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Increasing Innovation in Polish Enterprises: Key to Sustainable Economic Growth

BUSINESSIncreasing Innovation in Polish Enterprises: Key to Sustainable Economic Growth

In Poland, nearly 35% of domestic enterprises engage in innovative activities, which is still relatively low compared to the EU average of almost 53%. However, increasing this percentage of companies developing innovations could be the key to sustainable economic growth in the coming years. These innovation investments are particularly needed in the energy sector, which is undergoing significant transformation. High-tech, knowledge-based industries such as pharmaceuticals and beauty tech are also crucial. Several companies with French capital operating in Poland have announced plans to invest in innovative areas.

“Polish entrepreneurs and companies have repeatedly demonstrated their ability to be sources of new ideas. With such a strong base, we can conquer many European markets and set trends. Many Polish companies already set trends in their industries. Entrepreneurs will continue to move towards an increasingly advanced economy, including technologically, because that’s where growth and higher profitability lie,” says Michał Kobosko, MP and Chairman of the Parliamentary Committee on European Union Affairs, to Newseria Biznes.

Investments and innovation in Polish companies are crucial for the development of the national economy. According to GUS data, after three quarters of 2023, investment expenditures by Polish enterprises (in constant prices, adjusted for inflation) increased by 11.5% year-on-year, reaching 148.1 billion PLN. Growth in expenditures (in current prices) was recorded in most sectors, including mining and quarrying (56.5% compared to a 21.5% increase the previous year), construction (49.9% compared to a 15.1% decrease the previous year), electricity and gas supply (46% compared to a 3.5% decrease the previous year), and real estate activities (25.3% compared to a 19.8% increase the previous year).

Data from last year’s “Report on the State of the SME Sector in Poland” by PARP shows that Poland ranks fifth in the EU for the number of enterprises (after Italy, France, Spain, and Germany), and their number has been steadily increasing for several years. Meanwhile, nearly 35% of domestic enterprises engage in innovative activities (this percentage is highest among large companies at 69.4%, data for 2018–2020). However, this is still below the EU average of almost 53%. Therefore, increasing the percentage of Polish companies engaged in innovative activities could be the key to sustainable economic growth in the coming years.

“The main challenge we face in Poland is the culture of innovation. It’s both a challenge and an opportunity to make people believe they can contribute their new ideas and creativity to generate new solutions. At L’Oréal, we conducted an internal survey that showed people want to innovate but don’t necessarily believe they can. As a result, we implemented solutions to help them feel confident in their abilities. One such initiative is the Innovation Squad, a program for employees who want to pursue their innovations. This group works like startups. They have their great ideas and a budget to implement projects that improve our business efficiency,” says Adam Nitecki, General Manager of E-commerce at L’Oréal Poland and the Baltic States.

One area where innovation and investment are needed is energy.

“For our economy, the key issues right now are renewable energy sources and the ability to produce electricity, as well as transmission networks. The Polish economy is still overly reliant on coal. Therefore, we need to invest significantly more in renewable energy sources, such as wind, solar, and biomass, both on land and in the Baltic Sea. Without energy sources, the entire economy cannot develop,” says Michał Kobosko.

“In this context, another important and urgent action is the thermal modernization of buildings. Today, we have several million buildings in Poland that consume huge amounts of energy for heating. This is a relatively simple and straightforward action, and we can use EU funds to achieve it. If done, it will help our economy, make us less dependent on non-renewable energy resources, and reduce expenses,” adds Henryk Kwapisz, Director of Institutional Relations at Saint-Gobain Group in Poland. “In the near future, it will be crucial to shift Polish construction to zero-emission buildings, which consume minimal energy and emit as few harmful compounds as possible, while significantly reducing waste.”

French companies are another group of enterprises, after domestic ones, that significantly contribute to economic growth through investments and innovations. According to an April report by the French-Polish Chamber of Commerce (CCIFP), about 1,200 companies with French capital operate in the Polish market. In 2023, 48% of them increased their investment expenditures. Over the past three years, most firms have invested in areas such as digitalization (45%), environmental protection (33%), production automation (27%), and production facility expansion (21%).

“We do a lot to ensure the energy efficiency of our production plants is at an optimal level. An example is the hybridization of the furnace in our mineral wool, glass, and rock wool production plant in Gliwice, which significantly reduced our energy consumption. Using less energy, we also have a less negative impact on the environment. Additionally, we signed a PPA contract, which means that a large part of our energy comes from wind power, thus contributing to climate neutrality,” says Henryk Kwapisz.

In terms of the competitiveness of the Polish economy, the presence of French companies on the domestic market is significant because they often operate in knowledge-intensive industries characterized by the highest level of technological advancement, such as pharmaceutical and chemical production, transport equipment, and electrical and electronic devices. They are also strongly present in knowledge-intensive services, particularly in the information and communication sector.

CCIFP research shows that R&D is an important area of their activities. 41% of French-capital companies conduct such activities in Poland, and one in five allocates more than 2% of their annual revenues to them. Additionally, four out of five surveyed companies have implemented a new product or service in the last three years, and 43% of innovative solutions from French companies implemented in Poland have been replicated in other group branches worldwide. One example is the cosmetics industry.

“Innovations in the beauty industry have traditionally been associated mainly with new products and innovative ingredients. Today, these innovations have expanded significantly to include technological aspects, and so-called beauty tech – the combination of beauty and technology – allows us to provide consumers with increasingly advanced and better-tailored solutions. This is one aspect of innovation. The second aspect involves developing and designing production processes, especially in Poland, where L’Oréal’s largest factory in the world is located. Our significant investments aim to reduce the environmental impact of these production processes and manufacture our products in a more environmentally friendly manner,” says Adam Nitecki.

The role of innovation, technology, and highly developed industry in the development of the Polish economy, and the importance of Polish and foreign companies in enhancing its competitiveness, were discussed during the debate “Innovation in Industry: Opportunities, Challenges, Investments” held in the French Innovation Zone at this year’s Impact’24 congress in Poznań. One of the most important socio-economic events in Central and Eastern Europe, this year’s edition of Impact’24 traditionally attracted several thousand companies, startups, institutions, experts, and speakers from around the world. The French-Polish Chamber of Commerce and its partners, including Credit Agricole Bank Polska, L’Oréal Polska and the Baltic States, Saint-Gobain Group in Poland with the Sekurit brand, Sodexo Polska, Econocom, and Renault Polska, representing French capital in Poland, were also present at Impact’24.

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