Estonian and Lithuanian small and medium-sized enterprises (SMEs) are planning to focus more on innovations in 2015, while the proportion of Latvian SMEs planning to invest in innovations has decreased by 9 percent, according to a study conducted by SEB Baltic.

In Estonia, 73 percent of the polled companies said they plan to invest in innovations during 2015, while a year ago just 60 percent were planning to do so. A significant surge in plans for innovation can be observed in Lithuania: in 2015, 69 percent of SMEs plan to invest in innovation while a year ago only 42 percent had plans to innovate. However, in Latvia, the trend has been in the opposite directions: the number of Latvian companies planning to innovate has fallen from 48 percent to 39 percent over the last year.

"Through innovations companies in Estonia, Latvia, and Lithuania aim at increasing competitiveness both in the domestic and international markets, especially as the low-cost production advantage of Baltic markets is gradually diminishing. Companies are aware that after investing in innovations, fewer resources are required for production or provision of services, which will have a positive impact on company finances. However, it is clear that the inactivity of Latvian SMEs in terms of investment in new technologies and new products is a negative trend. In the medium-term this attitude could lead to decreased competitiveness and a diminished export capacity from Latvian companies," said Ieva Tetere, a member of the board at SEB Bank of Latvia.

Product and services are the preferred fields for innovation in all three countries, with 46 percent of Lithuanian, 36 percent of Estonian and 26 percent of Latvian SMEs choosing this option, while 24 percent of all polled SMEs in Estonia, 14 percent in Lithuania, and only 6 percent in Latvia plan to invest in employee development; 11 percent of Estonian, 5 percent of Lithuanian and 3 percent of Latvian SMEs have plans to change their business model over the next year.