BARRIERS TO INNOVATION

An understanding of the barriers hampering innovation is seen as important for policy makers to effectively target resources and programs in order to overcome impediments. All businesses were asked to report whether any factors hampered their ability to develop or introduce new goods, services, processes or methods. Businesses could select more than one factor and a ranking of importance was not required.

While the focus in this release is on innovative-active businesses and factors that influence innovation, the Business Characteristics Survey collects a comprehensive range of factors that hamper a business' ability to undertake innovation as well as factors which may impact on more general business activities or performance. These estimates will be released as part of Selected Characteristics of Australian Business, 2006-07 (cat. no. 8167.0).

ALL BUSINESSES - Barriers to innovation(a)(b), by innovation status - 2006-07
		Innovation-active businesses	Non innovation-active businesses	All businesses
		%	%	%
Lack of access to additional funds		24.5	10.8	15.9
Cost of development or introduction/implementation		17.5	7.0	10.9
Lack of skilled persons:
	within the business	23.2	12.0	16.1
	within the labour market	23.8	15.7	18.7
	in any location(c)	34.5	20.5	25.7
Attitude of staff towards change		9.9	3.6	6.0
Lack of access to knowledge or technology to enable development or introduction/implementation		5.6	2.1	3.4
Government regulations or compliance		12.7	8.8	10.3
Uncertain demand for new goods or services		12.1	6.9	8.8
Other barriers to innovation		5.8	5.3	5.5
Any barriers to innovation		61.7	37.2	46.3
No barriers to innovation		38.3	62.8	53.7
(a) Proportions are of all businesses.
(b) All businesses (irrespective of innovation status) were asked to report which of the factors listed significantly hampered their ability to develop or introduce new or significantly improved goods, services, processes or methods. Businesses could identify more than one factor.
(c) Includes businesses that reported lack of skilled persons within the business and/or lack of skilled persons within the labour market.

The proportion of all businesses that reported any barriers to innovation was 46%. Innovation-active businesses (62%) were far more likely to report barriers to undertaking innovative activity than non innovation-active businesses (37%).

Over one third of innovation-active businesses (34%) and one fifth of non innovation-active businesses (20%) cited a Lack of skilled persons in any location as a factor hampering innovation. Almost one quarter (24%) of innovating businesses reported a Lack of access to additional funds as a factor hampering innovation. Cost related barriers were seen by 18% of innovation-active businesses and 7% of non innovation-active businesses as hampering innovation.

INNOVATION-ACTIVE BUSINESSES, Barriers to innovation(a), by employment size - 2006-07
		0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
		%	%	%	%	%
Lack of access to additional funds		26.0	25.3	16.3	8.5	24.5
Cost of development or introduction/implementation		16.9	18.3	17.7	15.0	17.5
Lack of skilled persons:
	within the business	18.9	28.7	25.5	24.9	23.2
	within the labour market	16.4	31.6	32.5	30.4	23.8
	in any location(b)	26.6	44.0	40.0	36.8	34.5
Attitude of staff towards change		5.5	14.6	15.4	9.8	9.9
Lack of access to knowledge or technology to enable development or introduction/implementation		5.7	5.8	5.0	5.7	5.6
Government regulations or compliance		9.4	16.5	15.6	13.2	12.7
Uncertain demand for new goods or services		12.2	12.7	9.7	6.8	12.1
Other barriers to innovation		5.5	7.0	3.9	2.0	5.8
Any barrier to innovation		57.2	68.2	62.2	53.0	61.7
No barriers to innovation		42.8	31.8	37.8	47.0	38.3
(a) Proportions are of innovation-active businesses in each employment size category.
(b) Includes businesses that reported lack of skilled persons within the business and/or lack of skilled persons within the labour market.

Innovation-active businesses with 0-4 persons and those with 200 or more persons employed were more likely to report no barriers to undertaking innovation (43% and 47% respectively) than businesses in the other two employment size ranges. Uncertain demand for new goods or services was more commonly reported by smaller businesses as an impediment to undertaking innovative activity.

For every employment size range, a Lack of skilled persons in any location was the most commonly recorded barrier to undertaking innovative activity. However, for innovation-active businesses with 0-4 persons employed, a Lack of skilled persons in any location (27%) was only slightly higher than Lack of access to additional funds (26%) as a significant barrier. For the other employment size ranges, the proportion of businesses reporting Lack of access to additional funds was much lower than Lack of skilled persons. Government regulations or compliance as a factor hampering innovation was reported by 13% of innovation-active businesses and was more commonly reported by businesses with 5-19 persons and 20-199 persons employed (both at 16%) than those with 0-4 persons (9%) and 200 or more persons (13%) employed.

By industry, the highest proportions of innovation-active businesses reporting no barriers to undertaking innovation were in Mining (47%) and Financial and Insurance Services (46%). Lack of access to additional funds as an impediment to innovation was reported by almost 40% of businesses in the Information Media and Telecommunications industry. This industry along with Transport, Postal and Warehousing (at 21% and 20% respectively) also reported the highest proportions for Government regulations or compliance as a factor hampering innovative activity. However, for the majority of industries, Lack of skilled staff in any location was the most commonly reported barrier to innovation, ranging from 25% for innovation-active businesses in Rental, Hiring and Real Estate Services to 44% for Administrative and Support Services.

Innovation-active businesses within the Transport, Postal and Warehousing industry were almost twice as likely to report Lack of skilled persons within the labour market (26%) as a barrier to innovation than Lack of skilled persons within the business (14%). Innovation-active businesses in the Information Media and Telecommunications and Manufacturing industries reported similar results for both types of skills shortages.

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