Insights

IT investment is the future of innovation for Swiss companies

Written by Penta | Mar 12, 2025 10:00:00 AM

A study by KOF, the Swiss Federal Institute for Economic Studies at ETH Zurich, reveals a decline in radical innovation among Swiss companies. However, businesses that invest in IT are more likely to develop new products for the market and remain competitive.

Decline in R&D

The study found that fewer Swiss companies are engaging in research and development (R&D). In 2022, only 15.4% of companies had R&D activities, down from 17.4% in 2020. Despite this decline, R&D spending as a percentage of company revenue has been gradually increasing.

At the same time, product innovation is also decreasing. In 2022, only 24.3% of companies introduced new products, compared to 31.9% a decade ago. While many businesses still develop new products for their own use, fewer are bringing entirely new products to the market, indicating a drop in radical innovation. 

IT Investment and Innovation

The study also examined IT investment, which fell significantly after the late 1990s but has remained stable since 2016. KOF found that there is little difference between large and small companies in this regard.

Crucially, the study found a strong link between IT investment and product innovation. Companies that invest in IT and digital transformation (such as adopting new technologies, automating processes and leveraging data) are more likely to develop new market offerings, rather than simply cutting costs. 

On the other hand, businesses that invest less in IT and instead focus on gradual improvements to existing processes rather than groundbreaking innovations may struggle to maintain their competitive position. It is clear that investing in IT and technological advancements is the future of innovation for Swiss companies.