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8158.0 - Innovation in Australian Business, 2006-07 Quality Declaration 
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 22/08/2008   
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Contents >> Summary of findings >> INNOVATION BY TYPE AND STATUS

INNOVATION BY TYPE AND STATUS

Goods or services

Just over 18% of businesses reported the introduction of new goods or services (or product innovation) during the year ended 30 June 2007. A slightly higher proportion of businesses introduced new Services (11%) than new Goods (10%). Having new goods or services still in development was reported by 9% of businesses and only 3% of businesses reported abandoning activity that was intended to result in new goods or services.

Goods and services innovation(a), by employment size, by status - 2006-07

0-4 persons
5-19 persons
20-199 persons
200 or more persons
Total
%
%
%
%
%

Businesses which introduced or implemented any new or significantly improved:
goods
7.7
14.9
14.5
19.5
10.4
services
9.2
14.2
16.3
17.4
11.3
goods and/or services
14.7
23.9
26.9
31.1
18.4
Businesses with any activity related to new or signifcantly improved goods or services which was:
still in development(b)
8.3
10.4
14.4
17.2
9.4
abandoned
2.3
3.2
3.2
4.5
2.6

(a) Proportions are of all businesses in each employment size category.
(b) As at the end of the reference period.


By industry, the propensity to introduce new goods was higher for businesses in industries traditionally associated with goods, such as Manufacturing at 21% and Wholesale Trade at 28%. Businesses in Information Media and Telecommunications industry recorded the highest proportions of new goods or services still in development (19%) and the abandonment of activity associated with the development of new goods or services (6%).


Operational processes

New or significantly improved operational processes were introduced or implemented by 17% of businesses during the year ended 30 June 2007. New Supporting activities for business operations (e.g. maintenance systems or processes for purchasing, accounting or computing) at 11% was the most commonly reported type of operational process innovation, followed by new Methods of manufacturing or producing goods or services (6%) and Logistics, delivery or distribution methods of goods or services (4%). This ranking also holds across each employment size range. New operational processes still in development were reported by 7% of all businesses. A smaller proportion of businesses (2%) reported abandoning activity that was intended to result in the introduction or implementation of new or significantly improved operational processes.

Operational process innovation(a), by employment size, by status - 2006-07

0-4 persons
5-19 persons
20-199 persons
200 or more persons
Total
%
%
%
%
%

Businesses which introduced or implemented any new or significantly improved:
methods of manufacturing or producing goods or services
4.3
8.2
10.6
16.3
6.0
logistics, delivery or distribution methods for goods and services
3.8
4.7
8.8
13.3
4.5
supporting activities for business operations, such as systems or processes for purchasing, accounting or computing
8.1
12.9
22.5
32.6
10.7
other operational processes
0.1
0.3
0.4
0.5
0.2
any operational processes
13.3
20.4
31.7
41.8
16.9
Businesses with any activity related to new or significantly improved operational processes which was:
still in development(b)
5.1
9.1
14.9
21.1
7.1
abandoned
1.8
2.7
2.7
3.5
2.2

(a) Proportions are of all businesses in each employment size category.
(b) As at the end of the reference period.


The proportion of businesses reporting introduction or implementation of new or significantly improved operational processes increased with each successive employment size range. This pattern was also evident for each type of operational process. Businesses with 200 or more persons were almost four times as likely to report introduction or implementation for each type of operational process than businesses with 0-4 persons. For example, 16% of businesses with employment of 200 or more persons reported introducing new Methods of manufacturing or producing goods or services, whereas only 4% of businesses with employment of 0-4 persons reported introduction of this type of operational process.

Not surprisingly, businesses in Manufacturing reported the highest result for introduction of new Methods of manufacturing or producing goods or services (21%) and businesses in the Wholesale Trade industry reported the highest rate for implementation of new Logistics, delivery or distribution methods for goods or services (14%). By industry, the estimates for businesses reporting introduction of Supporting activities for business operations ranged from 7% for Retail Trade to 18% for Financial and Insurance Services.

For operational process innovation still in development, businesses in the Manufacturing industry recorded the highest proportion (12%) closely followed by Electricity, Gas, Water and Waste Services; Information Media and Telecommunications; and Professional, Scientific and Technical Services, all at 11%. By industry, relatively small proportions of businesses reported abandoning innovative activity associated with new operational processes, with Professional, Scientific and Technical Services at 5%, recording the highest proportion.


Organisational/managerial processes

Organisational/managerial process innovation is defined as a significant change to the strategies, structures or routines of a businesses which aims to improve business performance. During the year ended 30 June 2007, organisational/managerial process innovations were introduced by 16% of businesses.

Organisational/managerial process innovation(a), by employment size, by status: 2006-07

0-4 persons
5-19 persons
20-199 persons
200 or more persons
Total
%
%
%
%
%

Businesses which introduced or implemented any new or significantly improved:
knowledge management processes to better use or exchange information, knowledge and skills within the business
8.9
13.4
20.0
26.1
11.2
organisation of work within the business, such as changes to the management structure or integration of different departments or activities
4.2
9.4
17.9
24.8
6.8
relations with other businesses or public institutions, such as through alliances, partnerships, outsourcing or sub-contracting
3.6
3.6
5.1
7.9
3.8
other organisational/managerial processes
0.1
0.4
0.7
0.6
0.3
any organisational/managerial processes
12.9
19.4
32.4
39.1
16.4
Businesses with any activity related to new or significantly improved organisational/managerial processes which was:
still in development(b)
4.2
8.4
14.2
15.4
6.2
abandoned
1.5
2.6
2.8
1.8
1.9

(a) Proportions are of all businesses in each employment size category.
(b) As at the end of the reference period.


The proportion of businesses reporting the introduction of new organisational/managerial processes increased with each successive employment size range, from 13% for businesses with 0-4 persons employed to 39% for businesses with 200 or more persons employed. This same pattern was generally observed for each type of organisational/managerial innovation introduced. Businesses with 200 or more persons employed, at 25%, were far more likely to have introduced changes to the Organisation of work within the business. The absolute difference in the range of proportions reported across employment size categories was larger for organisational/managerial processes than for other broad types of innovation, with over 26 percentage points between the results recorded for businesses with 0-4 persons employed and those with 200 or more persons employed.

Businesses employing 200 or more persons reported the highest proportion of organisational/managerial processes still in development (15%). In contrast to the pattern evident for introduced or still in development organisational/managerial processes, businesses in the 5-19 and 20-199 persons employed size ranges reported the highest proportions of abandoning activity intended to result in the introduction of new organisational/managerial processes (both 3%).

Businesses in the Financial and Insurance Services, Professional, Scientific and Technical Services and Arts and Recreation Services industries (all at 16%) recorded the highest rates for introducing new or significantly improved Knowledge management processes. Businesses in the Transport, Postal and Warehousing industry, at 2%, were the least likely to report changes to the Organisation of work within the business. Across industry, the proportion of businesses reporting new or significantly improved organisational/managerial processes still in development ranged from 2% for Transport, Postal and Warehousing to 9% for Manufacturing, Financial and Insurance Services and Professional, Scientific and Technical Services.


Marketing methods

Marketing methods as a type of innovation includes new or significantly improved design, packaging or sales methods intended to increase the appeal of goods or services or to enter new markets. The introduction of marketing method innovation during the year ended 30 June 2007 was reported by 13% of businesses. The most common type of marketing method introduced was Sales or distribution methods at 9%. Amongst the four broad types of innovation reported in this release, 8% of businesses reported having Marketing method innovation still in development, making this type of innovation the second most common type of innovation in development. This is in contrast to the ranking of Marketing method innovation as being the type of innovation with the lowest proportion of implementation.

Marketing method innovation(a), by employment size, by status - 2006-07

0-4 persons
5-19 persons
20-199 persons
200 or more persons
Total
%
%
%
%
%

Businesses which introduced or implemented any new or significantly improved:
changes to the design or packaging of a good or service (excluding routine or seasonal changes)
3.0
5.7
7.4
12.8
4.2
sales or distribution methods, such as Internet or web sales, franchising, direct sales or distribution licences
7.2
11.1
13.1
13.8
8.8
other marketing methods
1.5
1.4
1.9
1.9
1.5
any marketing methods
10.3
16.1
18.6
22.0
12.7
Businesses with any activity related to new or significantly improved marketing methods which was:
still in development(b)
6.3
11.5
11.0
9.3
8.2
abandoned
2.6
4.0
2.9
1.1
3.0

(a) Proportions are of all businesses in each employment size category.
(b) As at the end of the reference period.


The difference in the range of proportions reported across employment size categories was lower for marketing methods than for other types of innovation, with only 12 percentage points between the results recorded for businesses with 0-4 persons employed and those with 200 or more persons employed. New or significantly improved Sales or distribution methods were the most commonly reported type of marketing method innovation overall, and for each employment size range.

Businesses employing 5-19 persons reported the highest proportion of marketing methods still in development (12%), and businesses with 0-4 persons the lowest (6%). The highest proportion of businesses reporting abandoned activity related to new marketing methods were those employing 5-19 persons (4%). While businesses employing 200 or more persons generally recorded the highest proportion for most types of marketing method innovation, they reported the lowest proportion of businesses having abandoned an innovative activity intended to result in a new marketing method.

Changes to the design or packaging of a good or service were most commonly reported by businesses in the Information Media and Telecommunications industry (12%). Businesses in this industry also reported the highest result (18%) for new or significantly improved Sales or distribution methods, followed by businesses in the Wholesale Trade industry (15%).

By industry, the proportion of businesses reporting new or significantly improved marketing methods still in development ranged from 2% for Mining to 12% for Financial and Insurance Services. The Accommodation and Food Services industry had the highest proportion of businesses abandoning activities associated with the development of new marketing methods (6%).


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