Latvian SMEs plan to decrease investments in innovations

SEB in Latvia was awarded with the status of a family-friendly entrepreneur. This status is given by the Ministry of Welfare of Latvia and it demonstrates that the policies and services of the company are friendly to staff, children and families.

 

In 2015, Estonian and Lithuanian SMEs plan to increase their activities in innovations, indicates Baltic Business Outlook, a survey by SEB in Estonia, Latvia and Lithuania. Largest growth in terms of innovation activities is observed among Lithuanian companies while SMEs in Latvia are the most passive innovators among three Baltic States.

In Estonia 73% of the polled companies said they plan to invest in innovations during 2015 while a year ago 60% were planning to do so. Significant surge of innovation plans is observed in Lithuania: in 2015 69% of SMEs plan to engage in innovation activities while a year ago only 42% had plans to innovate. However, in Latvia there is an opposite trend: the number of Latvian companies who are planning to innovate has fallen from 48% to 39% during last year.

"Through innovations the companies in Estonia, Latvia and Lithuania aim at increasing competitiveness both in the domestic and international markets, especially as the low-cost production advantage of Baltic markets is gradually diminishing. Companies are aware that after investing in innovations, less resources are required in production or provision in services, which will have a positive impact on company finances. However, it is clear that inactivity of Latvian SMEs in terms of investment in new technologies and new products is a negative trend. In medium-term this attitude could lead to decreased competitiveness and diminished export capacity of Latvian companies", said Ieva Tetere, member of the board of SEB banka.

Product or service innovation is the preferred field, with 46% of Lithuanian, 36% of Estonian and 26% Latvian SMEs opting for that. 24% of all polled SMEs in Estonia, 14% in Lithuania and only 6% in Latvia plan to invest in employee development. 11% of Estonian, 5 % of Lithuanian and 3% Latvian SME-s have plans to change their business model next year.

In Estonia, most upbeat about the innovation are hospitality and catering along with the industry and energy sector, where about 80% of the polled SMEs plan innovation in 2015, focusing on product and service improvements. In Lithuania, IT and communication sector (79%) and industry and energy (77%) indicate high innovation activity for 2015. In Latvia information and communication (69%), entertainment (57%) and industry/energetics (56%) sectors are the most active ones in innovation plans during 2015.

With about 60% of the companies planning innovation, agriculture and fishery and real estate sectors are the most reserved in Estonia while in Lithuania construction and education sectors have less ambitious plans. Administration (22%), transport and logistics (34%) as well agriculture and fishery (34%) are among the most passive sectors in terms of innovations in Latvia.

The survey was held in autumn 2014. 6125 SMEs took place in it (2022 SMEs in Latvia, 1266 in Lithuania and 2837 in Estonia).