Innovation, Training and Success

This paper describes the evidence that several Statistics Canada studies have developed on the importance of innovation to growth and the need for highly skilled workers in the innovation process. Rather than focusing on broad industry aggregates as is often done, we concentrate our attention on firms and their behaviour. This allows us to investigate the connection between the success of businesses and the strategies that they pursue. We find that the more successful firms attribute their success to having developed competencies in a wide range of areas-but that the common factor that most frequently distinguishes faster from slower growing firms is innovation. Innovators in turn place greater emphasis on training and acquiring skilled workers. The studies also show that the emphasis on highly skilled workers varies across industries. In goods industries, a training strategy complements an innovation strategy that focuses on R&D, the adoption of new advanced technologies, or the development of new processes. Small firms that are innovative train their workers when they introduce new machinery and equipment. In the service sector, the innovation strategy relies less on new capital and more on new skills embodied in the workforce. Here there is evidence that a training strategy, by itself, has more impact on the success of a firm-probably because it is more likely to be the innovation strategy of the firm.