Innovations in the Practice of Production and Trade Enterprises in EU Countries
Modern theories are increasingly focusing on innovations. Scientific literature states that the implementation of innovations causes increase in sales volume: enterprises are improving the organization of production and trade methods, reducing production and trade costs, producing and selling competitive products as a result of technological progress. Technological progress also influences the development of production and trade prospects. Although the implementation of innovations is different, the main aspects are related to the novelty of product, production and service R&D intensity and the qualification of employees. Enterprises without the capacity to innovate may invest time and resources in studies of research results but are unable to transform this knowledge into practice (Hult et al., 2004). In such sense it is important to create innovative behaviors and related outcomes on country level (Koellinger, Thurik, 2009).
Production and trade enterprises have a significant impact on the national economy, but the number of enterprises that have excellent understanding about innovations and their results is not sufficient.
Sales of the trade enterprises in the European Union amount to 66%, and 74% of gross domestic product (GDP) in Lithuania. At the same time sales of the production enterprises in the European Union amount to 15.5% of GDP, and in Lithuania — 21% of GDP.
Production and trade enterprises play a significant part among business companies. In corporate structure of the European Union 9.8% of companies are production companies which employ 22.6% of EU workers, while in the structure of the European Union 28.6% of companies are trade companies and these companies employ 24.7% of EU workers. However, in the trade sector there are 90% of companies, and in the production — 84% of companies with up to nine employees (Euro-stat, 2010).
Nevertheless, the European Commission’s (2013) study shows the declining contribution of production enterprises to GDP. Eurostat (2010) statistics show that small and medium-sized manufacturing companies are very slow to improve their operations and labor productivity. The EU companies are anticipated to increase by only 2.4% compared with the US companies, where growth of labor productivity is 3.5%
Therefore, innovations are also important for the EU trade and production companies. To sum up the above set out material, it can be said that the application of innovations must be considered as a very complex cognitive subject.
The article consists of three parts to fully examine the implementation of innovations in production and trade enterprises.
First, literature analysis is carried out and topic related aspects are identified.
In the second part the paper presents empirical research methodology. Herein, practices of production and trade enterprises are presented, comparison of production and trade enterprises is carried out, and effects on the activeness of enterprises regarding the opportunities of innovation implementation in this area are analyzed.
In the third part the article presents empirical research results, conclusions and recommendations. Literature analysis reveals that the greatest role innovation plays in international companies, however the number of such enterprises is very small in the EU. The results also show that production and trade companies from Luxembourg have higher competitiveness than the enterprises from other countries. Overall the paper glances into whether, to what extent, how companies innovate, and how this differs between production and trade service industries.