Canadian companies are not investing enough in their own growth – and many don't know it – resulting in low productivity performance relative to other countries and a threat to the country's standard of living.
These are the findings of a Deloitte study, detailed in a report entitled The future of productivity: A wake-up call for Canadian companies.
The study found that more than one-third – 36% – of Canadian companies are underinvesting and are unaware of it. They are not making ongoing investments that are essential for firm growth and expansion. This is having dire consequences for many of those firms, which Deloitte said is demonstrated by the fact that few Canadian companies are able to maintain high levels of growth.
"Canada's entrepreneurs are among the very best at launching fast-growing companies," the report states. "Sustaining that growth is another matter."
Canada's productivity performance has been falling behind that in other countries, the report argues. In the mid-1980s, Canadian productivity was about 91% of that that in the United States. In 2013, that number had fallen to 80%. While the average Canadian worker contributes US$47.66 per hour in GDP, the average American worker contributes US$60.77 per hour.
The best opportunity to increase productivity growth in Canada, the report argues, lies in focusing on these firms that are not aware that they are underinvesting in their growth and making them aware of these shortcomings. The report said that changing the behaviour of these firms will result in significant investment increases and a decrease in Canada's productivity gap.
The challenge lies in convincing those firms who aren't even aware there is a problem to solve these shortcomings.
Deloitte said the solution is for all firms to increase investment in research and development and pay greater attention to competitive data. For example, Statistics Canada can provide competitive intelligence on Canadian business practices.
Deloitte carried out the study by conducting research with chief decision makers from 884 firms across the country. The leaders were asked about research and development, monitoring and evaluation and information and communication technologies.
