Modern Australian

'Courageous' investment means innovation stays in NZ, not sold off overseas

  • Written by Jessica C Lai, Associate Professor in Commercial Law, Te Herenga Waka — Victoria University of Wellington
'Courageous' investment means innovation stays in NZ, not sold off overseas

New Zealand is in an economic recession and the government is trying to spend its way through it with direct investment to boost the economy and jobs.

At the same time, the Reserve Bank of New Zealand (RNBZ) plans to lend retail banks money at low interest rates in the hope they are — as the reserve bank governor, Adrian Orr, put it — “courageous” in their lending choices.

But as the money does not need to be used for any particular type of venture, there are concerns it will inflame the already overheated property market.

Part of the problem is New Zealanders do not have many investment options. There is little to be “courageous” about.

This lack of investment options is partly due to the average New Zealander’s model of successful innovation.

Read more: With house prices soaring again the government must get ahead of the market and become a 'customer of first resort'

Most of the big successful New Zealand innovation stories we see in the media are about people who sold their innovation to an overseas – typically American – company. This success allows the innovator to buy their “three Bs”: the Beamer, the boat and the bach.

But is this a true measure of successful innovation? Or could we do better to create more investment options and allow for more “courageous” investment?

Investment in local industry

Innovation involves creating and capturing value from new things – whether products, services or processes.

The New Zealand model of successful innovation is narrowly about creation, perhaps setting up and then selling a start-up. This model is shaped by skill shortages, funding issues and risk aversion, which limit innovative growth.

Big ideas struggle to grow in New Zealand. The model is about innovators capturing short-term value for their creations.

What might be truly beneficial to New Zealand is if innovations stayed here and more risks were taken locally.

If more investment was directed at commercialisation of local innovations they could be used to create and grow local industries. The resulting products or services could then be exported or licensed internationally to bring more wealth into New Zealand.

This would create more investment opportunities, as well as jobs and local know-how. In turn, wealth could be created and distributed across communities for a sustained period.

It’s worth pointing out that innovation is self-perpetuating. Once an innovative industry is developed in an area, this can generate further innovation in that area, because of skill development and the localisation of these skills. Silicon Valley exemplifies this.

Learn from the Māori perspective

We need not look far to find an alternative model of successful innovation.

Talk to Māori communities and you hear that successful innovation is something that is implemented locally and creates value throughout the community.

During community consultation to develop Te Matarau a Māui – a regional Māori economic development strategy for the greater Wellington region – we were told time and again that the common strategic goal of “play to win” was too narrow.

A Māori perspective on innovation doesn’t focus on winners and losers, but on a vibrant blossoming innovation ecosystem. Innovation from this perspective is tied up with cultural knowledge and community identity.

This kind of innovation model leads to better distributed and long-term wealth creation, since value is embedded within and spread throughout the community.

Yet the tools, such as the Business Model Canvas, that we use to explore business ideas are based on hyper-individualistic, win-at-all-costs businesses.

New Zealand needs entrepreneurship and innovation tools that embed a richer perspective on success, more in line with the aspirations of the wellbeing economy and the Māori communities that developed Te Matarau a Māui.

A look to the future

We are not saying individual innovators should not be rewarded for their innovations. They should be. Nor are we saying that there aren’t success stories that involve local commercialisation. There are.

Moreover, we are not suggesting New Zealanders do not look outwards. They absolutely should.

But perhaps New Zealanders could shift their understanding of a success story for innovation, because we could have more innovation stories that involve further growth and benefit the well-being of communities.

Such a shift cannot happen until there is money to undertake the necessary risk to produce Kiwi innovations locally. International intellectual property portfolios should be developed in important markets, but we should invest in local capabilities to maintain operations in New Zealand. This would feed the New Zealand economy.

Read more: New data privacy rules are coming in NZ — businesses and other organisations will have to lift their games

More provocatively, keeping innovations local would create more business opportunities that New Zealanders could invest in, aside from real estate. Perhaps this could help to cool down the property market.

So in light of RBNZ’s role to “promote the prosperity and well-being of New Zealanders”, contribute to a “sustainable and productive economy” and support “maximum sustainable employment”, perhaps it should think about tying its lending scheme to making sure local innovation stays local. Otherwise, we might be letting a good crisis go to waste.

Authors: Jessica C Lai, Associate Professor in Commercial Law, Te Herenga Waka — Victoria University of Wellington

Read more


New research suggests immunity to COVID is better than we first thought

Early in the pandemic, many researchers feared people who contracted COVID could be reinfected very quickly. This was because several earlystudies showed antibodies seemed to wane after the first few...

who is Antony Blinken, Biden's pick for secretary of state?

US Secretary of State-designate Antony Blinken promises both awkwardness and opportunity for Australia’s Morrison government.Blinken could hardly represent a more striking contrast with his soon-to-be predecessor Mike Pompeo in his...

Think taxing electric vehicle use is a backward step? Here's why it's an important policy advance

The South Australian and Victorian governments have announced, and New South Wales is considering, road user charges on electric vehicles. This policy has drawn scorn from environmental advocates and...

what’s the best way to conduct Australia’s Great Koala Count?

ShutterstockFederal environment minister Sussan Ley this week announced A$2 million for a national audit of Australia’s koalas, as part of an A$18 million package to protect the vulnerable species.The funding...

Data from 45 countries show containing COVID vs saving the economy is a false dichotomy

ShutterstockThere is no doubt the COVID-19 crisis has incurred widespread economic costs. There is understandable concern that stronger measures against the virus, from social distancing to full lockdowns, worsen...

Mining companies are required to return quarried sites to their 'natural character'. But is that enough?

New Zealand has more than 1,100 registered quarries. Some of these mined sites are small, rural operations, but a significant number are large and complex, and within a city’s urban...

the fraught history of women and swearing in Australia

Kath and Kim (aka Jane Turner and Gina Riley): the suburban hornbags used swearing in clever ways in their 2002-2007 TV series.Riley Turner ProductionsWomen have had a fraught historical relationship...

From here on our recovery will need more than fiscal policy, it'll need redistribution

From the 1980s right through to the global financial crisis, the standard response in Australia and elsewhere to too weak or too strong an economy has been monetary policy —...

Forensic linguists can make or break a court case. So who are they and what do they do?

shutterstockIf you’re an avid viewer of crime shows, you’ve probably come across cases in which an expert, often a psychologist, is called in to help solve a crime using their...

Officials' engagement with China especially important in tense times: Morrison

Scott Morrison has encouraged federal public servants to engage with their Chinese counterparts, saying these are important connections particularly given the tensions in the bilateral relationship.Answering a question during a...

two views on increasing the super contribution

The increase in the compulsory superannuation contribution, legislated to rise next July from 9.5% to 10%, is being fiercely debated following the release of the retirement income report.In this podcast...

Victoria is boosting disability support in schools by A$1.6 billion. Here are 4 ways to make the most of it

ShutterstockThe Victorian government has announced an investment of nearly A$1.6 billion for public schools to ensure students with disability are supported in the classroom. The money will double the number...

News Co Media Group

Content & Technology Connecting Global Audiences

More Information - Less Opinion

Popular articles from Modern Australian

Your New Home Needs A Great GardenHow To Identify Signs Of Stress In Your ChildInstalling Shade Sails On your Garden10 Tips for Clearing a Blocked DrainCarpet Cleaning: Where Is It Headed In The Future?Common Repairs to Shipping ContainersThe lifestyle Choices of the Australian Millennials5 Tips For Creating a Kid-Friendly BackyardWhat Happens When You Choose a Wrong Cosmetic Dentist Sydney?Garlic In Your Life: The Health Benefits and How To Grow Your Own GarlicPost-Coronavirus Camping - 5 Tips To Help You Have A Safe And Happy Camping TripEasy Ways to Stop Your Mechanic from Ripping You Off12 Helpful Tips to Increase Your Savings This SummerHow to Organize Your Kid’s Nursery On A Budget