The Wall Street Journal (January 17, 2013)

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Innovation

Supplemental Handout #3

The Wall Street Journal (January 17, 2013)

GE Survey: Protectionism at Odds with Innovation

By Rachael King

The extent to which companies can innovate depends largely on their ability to collaborate globally, according to a new survey fromGeneral Electric Co.Cross-border collaboration gives companies faster access to new technologies and markets. Yet, companies are becoming increasingly anxious about the protection of intellectual property, revenue sharing, trust and talent poaching in these efforts.

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There’s also growing anxiety that global innovation will be bad for local markets. About 71% of executives surveyed say they favor some protectionist measures to shield local economies.GE’s survey included more than 3,000 executives in 25 countries who are active in their company’s innovation strategy.In light of these findings, CIOs will need to choose their global business partners carefully. Companies located in countries that are leaning toward protectionist measures may not be the best partners going forward.

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“Business executives in Turkey, India, in the UAE and Malaysia were most negative about the role of innovation in their economies,” said Beth Comstock, GE senior vice president and chief marketing officer during a conference call with reporters.

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Just last week,the Wall Street Journal reportedon India’s proposal to restrict imports of high-tech products to increase security and promote local manufacturing. Those rules could extend beyond product acquisition by India’s government and into the private sector. India’s rationale is that tech products manufactured within its country would ensure the security of those devices.

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Protectionist tendencies are alive and well in the U.S. too. In October, a Congressional probe said that Huawei Technologies Inc. and ZTE Inc. posed a national security threat to the United States,reported the Wall Street Journal.That report recommended that the U.S. government avoid using equipment from the two Chinese firms. It also suggested that U.S. companies look for different vendors for telecom equipment.

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Also impeding collaboration are intellectual property fears. On average, 64% of companies said that the lack of intellectual property protection is one of the main reasons why they’d be reluctant to collaborate with entrepreneurs or other companies.

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For its part, China has become much more open to partnering with other companies over the last couple years, said Ms. Comstock. Business leaders in Germany, China, Brazil and Sweden said they have the most experience partnering with other companies, according to the survey. Notably, as China has become more open to partnering, business leaders are ranking the country as increasingly innovative. This year, China moved ahead of Japan for the first time in the innovation ranking. About 35% of the survey respondents said the US is the most innovative country. Germany followed with 15% of the vote, followed by China at 12% and Japan at 11%.

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