8163.0 - Patterns of Innovation in Australian Businesses, 2005  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 01/11/2007   
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As with the 2003 survey, the Innovation in Australian Business 2005 dataset contains a wealth of valuable information. This current study has replicated some of the outputs from the "Patterns of Innovation in Australian Businesses 2003" publication but using data from the new survey. Apart from highlighting change from the previous measure, the study is intended to be of interest to analysts looking to better understand connections between business characteristics thought to be of importance in explaining the innovation system in Australia.

Some of the interesting relationships and changes include that while the overall level of innovation has increased from 30% to 34% between the two survey periods, each of the higher level innovation novelty types (new to the world, Australia or Industry) have decreased since the 2002 to 2003 period. Therefore, it follows that the estimated total number of businesses introducing or implementing the basic "New to the business" goods or services innovation and operational process innovation have increased since the 2002 to 2003 period.

The intensity of goods and services innovation as measured through importance to turnover is also of interest. About 65% of businesses introducing new or significantly improved goods or services generated "10% or less" of their turnover in the financial year 2004-05. Turnover attributed to goods or services innovation "Greater than 25 to 50%" was about 6% in 2005. The Mining and Property and business services industries reported the largest proportion of turnover attributed to goods or services innovation among all the industries (about 11% and 10% respectively). Electricity, gas and water services, Construction, Retail trade and Communication industries reported the lowest (about 4% each) in the financial year 2004-05. The overall turnover attributed to new goods or services in 2004-05 was about 7%, which is below the average value for EU-27 in 2004 which was about 8.6% (Eurostat(b), 2007).

The proportion of businesses with "No foreign ownership" was about 94% in the 2004 to 2005 period, while businesses with foreign ownership "Greater than 50%" was about 4%. The situation was very similar to that of 2002 to 2003. Although it is expected that foreign ownership enhances a business's ability to innovate (DITR, 2006), the proportion of businesses in the "Greater than 50%" foreign ownership category for the 2004 to 2005 period showed lower levels of innovation than those identified for the 2002 to 2003 calendar years.

A set of economic data is best considered in context, rather than in isolation and the overall macroeconomic environment for this period may better inform such results and associated innovation theory. Further work using data from both ABS innovation surveys would be valuable in understanding the changing relationship between novelty, innovation intensity and other factors such as foreign ownership. Regression analysis, controlling for the effect of potential explanatory variables on innovation may also shed additional light on these and other aspects of innovation activity by Australian businesses.