New Product Development Doesn't Happen In A Vacuum

Every year, businesses develop new products in the hope of gaining a competitive advantage. The firms that have the best on the market tend to win out in the long-run, earning higher profits and forcing their competitors to lower their prices. Just look at Apple and its iPhone or Dyson and its vacuums. 

We should recognize, though, that these developments don’t happen in a vacuum. If you want companies to invest in R&D, you need to create the right environment. 

Some countries are very good at this. France, Japan, the UK, and the US all have highly advanced patent systems that allow firms to claim intellectual property and prevent copycat products from eating away their profits. These countries, unsurprisingly, are the most innovative, with the US streets ahead at the top of the pack. 

As the following infographic shows, however, the same is not true of the world’s largest emerging economy – China. Here, the institutional environment is not friendly to innovative firms that want to create something new and original. This feature of the economy could explain why we see so few global Chinese brands. Huawei is one, but it is the exception, not the rule. 

New product development isn’t automatic. It requires the right regulatory structures to make it work. If entrepreneurs can’t benefit from all their hard work financially, most won’t bother.

Are you interested in how to foster more R&D for your business or which country to choose to set up? If so, check out the following infographic. 

Infographic by University of Alabama Birmingham


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