Ingenuity of Employees Guarantees the International Competitiveness of German Businesses

Three quarters of the innovative businesses in Germany make use of company suggestion schemes in order to stimulate innovation. After all, high levels of international competition mean that if the generous levels of pay and short working hours in Germany are to be maintained, new and improved products must be constantly released onto the market.

It is in this context that the ingenuity of a company’s employees plays a critical role. This is a finding of a survey carried out by the Centre for European Economic Research (ZEW), in Mannheim, as part of the annual Innovation Survey.

The ZEW survey also revealed that a fifth of all innovative businesses in Germany consider the use of a company suggestion system to play an important role in their innovation activities. In the case of large businesses, up to 40 per cent of businesses consider this to be the case. The use of a company suggestion system is most widespread in industrial sectors. The implementation of such a system is particularly marked in vehicle manufacture, mechanical engineering, plastics processing, and the food industry and in optical and precision mechanics.

The situation is quite different, however, in the service sector. With the exception of the information technology sector, the use of company suggestion schemes is much less widespread in the service industries. The most common way in which businesses in this sector choose to stimulate innovation is by establishing a so-called innovation circle or innovation group. Such innovation circles, which consist of employees selected from the workforce of the given business, most notably play a role in innovation projects in which person-specific knowledge and cooperation between several departments is required. This is the case, for example, in business consultancy, where four out of five businesses make use of such a system. A third of innovative business consultancies consider that innovation circles play a significant role in the introduction of new consulting concepts.

Material incentives designed specifically to incentivize the managers of innovation projects, incentives such as bonuses or opportunities for promotion following completion of an innovation project for example, are rarely used in German businesses. Only half of innovative businesses make use of such measures and only five per cent consider such measures to be a significant part of their innovation schemes. Above all, it is large businesses which make use of material incentives in order to stimulate innovation.

Immaterial incentives aimed at innovation managers, such as the possibility of gaining greater work flexibility or awards, are also used in every second firm. The significance of these measures for the success of innovation projects, however, is considered to be somewhat greater than that of material incentives. The creation of agreements on targets, in which measures of success are defined, is also key to motivating managers and executives. 60 per cent of the innovative businesses in Germany make use of this instrument; every eighth firm considers that such agreements play a significant role. Such agreements are particularly common in the chemical and pharmaceuticals industry and in credit and insurance firms.

Contact

Dr Christian Rammer, Phone: +49(0)621/1235-184, E-mail: rammer@zew.de