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Small business in Canada lags in productivity behind our American competitors – because we don’t invest enough in technology….

 

There are two or three areas that have been well-noted in the research. First, there’s the issue of investment in information and communication technology [ICT]. Study after study shows we invest in ICT and retraining far less than the Americans. This is a very serious issue. It’s a partial explanation of why our productivity is so much lower than that of the States. 

Studies dating back to the 1980s reveal that Canadian companies are 25 per cent less productive than U.S. companies. My own explanation is that because there are still large swaths of the Canadian economy protected from foreign competition, they don’t invest in ICT or training because they don’t have to. They have a protected market and you don’t have to compete as hard. Think of telecom, dairy, banking. 

Last year, Stats Canada did a massive study on productivity in Canada. This subject has been studied to death in the last 40 or 50 years, so my first thought was, ‘What can they possibly come up with that’s new?’ Actually, they came up with something very important. 

They found [that] the companies that are most productive in Canada are our biggest companies, not our smallest, contrary to all the warm and fuzzy things we say about small business.Small business is actually notoriously less productive per worker. It’s our big businesses — and more importantly it’s our big businesses that export the most — that are most productive. 

And guess what? They invest more in ICT and training than other companies because they face aggressive competitors and these investments are the way in which firms try to obtain an edge, a competitive advantage." 
Ian Lee of the Sprott School of Business – June 1 2019 from The Canadian Accountant

 

 

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