Friday, 3 July 2015

Innovation advantages for subsidiaries compared with stand alone companies in DRC

If a company is a subsidiary of a larger group, then it may enjoy advantages over "stand alone" companies which are not part of groups.  Among other things, a larger group may offer its subsidiary access to increased finance or specialised management knowledge.  The extra resources may be especially felt when companies are innovating in products or practices, since innovation can be demanding.

The table shows the rates of innovation for DRC companies, for various types of innovation.  Innovation is assessed over the three year period running up to 2013.


Being part of a larger group is associated with increases in all types of innovation.  For innovation of products new to the company, 14 percent more subsidiary companies innovated, compared with stand alone companies.  For new production methods, the gap was 22 percent.

I haven't controlled for size and other features of the companies, so it could just be that subsidiary companies are larger, for example, and therefore innovate more.  But something that is noticeable is the larger gap in innovation of internal company processes, and the smaller gap in product innovation.  To me, this says that stand alone companies could benefit from business advice on improving their internal processes, and that this advice is already available to subsidiaries.

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