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Investment: are Canadian companies too confident?

In its report on the future of productivity, Deloitte notes that over one third of Canadian companies overestimate their investment compared to the competition. However, investment is a key for improving productivity.

 

The Deloitte firm, which recently investigated the causes of the problem of productivity in Canada, reiterates its remarks in this study on the behaviour of Canadian companies in relation to investment. Among the main lessons we learn that 36% of businesses in Canada do not suspect that they are underinvesting. Too confident, they think that they are investing more than their peers while this is not the case. In fact they rather tend to invest below the average, considering their size and industry.

 

To reduce the productivity gap

While Canadian productivity is now equal to 80% of American productivity, improving investment could reduce the gap between the two countries. In its report, Deloitte estimates that it could be reduced by 29% if the Canadian companies that overestimate their investment became aware of it. This is the challenge, since their leaders seem inclined to invest more in research and development and in machinery and equipment than the competition.

 

The importance of competitive intelligence

To remedy this, companies will need to develop competitive intelligence services.  Statistics Canada may be one solution. This public body provides a large amount of data on innovation, investment, profitability, jobs and trade. Diagnostic tools developed by consulting firms can also help. Canadian companies will then be more receptive to public policies and incentive measures put in place by the public authorities to stimulate growth.

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