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Visible minority‑owned SMEs harnessing innovative capacity

As a result of an increasingly competitive global economy, it is crucial that small and medium‑sized enterprises (SMEs) innovate to reach new markets and customers, as well as maintain their existing market share. Recognizing the importance of diversity in business and in trade, this chart explores the product, process, marketing and organizational innovations of visible minority entrepreneursFootnote 1.

SME Innovation Activities by Type and Firm Ownership (% share)
 Product Innovation  Process Innovation  Organizational Innovation  Marketing Innovation  At least one of the 4 types of innovations
Visible Minority‑Owned SMEs20.812.210.816.531.5
Canadian Average SMEs19.012.512.613.731.1

Data: Statistics Canada – Survey on Financing and Growth of Small and Medium Enterprises, 2017.
Source: Global Affairs Canada – Office of the Chief Economist

By the numbers

Visible minority‑owned SMEs have reported comparable innovation levels to those of all Canadian SMEs, and excel in product and marketing innovations in particular. In 2017 (the most recent survey year), 31.5% of visible minority‑owned businesses innovated in at least one way, while 31.1% of all businesses did on average. Moreover, visible minority‑owned firms outperformed the Canadian SME average in product innovation (20.8% compared to 19.0% of all SMEs), and marketing innovation (16.5% compared to 13.7% of all SMEs).

There is a two‑way connection between innovation and exporting in which innovation can lead firms to export, and exporting can also lead firms to innovate. However, even with comparable levels of innovation, an export gap persists with 10.5% of visible minority‑owned SMEs exporting compared to 11.7% for all SMEs. This gap is likely the result of different factors, but with similar innovation levels among visible minority enterprises, innovation does not appear to be one of them. In fact, continued innovation performance could contribute to closing the export gap.

Upshot

Innovation is closely associated with an enterprise’s ability to internationalize. Visible minority entrepreneurs have demonstrated innovative activities on par with and higher than the average Canadian business. This is a positive sign for visible minority owned businesses’ competitiveness abroad.

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1 Visible minorities are persons, other than Indigenous peoples, who are non‑Caucasian in race or non‑white in colour.

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