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Innovation

Government, Strategy and Business Competitiveness Observatory

Companies in Comunidad Valenciana must advance in technology and knowledge to reduce a gap of 1.6 points in competitiveness

This fourth report of the Observatorio de Gobierno, Estrategia y Competitividad Empresarial (GECE) de la Comunitat Valenciana is an initiative of the Instituto Valenciano de Investigaciones Económicas (Ivie) in collaboration with Bankia.

Communication Bankia

By  Communication Bankia

Publish on 
14 October 2019 - 11:30

  • 23.4% of companies in Comunidad Valenciana are at the forefront of competitiveness, however there is 1.6% fewer companies in this group than in the national average
  • These highly competitive companies continue to be the main generators of employment (44.7%) and added value (54%) in the region
  • The focus on highly technological or knowledge-based sectors is improving: 29.5% of the added value generated by companies in Comunidad Valenciana founded less than five years ago is associated with these sectors
  • The gap in technological intensity or knowledge between the Valencian and Spanish industries is close to 6 points and can be seen in all levels of competitiveness, even in young companies
  • The GECE Observatory, promoted by Bankia and the Ivie, publishes the 'Report 4', which analyses the evolution of competitiveness within Valencian companies

Companies in the Comunidad Valenciana are below the average level of competitiveness in Spain, given that only 23.4% of them are within the quartile of the most competitive ones, that is, 1.6 points below the national average and “there was no favourable trend seen in the 2014-2017 period that could lead to a reduction in this gap with Spanish companies”.

This is one of the main conclusions of 'Report 4' published by the 'Observatory on Government, Strategy and Competitiveness of Companies' (GECE), promoted by Bankia and Instituto Valenciano de Investigaciones Económicas (Ivie), in collaboration with Cátedra de Empresa Familiar de la Universitat de València (CEFUV).

One of the reasons that seems to weigh on the competitiveness of the Valencian companies is their “scarce orientation towards carrying out technology and knowledge intensive activities”. While in Comunidad Valenciana the added value of companies operating in high-technology industrial sectors does not exceed 1% (and dropped by one-tenth between 2014 and 2017), the weight of such companies in Spain stands at 6% (up two tenths over the same period).

Newly created companies are not contributing to reducing this difference, since only 29.5% of the added value generated by Valencian companies founded less than five years ago is associated with technology-intensive sectors, compared to 33.5% of those observed at national level.

In addition to the sector specialisation of Comunidad Valenciana as a limiting factor for competitiveness, the region still endures the problem of the small size of these companies. In 2017, Valencian companies had an average size of 20.1 workers, compared to 25.7 employees in Spanish companies in general.

On the other hand, companies in Comunidad Valenciana are increasingly concentrating their capital structures on a single shareholder, while there is a decreasing weight of the boards of directors. In 2017, the percentage of companies with a single shareholder stood at 57.1%, four points above the same figure for the rest of Spain.

Family businesses

With regards to family-owned companies, although we have seen a slight improvement in their competitiveness (23.6% of them were in the most competitive group in 2014 and this figure has risen to 25.4% in 2017), they reflect the same problems as discussed for companies as a whole.

The sector specialisation that is not very intensive in terms of technology and knowledge becomes more marked in the case of family businesses, and the weight of these sectors in the contribution of added value generated by all the family-owned companies has decreased during this period. If in 2014, 46.2% of the added value was generated by family businesses of medium-high and high technological or knowledge intensity, in 2017 that percentage fell by half, down to 23.2%.

One of the causes of this scarce technological and knowledge intensity of Valencian family-owned businesses is the vast importance of the retail and repair sector (which is not very intensive in technology) and happens to account for 49.1% of the added value generated by all family-owned businesses.

A more detailed analysis can be found in the fourth report published by Observatorio GECE (Observatory on Governance, Strategy and Competitiveness of Companies), an initiative of Ivie in collaboration with Bankia.

This new document entitled, 'Evolution of competitiveness in Valencian companies: trends and associated factors’, recommends “aligning the actions of all actors involved in fostering business growth, fostering technology and knowledge orientation, as well as adopting governance systems that promote transparency and accountability”.

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