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8166.0 - Summary of IT Use and Innovation in Australian Business, 2006-07  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 26/06/2008   
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EXPLANATORY NOTES


EXPLANATORY NOTES

INTRODUCTION

1 This release presents key indicators on business use of information technology (BUIT) and business innovation in Australia, as collected by the 2006-07 Business Characteristics Survey (BCS). The purpose of this summary release is to provide users with results for the key BUIT and Innovation indicators within 12 months of the end of the reference period.

2 The BCS is an annual survey and it is the survey vehicle for the ABS' Integrated Business Characteristics Strategy (IBCS). The strategy integrates the collection and quality assurance of data required for input into both the ABS' Business Longitudinal Database (BLD) and the production of point in time estimates for: business use of Information Technology (BUIT); business innovation in Australia; and, a broad range of other non-financial business characteristics.

3 A key part of the IBCS is the production of annual BUIT and business innovation indicators, with a more detailed set of items for each of these topics collected every second year (i.e. in alternating years). Previously, these IT and innovation indicators were produced from the separate annual Business Use of IT and biennial Innovation surveys, respectively. The 2006-07 BCS is the second fully integrated collection and had a focus on Innovation. The 2007-08 BCS will collect detailed IT use information.


STATISTICAL UNITS USED

4 Statistical units are those entities from which statistics are collected, or about which statistics are compiled. In ABS economic statistics, the statistical unit is generally the business. The ABS Business Register (ABSBR) is used to record information about statistical units and is used to create the frames for most ABS economic collections.

5 The ABS uses an economic statistics units model on the ABSBR to describe the characteristics of businesses, and the structural relationships between related businesses. Within large, complex and diverse business groups, the units model is used also to define reporting units that can provide data to the ABS at suitable levels of detail.

6 This units model allocates businesses to one of two sub-populations:

  • Businesses with a simple structure - Most businesses and organisations in Australia need to obtain an Australian Business Number (ABN). They are then included on the whole-of-government register of businesses, the Australian Business Register (ABR), which is maintained by the Australian Taxation Office (ATO). Most of these businesses have simple structures; therefore, the unit registered for an ABN will satisfy ABS statistical requirements. For these businesses, the ABS has aligned its statistical units structure with the ABN unit. The businesses with simple structures constitute the ATO maintained population (ATOMP), and the ABN unit is used as the statistical unit for all ABS economic collections.
  • Businesses with a complex structure - For the population of businesses where the ABN unit is not suitable for ABS statistical requirements, the ABS maintains its own units structure through direct contact with the business. These businesses constitute the ABS maintained population (ABSMP). This population consists typically of large, complex and diverse businesses. For businesses in the ABSMP, statistical units comprise the Enterprise Group, the Enterprise and the Type of Activity Unit (TAU). The range of activities across the Enterprise Group can be very diverse. The TAU represents a grouping of one or more business entities within the Enterprise that cover all of the operations within an industry subdivision and for which a basic set of financial data, production and employment can be reported.

7 Together these two sub-populations (of ABN units and TAUs) make up the ABSBR population, from which the BCS sample is taken.

8 The current economic statistics units model was introduced into the ABS in mid 2002, to better use the information available as a result of The New Tax System (TNTS). For more information please refer to Information Paper: Improvements in ABS Economic Statistics - Arising from the New Tax System], (cat. no. 1372.0).


SCOPE AND COVERAGE

9 The businesses that contribute to the statistics in this publication are classified:
10 The scope of the estimates in this publication consists of all business entities in the Australian economy, except for:
      SISCA 3000 General government
      SISCA 6000 Rest of the world
      ANZSIC06 Division A Agriculture, forestry and fishing
      ANZSIC06 Division O Public administration and safety
      ANZSIC06 Division P Education and training
      ANZSIC06 Groups 624 (Financial asset investing) and 633 (Superannuation funds)
      ANZSIC06 Groups 854 (Religious services) and 955 (Civic, professional and other interest group services)
      ANZSIC06 Subdivision 96 Private households employing staff

11 The 2006-07 BCS used the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 edition to define scope. This differs from the previous survey which used the 1993 edition of this classfication. More information about the impact of this change is provided in the Appendix: Changes to Industry Classification: Comparability with previous outputs.

12 The frame for the Business Characteristics Survey is a subset of the ABS Business Register and includes employing businesses only. These are defined as those businesses which register for the ATO's Pay As You Go Withholding (PAYGW) scheme. It is not unusual for some of these 'employing businesses' to have zero employment at various times during the reporting period. The frame is updated quarterly to take account of new businesses, businesses which have ceased employing, changes in employment levels, changes in industry and other general business changes. Businesses which have ceased employing are identified when the ATO cancels their Australian Business Number (ABN) and/or PAYGW registration. In addition, businesses with less than 50 employees, which did not remit under the PAYGW scheme in each of the previous five quarters, are removed from the frame. The estimates in this publication include an allowance for the time it takes a newly registered business to be included in the survey frame.


SURVEY METHODOLOGY

13 The sample design for this survey is complex due to serving dual purposes: collection of characteristics data for the ABS Business Longitudinal Database (BLD); and production of point in time estimates for a range of non-financial business characteristics. While there are scope differences between the BLD and point in time estimates, the intention is to maximise the number of businesses selected for which data collected can contribute to both purposes. More information about releases for the BLD is provided in Explanatory Note 35. For more information about the survey design or methodology for the BCS, please email your query to innovation.technology@abs.gov.au.

14 Collection of data included in this release was undertaken based on a random sample of approximately 9,700 businesses using a mail out questionnaire. The sample was stratified by industry and an employment based size indicator. All businesses on the ABS Business Register identified as having 200 or more employees were included in the sample. The 2006-07 BCS was dispatched in November 2007.

15 Apart from the scope differences, the main change in the sample design of the 2006-07 BCS compared to most recent BUIT and Innovation surveys is the removal of state or territory as a stratification variable. The loss of state or territory stratification may impact on the quality of state or territory estimates that are intended for inclusion in future related releases for the 2006-07 BCS.


REFERENCE PERIOD

16 The reference period for most of the characteristics items included in the 2006-07 Business Characteristics Survey is the year ended 30 June 2007. Financial data relates to the most recent financial year ended on or before 30 September 2007.


DEFINING "INTERNET COMMERCE"

17 In the BCS (and previous BUIT surveys), the ABS has used the Organisation for Economic Co-operation and Development (OECD) narrow definition of e-commerce transactions when collecting data on Internet orders and Internet income. The narrow definition is "an Internet transaction is the sale or purchase of goods or services, whether between businesses, households, individuals, governments, and other public or private organisations, conducted over the Internet. The goods and services are ordered over the Internet, but the payment and the ultimate delivery of the good or service may be conducted on or off-line" (i.e., the commitment to purchase is made over the Internet). Internet income is, therefore, defined as income resulting from goods and services ordered over the Internet where the commitment to purchase is via the Internet or web. Excluded from these measures are orders, payments or transactions for which the commitment has been made using other arrangements.

18 ABS experience in collecting data for receipt of orders via the Internet and Internet income continuously highlights the difficulty of defining an Internet commerce transaction in a way which is understood by businesses and suits all forms of Internet commerce. For instance, for some businesses, the Internet transaction initiates and completes the purchase, while for others the Internet transaction finalises details of a purchase which was initiated by a non-Internet based agreement or contract. In order to apply consistent treatment in the collecting and quality assuring Internet orders and Internet income data, over several cycles of collecting these data, the ABS refined the definition of an "Internet order" to include only those transactions where the commitment to purchase occurs via the Internet or web. An important element of the definition remains that payment and the ultimate delivery of the good or service is not relevant, that is, either or both may be conducted off-line. This definition remains in place for the 2006-07 BCS.


DEFINING "INNOVATION"

19 The 2006-07 BCS draws on the conceptual definitions and guidelines included in the 'Oslo Manual, Guidelines for Collecting and Interpreting Innovation Data' (Third Edition, 2005). This manual provides a framework for the collection of innovation statistics and specifies the definitions of innovating businesses and innovation-active businesses that are used by the ABS. The 2006-07 BCS draws on this manual for the questions used the BCS and in presentation of outputs from the survey.

20 Key indicators of innovation include: measures of business innovation (innovating, innovation-active); types of innovation (goods or services, operational processes, organisational/managerial processes, marketing methods); and status of innovation (introduced or implemented, still in development, abandoned).

Measures of business innovation

21 Two measure of business innovation are included in this release:
      Innovating businesses - businesses which introduced or implemented any type of innovation during the reference period.
      Innovation-active businesses - businesses which had undertaken any innovative activity during the reference period, including introduction or implementation of any type of innovation and/or businesses with work on the development or introduction either still in progress or abandoned.

Types of innovation

22 Four types of innovation are included in this release:
      Goods or services - Any good or service or combination of these which is new to a business (or significantly improved). Its characteristics or intended uses differ significantly from those previously produced/offered.
      Operational processes - New or significantly improved methods of producing or delivering goods or services of a business (including significant change in techniques, equipment and/or software).
      Organisational/managerial processes - New or significantly improved strategies, structures or routines of a business which aim to improve performance.
      Marketing methods - New or significantly improved design, packaging or sales methods aimed to increase the appeal of goods or services of a business or to enter new markets.

Status of innovation

23 Three statuses of innovation are included in this release:
      Introduced or implemented - the business successfully introduced or implemented an innovation during the reference period (although the innovation does not need to have been commercially successful).
      Still in development - the business was in the process of developing, introducing or implementing an innovation during the reference period but work on the innovation was still in progress at the end of the period.
      Abandoned - the business abandoned the development and/or introduction of an innovation during the reference period (i.e. work on the innovation ceased without full introduction occurring).


IMPACT ON MEASURES OF INNOVATION ARISING FROM THE IMPLEMENTATION OF THE IBCS

24 In recent years, the ABS has conducted two Innovation Surveys, one for the calendar years 2001 to 2003 and another for the calendar years 2004 and 2005. There were some changes to the concepts measured between these two surveys. The collection of innovation statistics as part of the BCS has resulted in further changes to the range of innovation concepts being measured. Conceptually the scope of innovation measures has been expanded to better align to the framework provided in the 'Oslo Manual, Guidelines for Collecting and Interpreting Innovation Data' (Third Edition, 2005).

25 Changes to the collection of innovation statistics were made as part of BCS implementation. For example, questions used to produce the innovation activity measures are significantly different to those used in previous stand-alone Innovation Surveys. The questions are more detailed in nature than the broader indicator questions used in previous innovation surveys. Other changes include the addition to the scope of more industries and small employers (ie. those with less than 5 employees).

26 Innovation statistics collected by the BCS are in respect of a single financial year reference period. This differs from the 2003 and 2005 Innovation Surveys which were based on three year (i.e. 2001, 2002 and 2003) and two year (i.e. 2004 and 2005) calendar years, respectively, for characteristic type data. It should be noted that migration of innovation items to the BCS vehicle will still enable experimental estimates for some innovation items to be compiled for multiple reference years, e.g. two year periods. Subject to quality assurance, experimental estimates for the two years, 2005-06 and 2006-07, may be released in the upcoming innovation release.


BUSINESS COUNTS IN THIS RELEASE AND COMPARABILITY WITH OTHERS PUBLISHED BY THE ABS

27 Estimates of the number of businesses operating in Australia can be derived from a number of sources within the ABS. They may relate to a particular point in time or may be presented as an average annual figure. However, these estimates will not always show the same results. Variations will occur because of differing data sources, differing scope and coverage definitions between surveys, as well as variations due to sampling and non-sampling error. More information about business counts can be found in the information paper A Statistical View of Counts of Businesses in Australia (cat. no. 8162.0).

28 The Business Characteristics Survey is not designed to provide high quality estimates of numbers of businesses for any of the output classifications (for example, employment size or industry) and the number of businesses in this publication are only included to provide contextual information for the user. A more robust source of counts of Australian businesses is available from Counts of Australian Businesses, including Entries and Exits, Jun 2003 to Jun 2007 (cat. no. 8165.0).


OUTPUT CLASSIFICATIONS

29 For output purposes, businesses are classified to employment size ranges based on actual data reported in the survey. For other output groups (industry, capital city/other areas) the classification is drawn from information held about the business on the ABS Business Register.


UPCOMING RELATED RELEASES

30 Upcoming ABS data releases from the 2006-07 Business Characteristics Survey and a brief description of these are listed below:
      Innovation in Australian Business, 2006-07 (cat. no. 8158.0) This release will include summary innovation specific data (similar to that included in the 2005 edition). The majority of data will be released via the web site in the form of data cubes; these will include detailed (including some cross classified) industry and employment size data by topic. Some basic data for States/territories may be included. This release is scheduled for 22 August 2008.
      Selected Characteristics of Australian Business, 2006-07 (cat. no. 8167.0). This release will include summary characteristics data for a selection of topics including business cooperative arrangements, performance measures, barriers, government financial assistance, finance sought, markets and competition, innovation rates and IT usage. There may be additional outputs relating to business characteristics (with some cross classification of characteristics variables) released as data cubes. Some basic data for States/territories may be included. This release is scheduled for 19 September 2008.


MOST RECENT RELATED RELEASES

31 The most recent issue of ABS releases related to demography of Australian business is listed below:
32 The most recent issues of other ABS releases related to innovation in business in Australia are listed below:
33 The most recent issues of other ABS releases on the use and production of information and communication technologies (ICT) in Australia are listed below:
34 Recent ABS releases which provide additional information related to the Integrated Business Characteristics Strategy and the Business Longitudinal Database are listed below:

BUSINESS LONGITUDINAL DATABASE - CONFIDENTIALISED UNIT RECORD FILE

35 The primary outputs from the BLD will be a suite of Confidentialised Unit Record Files (CURFs). The BLD design is comprised of panels (or waves) with each panel representing the entire population of in-scope small and medium businesses at the time of initialisation. Each panel is surveyed for five years. The first wave of the BLD (Panel 1) was initiated via a stand-alone survey conducted in respect of the 2004-05 reference year. The first CURF for the BLD will include, for at least some businesses, 6-7 years of financial data (from administrative sources) and 3-4 years of characteristics data (directly collected via the BCS). The CURF is due for release in the first half of 2009.


ABS WEBSITE

36 Other information relating to IT, innovation and characteristics of business, particularly updates about additional analytical work can be found on the ABS website <www.abs.gov.au>; see the Innovation, Science and Technology Home page under Themes/Industry.


ROUNDING

37 Estimates of proportions have been calculated using unrounded figures, but are shown in the tables rounded to one tenth of a percentage point. Where figures have been rounded, discrepancies may occur between the sum of the component items and the total. Figures presented in the commentary have been rounded to the percentage point.


COMMENTS

38 The ABS welcomes comments and suggestions from users regarding business characteristics including IT and innovation statistics. These comments should be addressed to the Director, Innovation and Technology Business Statistics Centre, Australian Bureau of Statistics, GPO Box K881, Perth, WA, 6842, or email innovation.technology@abs.gov.au.


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