By Marcus Leach

Nearly a third of British companies (31.4%) spend absolutely nothing on searching for new ideas, services and products. That is the shocking finding of a new survey conducted by IT consultancy firm, Portal.

The survey of 500 companies up and down the country found that only a fifth of companies spend more than five per cent of their revenues on research and development (R&D), despite the fact that nearly 52 per cent (51.8%) recognise that innovation is critical to maintaining, or growing, market share.

The findings are published today (Tuesday) in a whitepaper entitled 'Innovation: the first casualty of a downturn'.

The major reason for companies failing to invest in R&D is the economic downturn. Less than seven per cent of respondents have increased their investment since the start of the recession in 2008 while nearly 14 per cent have 'cut their investment in R&D enormously'.

The effect of the prolonged economic downturn is easy to see as 48 per cent said they would invest more if the government was able to offer tax breaks on R&D expenditure.

“We all know that in a downturn we must try and find easy ways to cut costs,” said Tony Egerton, Sales and Marketing Director at Portal. “But cutting R&D is a corporate version of cutting your nose to spite your face and is only going to be bad news for companies that think it’s a rational business strategy.”

Lack of available funds is not the only reason for companies failing to invest sufficiently. Perceived difficulty of the process is deterring some from applying sufficient resources. For respondents to the survey, there were three major process challenges:

- Creating a collaborative environment — innovation does not just happen; it requires an environment in which it can flourish;

- Finding the right people — for many companies, particularly those with multiple sites, knowing what skills the workforce has, whether they are part of current job descriptions or not, is an almost impossible job; and

- Keeping the team collaborating — we all know how our ‘day jobs’ get in the way of special projects so keeping everyone focused and collaborating on the innovation process is a major challenge for companies.

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