation, skills and infrastructure will enhance Australia’s productivity levels.
“One of the main drivers of productivity comes through innovation. If you look at various indicators of innovation performance Australia falls short on best practices. Innovation is not something you can decree, and there’s no single policy lever that’s important for it.”
But he argues medium-size companies are critical to driving the level and success of innovation.
“What we do know is a large proportion of productivity gains come from new firms, and these are by definition SME’s. True innovation begins in small and medium size enterprises. There are different types of innovation, those that diffuse knowledge or make improvements in processes or so-forth, but that Schumpeterian innovation, creative destruction is often the new start-ups, and the entrepreneurial spirit of the SME’s.”
Australian-born Mr Coppel said the OECD dedicates significant attention to the productive barriers facing small and medium enterprises.
“What we address is developing the evidence base to really deeply understand the specific areas where SMEs are being held back from their full potential. Access to finance is always right up there. It’s an ongoing battle.”
Both the OECD and the G20 are focused on creating neutral regulatory settings to ensure smaller enterprises aren’t sidelined by their larger counterparts.
“When you’re a SME compared to a large enterprise, lack of transparency or non-equal treatment in terms of government regulations can be a constraint. A large enterprise has much closer contact with government to help solve problems. When it’s a small enterprise they don’t want to hear about it. That can create an uneven playing field and make it more difficult to be competitive. This is something we emphasise at the OECD in terms of regulatory practices and the importance of transparent, fairly treated and implemented regulations. A lot of this work is feeding into the G20.”
For more information visit the G20 SME challenge
Jonathon Coppel spoke to First 5000 Editor Virginia Harrison
