Value-creating innovation

Analysis by Candriam shows that innovation could be the optimal corporate strategy for creating a sustainable, competitive advantage and ensuring future growth, productivity and profitability.

EXECUTIVE SUMMARY

Globalisation has allowed companies to overcome geographic boundaries and break down market barriers, driving growth and profitability. It has revolutionised the corporate sector and delivered huge returns to shareholders. While globalisation is a powerful driver of profitability, so too is innovation. And the power of innovation as a core driver of growth is only likely to increase in the future. Innovation, we believe, is the best corporate strategy for creating a sustainable, competitive advantage and ensuring future growth, productivity and profitability. A diversified equity portfolio invested in innovative companies across a range of industries should outperform the broader market over the longer term. From an investment perspective, innovation will outrank quality and service, which are no longer differentiating factors, only prerequisites for good performance.

But identifying and analysing innovation is a subtle task and defies easy methodology. So how can we find companies that innovate? How can we measure the impact of their innovation? And how can we create a high-performing portfolio of innovative companies?

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Koen Popleu
Deputy Head of Fundamental European Equity