Innovation refers to the extent that a business can develop new ideas and turn them into marketable products. Innovation is a key factor when investing as it determines the long-term success of a business.
Companies need to ensure that they are able to innovate well, otherwise, they may become uncompetitive in the market. If they become uncompetitive, they will start to lose market share.
Younger companies tend to be more risk-taking when it comes to innovation, but often don’t have the experience or resources that more established firms do, to ensure the success of their new ideas.
More innovative companies tend to grow quickly and be more profitable over time. Measuring innovation is complicated but a key metric is investment into research and development.
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