How innovators behave


13th February 2018

It’s not what you say, it’s what you do
‘The cowl does not make the monk’ is a common Spanish saying that could well be used to summarize the unsettling results of a statistical experiment we carried out. It was aimed at spotting differences in financial behavior and performance between innovators and non-innovators in Latin America.
We selected thirty firms from the list of the biggest 600, publicly traded, non-financial companies in the region. The ones chosen, had been named the most innovative firms, on rankings published by Forbes, Fast Company, Strategy&, Dinero, La Nacion, and other (See list below). In all cases, they made these lists because of their reputation as product innovators.
We then built a set of indicators that could be a sign of product or process innovation within a company. Some ratios, like capital expenditure, invested capital, cost control, efficiency, liquidity and indebtedness, were selected to show mostly managerial decisions; others, like revenues, and return on equity, to show corporate performance.
Financial data of all firms, labeled as innovative or not, was analyzed using the method of Principal Component. In a gross oversimplification, the technique allowed us to summarize graphically on two axes, the combined effect of all the variables. A clue to understanding these graphs: Points that are close together indicate that firms have similar values on all variables. Points that are spread apart show firms that have …

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