1504.0 - Methodological News, Jun 2009  
ARCHIVED ISSUE Released at 11:30 AM (CANBERRA TIME) 03/07/2009   
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Does ICT enable innovation?

Innovation is a major driver of productivity gains in business, which facilitates not only improved performance for the individual firm but also continued, strong growth for the economy. Therefore, there is substantial interest in knowing what factors enable or drive business innovation in Australia. A research project to look into this is underway in the Analytical Services Branch (ASB).

The objective of the ASB study is to use the first two waves of data from the Business Longitudinal Database (BLD) to analyse the links between the use of information and communications technology (ICT) by businesses, and innovation. The use of the BLD provides an opportunity to look at the dynamics of the relationship between the two. Innovation and ICT use are also the subject of an OECD cross-country comparative study, to which this project will contribute its findings.

The primary question being addressed by this study, which is being undertaken with the help of the Innovation and Technology National Statistical Centre and the Economic Analysis and Reporting Branch, is whether ICT use is a source of business innovation, when controlling for other characteristics of the business. ICT use refers to things such as the use of broadband Internet, business web presence, employment of IT staff, business use of e-commerce, and automated system linkages. The project is testing the hypothesis that businesses which use ICT more intensively are more likely to innovate, and furthermore, are likely to innovate more intensively.

Specific types of innovation are being analysed (product, operational process, organisational/managerial and marketing, or the combinations of these). The analysis also considers the different stages of innovation (implemented, ongoing or abandoned), the degrees of novelty, and also according to whether the innovation was developed internally or in consultation with collaborative partners.

Following a review of the theoretical and empirical literature, exploratory analysis of the BLD was undertaken, in which an appropriate sample of businesses was selected. Initial descriptive analysis focused on the characteristics of those businesses which were innovating, and investigated businesses which became, or ceased to be, innovative between 2005-06 and 2006-07. Following detailed cross-tabulation and correlation analysis, the study is now developing regression models to examine the links between the different measures of innovation and ICT use.

For more information, please contact Jessica Todhunter on (02) 6252 6992 or jessica.todhunter@abs.gov.au..