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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FINANCIAL INDICATORS

Expenditure on innovation or income resulting from implementation or introduction of innovations are not generally specified separately in business accounts. This makes it difficult for businesses to provide dollar estimates for these items. Therefore dollar estimates for innovation expenditure and income are not available. For more information, please refer to Explanatory Notes 27 and 28.


Type of innovation related expenditure

Businesses were asked to indicate which types of expenditure they had incurred in developing or introducing their new goods, services, processes or methods. Businesses were not asked to report dollars expended and could indicate more than one type of expenditure.

Types of expenditure for innovation purposes(a)(b), by employment size - 2006-07

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

Acquisition of machinery, equipment or technology (including hardware or software) used for innovation related purposes
42.2
53.3
54.5
58.6
47.8
Training (including external) specifically for innovation related purposes
25.0
39.9
53.7
56.9
34.0
Marketing activities undertaken to introduce innovation(s) to the market
26.9
32.5
35.1
38.5
30.0
Research and Experimental Development for purposes of introducing or implementing innovation only:(c)
Acquired from other businesses
4.8
5.9
3.7
10.5
5.1
Undertaken by the business
10.4
13.0
14.0
26.6
11.9
Any expenditure on research and experimental development
14.6
15.2
15.6
29.8
15.0
Design, planning or testing needed for innovative activities
13.3
19.7
20.5
38.9
16.6
Acquisition of licences, rights, patents or other intellectual property
8.6
10.8
16.2
19.0
10.4
Other activities related to the development or introduction of new or significantly improved:
goods or services
12.6
15.9
14.3
15.7
14.0
operational processes
7.4
15.4
17.9
24.6
11.7
organisational/managerial processes
8.2
13.5
19.2
22.3
11.5
marketing methods
14.2
13.9
13.2
9.6
13.9

(a) Proportions are of innovation-active businesses in each employment size category.
(b) Businesses were asked for which items or activities related to innovation only, they had incurred expenditure for during the reference period. Businesses were not asked to report actual dollar expenditure for the items or activities included in this table.
(c) A definition of Research and Experimental Development was not provided. No checks were made to ensure consistency with the definitions used to produce other ABS R&D outputs, for example, those included in cat. no. 8104.0.


The most commonly reported type of innovation-related expenditure was Acquisition of machinery, equipment or technology (including hardware or software) at 48%. A high proportion of businesses also reported expenditure on Training (34%) and Marketing (30%) activities related to innovation.

Acquisition of machinery, equipment or technology (including hardware or software) used for innovation related purposes was the most commonly reported type of innovation-related expenditure across all four employment size ranges. Businesses with 200 or more persons employed were twice as likely to report expenditure on Training specifically for innovation, than businesses with 0-4 persons employed. Similarly, larger businesses were more likely to report expenditure on Acquisition of licences, rights, patents or other intellectual property than smaller businesses.

While businesses were asked to indicate if, for the purposes of innovation, they had incurred expenditure on Research and Experimental Development, a detailed definition was not included nor were they contacted to confirm whether their understanding met the generally used conceptual definition of Research and Experimental Development. For these reasons, these estimates should only be used as a broad indicator of business expenditure on some form of research and experimental development, please refer to Explanatory Note 29 for more information.


Broad indicators of innovation-related expenditure and income

In collecting information about innovation in Australian business, the focus is on the incidence of innovation rather than the intensity. A measure of intensity could be the number of innovations introduced or the impact on the business. The collection of these data through a survey is generally accepted as being too onerous on businesses and difficult to accurately report. The Oslo Manual indicates that a proxy measure for intensity can be the dollar-based estimates of expenditure on innovation and income from new goods or services. As indicated in the introduction to this section, many businesses cannot report accurate estimates of actual expenditure on innovation or income from new goods or services. Therefore, dollar estimates of innovation-related expenditure or income are not available for release, please refer to Explanatory Notes 27 and 28.

While most businesses cannot provide accurate measures, some can provide a broad estimate of the percentage of their total business expenditure or business income from sales of goods or services that can be attributed to their innovative activity and these data are presented here. However, users should take into consideration that not all businesses can provide even an estimate of proportion and that the ABS has imputed an estimate for these businesses. The missing data are imputed by using reported data to calculate an average proportion based on business employment size and industry. Users should use these estimates as broad indicators only.

Innovation related expenditure and income(a)(b), by employment size, by broad type of innovation - 2006-07

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

Expenditure on innovative activity as a proportion of total business expenditure related to new or signficantly improved:(c)(d)(e)
goods or services
1.0
0.8
0.9
1.1
1.0
operational processes
0.3
0.3
0.8
1.0
0.8
organisational/managerial processes
0.2
0.2
0.4
0.6
0.5
marketing methods
0.4
0.2
0.3
0.3
0.3
All types of innovation
2.0
1.6
2.5
2.9
2.6
Sales of new or significantly improved goods or services as a proportion of business income from sales of goods or services (f)
1.9
2.9
1.8
1.8
2.0

(a) Many businesses do not keep detailed records of innovation expenditure or income separately in their standard financial reports and are only able to provide broad estimates. These data should be used with caution. Only innovation-active businesses were required to report these data. Please refer to Explanatory Notes 27 and 28 for more detail.
(b) Proportions are of total expenditure or total income from sales of goods or services of all businesses (not just innovation-active businesses).
(c) Includes expenditure related to the development, introduction, and implementation for each type of innovation.
(d) Total business expenditure includes both operating expenses and capital expenditure.
(e) Excludes expenditure related to Research and Experimental Development. Please refer to Explanatory Note 29.
(f) Includes income only from new or significantly improved goods or services introduced during the reference period.


In general, around 2% to 3% of total business expenditure is spent on innovation related activities. A similar proportion of total income from goods and services can be attributed to new or significantly improved goods or services.

Due to quality considerations, these data are not available by industry.


Government financial assistance for innovation related activities

Innovation-active businesses were asked if they had received any financial assistance from government organisations specifically for the purposes of innovation and, those who indicated that they had, were asked which broad level of government provided this assistance.

More detailed estimates of government financial assistance received by all business by type of assistance is collected annually in the Business Characteristics Survey and will be released as part of Selected Characteristics of Australian Business, 2006-07 (cat. no. 8167.0). These estimates are available cross-classified by innovator status.

Assistance from government for innovation purposes, by employment size - 2006-07

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

Businesses which received government financial assistance for the purposes of innovation
2.1
4.1
7.3
15.0
3.5
Level of government from which financial assistance was received(a)(b)
Federal government
*31.1
^63.1
^72.4
82.4
^56.2
State/territory or local government
*68.9
^43.7
*56.4
^43.5
^54.9

^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
* estimate has a relative standard error of 25% to 50% and should be used with caution
(a) Proportions are of innovation-active businesses which received financial assistance in each employment size category.
(b) Businesses could identify more than one level of government from which financial assistance for the purposes of innovation was received.


A total of 4% of businesses indicated receiving financial assistance from Australian government organisations for the development or introduction of new goods, services, processes or methods during the year ended 30 June 2007. Innovation-active businesses with 200 or more persons employed reported the highest proportion for receipt of government financial assistance for innovation purposes (15%). In considering these results, users should take into account the populations for each of the employment size groups.

At 11%, businesses in the Health Care and Social Assistance industry reported the highest proportion for receipt of any government financial assistance for innovation related activities.

Of innovation-active businesses receiving government financial assistance for innovation, 56% received this assistance from Federal government and 55% from State/territory or local government. Based on the high relative standard errors recorded for the level of government from which assistance was received, estimates by industry for these data are not suitable for release.


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