CONTRARY to stereotypes about the bush, regionally-based businesses and their staff are more likely to be innovative and understand their markets than their city peers.
The rewards for those regional enterprises which frequently invest in innovative management practices or new business opportunities are worth an average $279,000 each in extra earnings according to research from the Commonwealth Bank of Australia (CBA).
That’s equivalent to a $19 billion injection into the regional economy every year.
A regional business insights report by CBA has just given country-based businesses an innovation index score of 25.5, compared with 23.6 for metropolitan businesses.
However, the bank believes active innovative characteristics were common to only half the regional enterprises it studied, which meant more attention to innovation could grow the non-metropolitan sector by a further $44b a year.
The CBA report, which follows an extensive survey of businesses with annual turnover of $500,000-plus, assessed 15 core aspects it considered as “business innovation”, ranging from use of new technology to cultivating new ideas from staff.
The report showed regional businesses were more likely than their city counterparts to adapt products and services to make the most of opportunities.
They also tended to encourage staff to ask questions which challenged the status quo.
Country employers were generally better at empowering employees, with 41pc encouraging people to ask challenging questions, compared to just 25pc of businesses in metro areas.
About 32pc of regional businesses actually expected staff to contribute creative ideas, again compared with 25pc in metro areas.
CBA’s executive general manager of regional and agribusiness banking, Grant Cairns, said regional Australia’s success was clearly dependent on a “very entrepreneurial culture”.
“They are good at adapting to meet market needs and harvesting people power,” he said of regional enterprises.
“Maybe, it’s because businesses based in regional or remote areas are very close to their local community and part of the marketplace - they’ve got a good feel for what will work and how to make a relevant difference.”
Also, as many regional operators were exposed to global competitors in export markets, particularly in the agribusiness and resources sectors, they were often forced to reinvent products and adapt their business focus.
“Our research shows they are not only surviving, but thriving because they’re under pressure to shine against the world’s best,” Mr Cairns said.
Mining and manufacturing, and the farming, fishing and forestry sectors tended to be, respectively, 75pc and 61pc “innovation active” - well ahead of regional health and education (30pc), and general retail trade (47pc).
Small and medium sized regional businesses were more likely to innovate than big.
The study of 2195 business owners and managers, including 380 in the bush, found metropolitan businesses tended to fall in a category of improving-but-not innovating.
Regional businesses were already in the innovation category and making things happen.
CBA’s innovation index puts a score of 25 as representing “the beginning of true innovation”.
However, while 84pc of regional businesses felt they were relatively innovative, if measured on an international scale just 49pc were truly innovating.
The rest were simply making only incremental improvements.
This still compared better than city businesses (43pc), but the city enjoyed a much higher return on investment in innovation, averaging about $460,000 for each enterprise.
“If regional businesses could achieve the same return they would increase their potential innovation dividend to around $73b,” Mr Cairns said.
“Given regional innovators tend to be smaller businesses with limited amounts to invest, that may indicate they are more focused and selective than metropolitan firms in the initiatives they choose.”
Smaller businesses, with small staff numbers, may also have a culture where everybody adapted to different jobs and contributed more actively to changing opportunities.
Mr Cairns, who only recently took over as the head of CBA’s agribusiness portfolio, said he had lately witnessed the “enterprising culture of regional Australia” first-hand.
“Strong ag sector growth and rising farm incomes are also having a positive flow-on benefit to farm industry businesses and other businesses in many areas at the moment,” he said.
