BARRIERS TO INNOVATION

An understanding of the barriers hampering innovation is seen as important for policy makers to effectively target resources and programs in order to overcome impediments. All businesses were asked to report whether any factors hampered their ability to develop or introduce new goods, services, processes or methods. Businesses could select more than one factor and a ranking of importance was not required.

While the focus in this release is on innovation-active businesses and factors that influence innovation, the Business Characteristics Survey collects a comprehensive range of factors that hamper the ability of a business to undertake innovation as well as factors which may impact on more general business activities or performance. These latter estimates will be released as part of Selected Characteristics of Australian Business, 2008-09 (cat. no. 8167.0).

Barriers to innovation(a)(b)(c), by innovation status, 2007 - 08 and 2008 - 09
		2007-08			2008-09
		Innovation-active businesses	Non innovation-active businesses	All businesses	Innovation-active businesses	Non innovation-active businesses	All businesses
		%	%	%	%	%	%
Lack of access to additional funds		24.7	9.0	16.0	29.5	12.9	19.5
Cost of development or introduction/implementation		17.6	5.2	10.8	20.7	7.1	12.5
Lack of skilled persons:
	within the business	22.0	8.9	14.8	20.3	8.6	13.2
	within the labour market	22.7	11.5	16.6	16.6	10.3	12.8
	in any location(d)	32.6	15.2	23.0	27.1	14.3	19.4
Lack of access to knowledge or technology		5.0	1.8	3.2	3.9	2.5	3.0
Government regulations or compliance		14.9	7.1	10.6	15.0	9.9	11.9
Adherence to standards(e)		-	-	-	5.1	3.4	4.1
Uncertain demand for new goods and/or services		16.8	6.6	11.2	17.6	10.0	13.0
Other barriers to innovation(f)		3.2	2.1	2.6	-	-	-
Any barrier to innovation		61.3	29.4	43.7	59.6	32.4	43.2
No barriers to innovation		38.7	70.6	56.3	40.4	67.6	56.8
- nil or rounded to zero (including null cells)
(a) Proportions are of all businesses.
(b) Barriers to innovation are those factors which significantly hampered the development or introduction of any new or significantly improved goods, services, processes and/or methods.
(c) Businesses could identify more than one barrier and were not asked to rank barriers in order of significance.
(d) Includes businesses that reported lack of skilled persons within the business and/or within the labour market.
(e) Response option introduced in 2008-09 reference period.
(f) Response option not included in 2008 - 09 reference period.

The proportion of all businesses that reported any barrier to innovation was 43%. Innovation-active businesses (60%) were almost twice as likely to report barriers to undertaking innovative activity than non innovation-active businesses (32%).

Lack of access to additional funds as a barrier to innovation was reported by 30% of innovation-active businesses, an increase of 5 percentage points from 2007-08. The proportion of innovation-active businesses which reported lack of skilled persons in any location decreased 6 percentage points from 33% in 2007-08, to 27% in 2008-09.

INNOVATION-ACTIVE BUSINESSES, Barriers to innovation(a)(b), by employment size, 2008 - 09
		0-4 persons	5-19 persons	20-199 persons	200 or more persons	Total
		%	%	%	%	%
Lack of access to additional funds		29.9	30.4	26.3	18.1	29.5
Cost of development or introduction/implementation		19.1	23.7	18.5	19.0	20.7
Lack of skilled persons:
	within the business	18.3	22.9	20.4	17.2	20.3
	within the labour market	13.6	18.8	22.2	13.7	16.6
	in any location(b)	23.7	30.5	30.8	21.4	27.1
Lack of access to knowledge or technology		4.1	3.7	3.6	4.0	3.9
Government regulations or compliance		15.9	12.6	18.5	13.1	15.0
Adherence to standards		4.1	6.0	6.2	3.6	5.1
Uncertain demand for new goods and/or services		19.2	16.7	14.3	12.5	17.6
Any barrier to innovation		58.7	61.6	57.6	45.0	59.6
No barriers to innovation		41.3	38.4	42.4	55.0	40.4
(a) Proportions are of innovation-active businesses in each employment size category.
(b) Includes businesses that reported lack of skilled persons within the business and/or lack of skilled persons within the labour market.

For innovation-active businesses with 0-4 persons employed, a lack of access to additional funds (30%) was the main factor hampering innovation. For innovation-active businesses with 20-199 persons employed, and 200 or more persons employed, the most common factor hampering innovation was lack of skilled persons in any location (at 31% and 21% respectively). Uncertain demand for new goods and/or services as a factor hampering innovation was reported by 18% of innovation-active businesses and was more commonly reported by businesses with 0-4 persons employed (19%), compared to 12% of businesses with 200 or more persons employed.

Lack of access to additional funds was the most reported impediment to innovation in fourteen out of sixteen industries, with businesses in Rental, hiring and real estate services the highest at 51%.

By industry, the highest proportion of innovation-active businesses reporting no barriers to undertaking innovation were in Electricity, gas, water and waste services (51%), followed by Construction (46%). Lack of access to knowledge or technology to enable development or introduction/implementation and adherence to standards were the least recorded barriers to innovation for the majority of industries.

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