New Zealand’s government plans to double the country’s exports by 2034. But a key ingredient is missing: innovation. Rod McNaughton, a University of Auckland Business School professor, says firms need to have world-class products and services to compete globally.
Small and medium-sized enterprises (SMEs) make up most of New Zealand’s exporting firms, but they contribute only a small amount to the country’s total goods exports. Larger firms account for a much bigger share of export volume.
Only 16 percent of SMEs export, compared to 35 percent of larger firms. New Zealand spends less on research and development than other countries. This limits the ability of firms to develop high-value, competitive exports.
Focusing only on exporting could push more firms, especially SMEs, into international markets without the innovation and strategies needed to succeed. A study examined 779 Canadian SMEs to see which internationalization strategies help innovation the most. The findings are important for New Zealand, where SMEs face similar challenges.
The most innovative firms followed one of two paths.
Boosting New Zealand export growth
Some scaled up quickly in a few key markets.
Others expanded across many countries while maintaining moderate sales in each. These companies introduced more new innovations, invested more in research and development, and applied for more patents than those that stayed domestic or expanded without clear strategies. Due to intense competition, businesses that focused on a few key markets tended to be highly innovative.
Firms that entered multiple markets benefited from exposure to diverse customer needs, regulations, and technologies. Companies that entered export markets without a clear strategy were far less innovative. To reach its export growth target, New Zealand needs to ensure that firms innovate as they expand.
Export promotion and innovation strategy should be integrated. Businesses entering international markets will struggle to compete without a focus on innovation. Firms that scale rapidly in key markets need help with distributors, financing, and logistics.
Sustaining innovation depends on access to capital, R&D support, and connections to research institutions. Firms expanding across multiple countries need help navigating regulations, managing partnerships, and developing scalable business models. Their success depends on leveraging global knowledge and adapting to different customer demands.
Without innovation, New Zealand risks falling short of its export target and lagging in global competitiveness.
Photo by Sulthan Auliya; Unsplash