Innovations in Poland

Poland: Increased pace necessary

| Author / Editor: Wojciech Traczyk / Franziska Breunig

Innovation in Polish industry still requires greater expenditure
Innovation in Polish industry still requires greater expenditure (Source: Pixabay)

Investment in innovation is a necessary factor which on the one hand ensures dynamic development and on the other hand enables equal rivalry with foreign competitors. In Poland, despite a clear improvement in recent years, there is still a lot to make up for in terms of industry innovation as well as innovation of the economy as a whole.

Products, technological processes as well as services or marketing and organizational methods have a significant, if not the biggest, impact upon the development and condition of enterprises. Without implementing innovation and increased expenditure on research and development (R+D), fast and dynamic development is practically impossible. These relationships are especially visible in the industry sector which is particularly exposed to international competition.

The structure of Polish industry innovation

According to GUS (Main Statistical Office), innovation expenditure in Polish industrial enterprises totalled PLN 28304.7 million in 2016 which constitutes a 9% decrease compared to the previous year. Investment expenditure predominates as it amounts to 76.1% of all innovation expenditure. The percentage of industrial enterprises which were active in terms of innovation between 2014 and 2016 was higher by 1.4 percent compared to the years 2013-2015. The total of 18.7% of companies introduced new or enhanced products or processes. In terms of process innovations, industrial enterprises were most likely to introduce new or significantly enhanced product manufacturing methods. Nevertheless, in Europe Poland still ranks low in innovation rankings. In the EU’s ‘European Innovation Scoreboard 2017, Poland ranked 25th (together with Croatia) and remained in the group of so-called moderate innovators. Over the recent years, results have improved within the scope of friendly environment and investment whilst the results within the scope of enterprise innovation activity (EIA), co-operation between various entities and sales of technologically advanced products have worsened. In the ‘Global Innovation Index 2017’ (GII), on the other hand, Poland ranked 37th (out of 127 countries), behind Bulgaria, Slovakia and Latvia. Switzerland leads this ranking, followed by Sweden and Netherlands. In Poland, entities employing 250 people or more had the biggest share in the total number of innovative enterprises. Over 50% of so-called large enterprises have introduced process innovations and 44% introduced product innovations in the last year. Meanwhile, the average figures for these two innovation categories for the whole industrial sector were 15.2 and 12.4% respectively. The ‘Smart Industry Poland 2016’ report prepared by Millward Brown paints a better picture of the Polish industry’s innovation. 68% of the respondents evaluate the advancement level of Polish industrial companies to be in par with their Western European counterparts whilst 80% of the researched companies declared they benefited from product process optimization. The highest percentage of industrial enterprises which introduced product or process innovation was observed in oil and natural gas mining (66.7%) as well as in the pharmaceutical industry (45%). A large percentage of innovative companies can also be found amongst the manufacturers of chemicals and chemical products as well as coke fuel and crude oil refinement products. On the other hand, the entities operating in land pipeline transport, production of clothes and leathers were characterized by low level of innovation.

Increased research and development expenditure

One of the most important criteria for measuring an economy’s level of innovation and technological advancement is the research and development expenditure which has been clearly growing in the recent years. It amounted to PLN 18.06 billion in 2015, reaching the level of 1% of GDP. However, the Polish economy lags behind the EU’s average of 2.03%. An excellent example which confirms the aforementioned thesis are the results of the ‘2016 EU Industrial R&D Investment Scoreboard’. Amongst 2500 companies – the global R+D leaders – there was not a single enterprise from Poland.

Biggest barriers to innovation development

Some of the most important barriers hampering the development of innovation in Polish enterprises are the lack of sufficient funds and the human factor. This is because people are afraid of their jobs. They often lack courage to make daring decisions. They prefer to wait for ready solutions which have been tested by others, rather than risk spending their own money and time on uncertain investments. Another barrier to fast development is also the lack of sufficiently qualified and creative workforce at every level who would be able to make daring investment decisions, successfully implement modern technologies, service them appropriately or develop for the benefit of production. The area which definitely requires improvement is the education of future employees, including close co-operation between enterprises and higher education establishments as well as lower level schools. It is crucial to educate managers with competences meeting the needs of the fourth industrial revolution. This shall determine not only the directions and development possibilities of individual companies but also the general scope of technological revolution in the Polish industry.

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