Monday, 28 September 2015

What reforms of business practices accompany innovations in Rwandan companies?

New product innovations can also require reforms of business practices in order for them to work well.  It may give larger companies advantages over small companies, because the larger companies may have the resources to implement the reforms in a way consistent with recommendations for best managerial practice - for example, big companies can hire expensively trained executives.  A similar argument applies for companies in developed countries having an advantage over those in developing countries.

In Rwanda, business practice reform usually accompanies innovations in products and services.  The table shows that in more than three quarters of cases of companies undertaking innovation in the last three years, there is simultaneous introduction of new manufacturing methods, logistical processes, organisational structures, and marketing methods.


However, these statistics don't tell the whole story.  It may be that companies are introducing business practice reforms independently of whether they are innovating in products and services.  The next table shows that companies often introduce business practice reforms even if they are not innovating, but the rate of reform is lower.

The biggest gap in the rates for innovating and non-innovating companies are for manufacturing methods, followed by new logistical processes.  In other words, Rwandan companies are more likely to change their manufacturing methods and logistical processes if they are innovating, but there is less of a change in their organisation and marketing.  I don't know whether new organisation and marketing methods are not needed for the innovations, or whether the skills to implement the new methods are not there.

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