DRIVERS OF INNOVATION

The key drivers of innovation represent the underlying reasons why businesses may initiate innovation. Together with barriers to innovation, they represent part of a continuum of key factors that influence innovative activity within a business. Innovation-active businesses were asked to report the drivers for developing or introducing new goods, services, processes or methods. Businesses could select more than one driver and a ranking of importance was not required.

Drivers of innovation(a)(b), by employment size, 2008 - 09
		0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
		%	%	%	%	%
Profit related drivers(c)		71.9	77.9	75.0	82.6	74.6
Competition, demand and market related drivers
	Be at the cutting edge of the industry	29.9	34.7	34.0	43.9	32.3
	Increase responsiveness to customer needs	47.6	51.7	53.0	60.5	49.9
	Ensure the business's products are competitively priced	20.7	28.5	36.2	33.1	25.6
	Increase or maintain market share	37.9	41.6	50.0	53.4	40.9
	Establish new markets	33.6	33.4	34.7	31.5	33.6
	Increase export opportunities	3.7	4.8	6.1	8.1	4.4
	Any of the above competition, demand and market related drivers	73.1	76.2	76.0	78.0	74.7
Production and delivery drivers
	Increase efficiency of supplying/delivering goods and/or services	28.2	39.1	39.0	52.4	33.8
	Improve quality of goods and/or services	35.2	39.9	39.4	45.5	37.6
	Improve IT capabilities or better utilise IT capacity	16.4	25.1	25.0	40.5	20.9
	Increase capacity of production or service provision	13.5	17.7	21.1	25.5	16.1
	Any of the above production and delivery drivers	49.8	61.9	59.6	70.2	55.6
Reduce environmental impacts		9.7	12.9	12.9	25.1	11.4
Improve safety or working conditions		12.9	21.2	29.4	32.2	18.2
In response to government regulations		7.9	11.5	13.1	15.8	9.9
Adherence to standards		11.6	17.1	16.8	20.3	14.4
(a) Proportions are of innovation-active businesses in each employment size category.
(b) Businesses that were innovation-active were asked for the reasons they had undertaken innovation. Businesses could identify more than one reason.
(c) Including to improve revenue or productivity and to reduce costs.

Across all employment size ranges, profit related drivers were the most reported reason for undertaking innovative activity. Overall, increase responsiveness to customer needs (50%) and increase or maintain market share (41%) were the next most reported drivers. Businesses with 200 or more persons employed were more than twice as likely to report the driver, improve IT capabilities or better utilise IT capacity compared to businesses with 0-4 persons employed, at 40% and 16% respectively. However, the difference was much less for establish new markets, at 32% and 34% respectively, across the same employment size ranges.

By industry, businesses within Health care and social assistance and Wholesale trade recorded the highest proportion of businesses for increase responsiveness to customer needs as a driver of innovation (both 60%). Profit related reasons as a driver for innovation ranged from 56% for businesses in Health care and social assistance, to 82% for Wholesale trade, and Rental, hiring and real estate services. With the exception of the Mining (13%) and Information media and telecommunications industries (16%), increase export opportunities as a driver of innovation was reported by less than 10% of innovation-active businesses across all industries.

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