Characteristics of Australian Business methodology

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Reference period
2018-19 financial year
Released
26/06/2020
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Explanatory notes

Introduction

The BCS is an annual survey and is the vehicle for estimates in business use of information technology; innovation; and a broad range of other non-financial business characteristics. A more detailed set of items for either business use of information technology or innovation are collected every second year (i.e. in alternating years). The 2018-19 BCS collected detailed information relating to innovation.

Statistical units used

The Economics Unit Model is used by the ABS to determine the structure of Australian businesses and other organisations. The model consists of:

The Enterprise Group (EG)
Legal Entities (LEs)
Type of Activity Units (TAUs)
Location Units

Businesses contributing to the estimates in this publication are sourced from the ABS Business Register (ABSBR), and are selected at either the Australian Business Number (ABN) unit or the Type of Activity Unit (TAU) level, as described below.

In the BCS, the statistical unit used to represent the majority of businesses, and for which statistics are reported, is the ABN unit. The ABN unit is the business unit which has registered for an ABN, and thus appears on the Australian Tax Office (ATO) administered Australian Business Register (ABR). These units are suitable for ABS statistical needs when the business is simple in structure, and are generally referred to as the non-profiled population. In these instances, one ABN equates to one statistical unit.

For more significant and diverse businesses where the ABN unit is not suitable for ABS statistical needs, the ABS maintains its own unit's structure through direct contact with the business, and the statistical unit used is the TAU. A TAU comprises one or more business entities, sub-entities or branches of a business entity within an Enterprise Group that can report production and employment activities. When a minimum set of data items is available, a TAU is created which covers all the operations within an industry subdivision (and the TAU is classified to the relevant subdivision of the Australian and New Zealand Standard Industrial Classification (ANZSIC)). These units are generally referred to as the profiled population.

Classification of units

ANZSIC is used to classify the industry in which the TAU or ABN has productive activity. Further information on this classification can be found in Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 (Revision 2.0) (cat. no. 1292.0).

The Standard Institutional Sector Classification of Australia (SISCA) provides a framework for dividing the Australian economy into institutional sectors. Further information on this classification can be found in Standard Economic Sector Classifications of Australia (SESCA), 2008 (Version 1.1) (cat. no. 1218.0).

Scope and coverage

The scope of the estimates in this publication consists of all employing business entities in the Australian economy, except for:

SISCA 3000 General government
SISCA 6000 Rest of the world
ANZSIC06 Division O Public administration and safety
ANZSIC06 Division P Education and training
ANZSIC06 Groups 624 (Financial asset investing) and 633 (Superannuation funds)
ANZSIC06 Groups 954 (Religious services) and 955 (Civic, professional and other interest group services)
ANZSIC06 Subdivision 96 Private households employing staff

The frame for the BCS is a subset of the ABSBR and includes employing businesses only. These are defined as those businesses which register for the ATO's Pay As You Go Withholding (PAYGW) scheme. It is not unusual for some of these 'employing businesses' to have zero employment at various times during the reporting period. The BCS frame is updated to take account of new businesses, businesses which have ceased employing, changes in employment levels, changes in industry and other general business changes. Businesses which have ceased employing are identified when the ATO cancels their ABN and/or PAYGW registration. In addition, businesses with less than 50 employees which did not remit under the PAYGW scheme in each of the previous five quarters, are removed from the frame. The estimates in this publication include an allowance for the time it takes a newly registered business to be included in the survey frame.

Survey methodology

Collection of data included in this release was undertaken based on a random sample of approximately 7,000 businesses via online forms or mail-out questionnaires. The sample was stratified by industry and an employment-based size indicator. All businesses on the ABSBR identified as having 1,000 or more employees were included in the sample.

Reference period

The reference period for most of the characteristics items included in the 2018-19 BCS is during the year ended 30 June 2019 or as at 30 June 2019. Financial data relates to the most recent financial year ended on or before 30 September 2019.

Defining "innovation"

The BCS draws on the conceptual definitions and guidelines included in the 'Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data' (Fourth Edition, 2018). This manual provides a framework for the collection of innovation statistics and specifies the definitions of innovating businesses and innovation-active businesses that are used by the ABS. The BCS draws on this manual for the questions used in the BCS and in the presentation of outputs from the survey.

Key indicators of innovation include: measures of business innovation (innovating, innovation-active); types of innovation (goods or services, process); and status of innovation (introduced, still in development, abandoned). Definitions for each of these measures of business innovation are provided in the Glossary.

Changes to the measure of innovation in 2018-19

BCS innovation data released previously, in cat. no. 8166.0, 8158.0 and 8167.0, used 2005 'Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data, Third edition ' concepts.

The BCS applied the fourth edition of the OSLO definitions for the 2018-19 collection, resulting in:

  • reduction in types of innovation from four to two 
    • previously there were four types of innovation introduced by businesses: goods and/or services, operational processes, organisational/managerial processes and marketing methods.
    • starting with this cycle there are two types of innovation introduced by business: goods and/or services; and process.
       
  • Goods and/or services innovation definition change
    • starting with this cycle, changes to aesthetic design or packaging is included with goods and/or services innovation. This was previously reported under marketing methods innovation.
       
  • new innovation type - Process innovation
    • this includes all innovation collected previously under: operational processes; organisational/managerial processes; and marketing methods. The exception is aesthetic design or packaging which is now part of goods and/or services innovation.
       
  • flow on impacts of these changes to abandoned and ongoing innovation to reflect the two types of innovation from this cycle.
     

Refer to the Appendix to view all changes to the BCS. A copy of the 2018-19 BCS questionnaire can also be found via the Data downloads section.

For comparative purposes, 2017-18 BCS data for both the 2018 and 2005 versions of the OSLO manual can be found in datacube 11 (via the Data downloads section).

Innovation expenditure

Innovation-active businesses were asked to estimate their expenditure (using ranges) on the development or introduction of all new goods, services and processes during the reference period.

Using this data and running multiple simulations, the estimated total expenditure spent on innovation by Australian businesses in 2018-19 is between $33 billion and $37 billion. Approximately one third of total innovation expenditure is derived from businesses that reported actual dollar values $5 million or greater.

Further expenditure information can be found in datacube 8 (via the Data downloads section).

Business counts in this release and comparability with others published by the ABS

Estimates of the number of businesses operating in Australia can be derived from a number of sources within the ABS. They may relate to a particular point in time or may be presented as an average annual figure. However, these estimates will not always show the same results. Variations will occur because of differing data sources, differing scope and coverage definitions between surveys, as well as variations due to sampling and non-sampling error. More information about business counts can be found in the Information Paper: A Statistical View of Counts of Businesses in Australia (cat. no. 8162.0).

The BCS is not designed to provide high quality estimates of numbers of businesses for any of the output classifications (for example, employment size or industry) and the number of businesses in this publication are only included to provide contextual information for the user. The estimate of the total number of businesses may not be equal to the sum of each employment size range due to rounding of business counts to the nearest thousand. A more robust source of counts of Australian businesses is available from Counts of Australian Businesses, including Entries and Exits, Jun 2015 to Jun 2019 (cat. no. 8165.0).

Output classifications

For output purposes, businesses are classified to employment size ranges based on actual data reported in the survey. For the first time outputs will be available for some data items in the 0-19 employment size range (small businesses). For industry output, the classification is drawn from information held about the business on the ABSBR.

Availability of state/territory output

The sample is designed to produce efficient estimates for industry and employment size at the national level; therefore it does not provide quality estimates for states/territories. As estimates may not reflect change over time for a selected state/territory or adequately enable comparison between states/territories, they are not available.

Rounding and other adjustments

Estimates of proportions have been calculated using unrounded figures, but are shown in the tables rounded to one tenth of a percentage point. Where figures have been rounded, discrepancies may occur between the sum of the component items and the total. Figures presented in the commentary have been rounded to the whole percentage.

Acknowledgement

ABS publications draw extensively on information provided freely by individuals, businesses, governments and other organisations. Their continued cooperation is very much appreciated: without it, the wide range of statistics published by the ABS would not be available. Information received by the ABS is treated in strict confidence as required by the Census and Statistics Act 1905.

Appendix - OSLO Manual update

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The 2018-19 Business Characteristics Survey (BCS) adopted the revised 2018 'Oslo Manual: Guidelines for Collecting, Reporting and Using Data on Innovation, Fourth edition'. Updating the BCS innovation concepts to the fourth edition of the OSLO manual ensures Australia’s innovation data aligns with innovation measures from other nations.

The changes to innovation concepts between OSLO Manual versions reduced the complexity of the types of innovation. There is a change from four types to two types, as seen in Table 1 below.

Table 1 – Types of innovation in OSLO Manual versions 3 and 4

 OSLO Manual 2005 (OM3)OSLO Manual 2018 (OM4)
Types of Innovation


 		Goods or services
Operational Processes
Managerial processes
Marketing methods		Goods or services
Process

 


The changes in types of innovation can be mapped as follows:

OSLO mapping for changes in types of innovation
The following diagram shows the change form 4 types of innovation within OSLO manual version 3 to 2 types in OSLO manual version 4. Within OSLO manual version 3, Goods or services and marketing methods encompassing aesthetic design or packaging changes to goods or service within OLSO manual version 4. The remainder of marketing methods, operational processes and managerial processes in OSLO manual version 3 change to process within OSLO manual version 4.

The 2018-19 BCS implemented the change to the types of innovation. The OSLO manual (page 75) included six broad subcategories of Process Innovation:

  • production of goods or services;
  • distribution and logistics;
  • marketing and sales;
  • information and communication systems;
  • administration and management; and
  • product and business process development.


The BCS does not use these subcategories. To maintain relevance in the Australian context, and to assist with business reporting and interpretability of the data, the subcategories have been reworded and an additional subcategory included. For further detail refer to the BCS 2018-19 questionnaire which is available via the Data downloads section.

Table 2 shows how the OSLO Manual has been implemented for the 2018-19 BCS with a comparison of how the information was collected for the 2017-18 BCS which used OM3 as the conceptual basis and the 2018-19 BCS which used OM4 as the conceptual basis. Note that these are not directly comparable as can be seen by the mapping of innovation types above.

Table 2 – Comparison of BCS questions, 2017-18 and 2018-19

OSLO Manual 2005 (OM3) - BCS 2017-18OSLO Manual 2018 (OM4) - BCS 2018-19
Q34 (a) Goods
Q34 (b) Services
Q37 (a) Marketing Methods
Significant changes to aesthetic design or packaging		Q31 (a) Goods
Q31 (b) Services

 
Q35 Operational processes
(a) Methods of manufacturing or producing goods or services
 		Q36 Process
(a) Methods of producing goods or providing services (including methods for developing goods or services)
Q35 Operational processes
(b) Logistics, delivery or distribution methods for goods or services		Q36 Process
(b) Logistics, delivery or distribution methods
Q35 Operational processes
(c) Supporting activities for business operations, such as maintenance systems or processes for purchasing, accounting or computing
 		Q36 Process
(c) Methods for information processing or communication
(d) Methods for accounting or other administrative operations
Q36 Organisational/managerial processes
(a) Knowledge management processes to better use or exchange information, knowledge and skills within this business.
(b) New business practices for organising procedures
(e.g. supply chain management, business re‑engineering, quality management)
(d) New methods of organising external relations with other businesses or public institutions
(e.g. first use of alliances, partnerships, outsourcing or sub‑contracting)		Q36 Process
(e) Methods of organising ongoing internal procedures or external relations
 
Q36 Organisational/managerial processes
(c) New methods of organising work responsibilities and decision making
(e.g. first use of a new system of employee responsibilities, teamwork, decentralisation, integration or de‑integration of departments,
education/training systems).
 		Q36 Process
(f) Methods of organising work responsibility, decision making or human resource management
Q37 Marketing Methods
(b) New media or techniques for product promotion
(e.g. the first time use of a new advertising media, a new brand image, introduction of loyalty cards, use of social networking sites)
(c) New methods of product placement or sales channels
(e.g. first time use of franchising or distribution licenses, direct selling, exclusive retailing, new concepts for product presentation)
(d) New methods of pricing goods or services
(e.g. first time use of variable pricing by demand, discount systems)		Q36 Process
(g) Marketing methods for promotion, packaging, pricing, product placement or after sales services
 
Q35(d) Other operational processes
Q36(e) Other organisational/managerial processes
Q37(e) Other marketing methods processes		Q36 Process
(h) Other processes
 

Technical note - data quality

Introduction

When interpreting the results of a survey, it is important to take into account factors that may affect the reliability of the estimates. Estimates in this publication are subject to both non-sampling and sampling errors.

Non-sampling errors

Non-sampling errors may arise as a result of errors in the reporting, recording or processing of the data and can occur even if there is a complete enumeration of the population. These errors can be introduced through inadequacies in the questionnaire, treatment of non-response, inaccurate reporting by respondents, errors in the application of survey procedures, and incorrect recording of answers and errors in data capture and processing.

The extent to which non-sampling error affects the results of the survey is difficult to measure. Every effort is made to reduce non-sampling error by careful design and testing of the questionnaire, efficient operating procedures and systems, and the use of appropriate methodology.

Some of the items collected in the BCS are dynamic in nature and the concepts measured are subject to evolution and refinement over time; it is not possible to measure the impact of these changes on data quality.

The approach to quality assurance for the BCS aims to make the best use of ABS resources to meet user prioritised requirements - both in terms of data quality and timing of release. The approach specifies the level and degree to which each data item is quality assured, noting that only some of the total output from the BCS is able to be quality assured to the highest standards. Different priorities are assigned to groups of data items, with highest priority being assigned to key point in time data on business use of IT and innovation.

The 2018-19 BCS had a response rate of 90%.

Sampling error

The difference between estimates obtained from a sample of businesses, and the estimates that would have been produced if the information had been obtained from all businesses, is called sampling error. The expected magnitude of the sampling error associated with any estimate can be estimated from the sample results. One measure of sampling error is given by the standard error (SE), which indicates the degree to which an estimate may vary from the value that would have been obtained from a full enumeration (the 'true' figure). There are about two chances in three that a sample estimate differs from the true value by less than one standard error, and about nineteen chances in twenty that the difference will be less than two standard errors.

The following is an example of the use of standard error on the estimated proportion of businesses with a web presence. If the estimated proportion of businesses with a web presence was 54.4% and the standard error of this estimate was 1.0. There would be approximately two chances in three that a full enumeration would have given a figure in the range of 53.4% and 55.4%, and nineteen chances in twenty that it would be in the range of 52.4% to 56.4%.

In this publication, indications of sampling variability are measured by relative standard errors (RSEs). The relative standard error is a useful measure in that it provides an immediate indication of the percentage errors likely to have occurred due to sampling, and thus avoids the need to refer to the size of the estimate. Relative standard errors are shown in the Relative Standard Error table in this section. RSEs for all data included in this release (including data cube content) are available upon request.

To annotate proportion estimates, a value of 50% has been used in the calculation of RSE rather than the estimated proportion from the survey data. This avoids inconsistencies between the way very low and very high proportions are annotated. Relative standard errors for estimates in this publication have been calculated using the actual standard error and the survey estimate (referred to as x) in the following manner: RSE%(x) = (SE(x)*100)/50.

Using the previous example, the standard error for the estimated proportion of businesses with a web presence was 1.0%. Multiplied by 100 and then divided by 50 gives an RSE calculated on this basis of 2.0%. It is these figures that appear in the table appended to this chapter.

Estimates may have corresponding RSE range values annotated. Depending on the level of RSE, data should be used with caution. Estimates with RSEs between 10% and 25% are subject to sampling variability too high for some purposes. Estimates with RSEs between 25% and 50% are subject to sampling variability too high for most practical purposes and estimates with an RSE greater than 50% indicate that the sampling variability causes the estimates to be considered too unreliable for general use.

Estimates with an annotated RSE of between 10% and 25% should be used with caution as the estimate from full enumeration could lie more than a decile away. For example a proportion estimate of 30% with this RSE annotation, means the full enumeration value could lie beyond the range 20% to 40%. Estimates with an annotated RSE of between 25% and 50% could lie more than a quartile away and is subject to sampling variability too high for most practical purposes. A proportion estimate of 30% annotated with this RSE annotation, means the full enumeration value could lie beyond the range 5% to 55%. Proportion estimates annotated with RSE greater than 50% have a sampling error that causes the estimates to be considered too unreliable for general use.

Relative standard errors, selected indicators, by employment size(a)(b), 2018-19

  0-4 persons5-19 persons20-199 persons200 or more personsTotal
Businesses that reported:      
 any collaborative arrangements%1.231.513.213.840.88
 receiving any government financial assistance%1.222.743.646.071.11
 seeking any debt or equity finance%1.883.416.659.091.49
 introducing or implementing innovation (i.e. innovating businesses)%2.363.234.577.451.98
 any innovative activity (i.e. innovation-active businesses)%2.403.314.827.771.88
 any barriers to core business activities or performance%2.513.914.537.461.79
Businesses with:%     
 internet access(b)%0.991.060.330.190.62
 social media presence(b)%2.323.064.023.911.66
 web presence(b)%2.143.073.490.971.43
Businesses that:      
 placed orders via the internet%2.642.923.973.171.91
 received orders via the internet%2.253.394.665.541.73

a. RSEs for 2018-19 are on a proportions basis.
b. As at the end of the reference period 30 June 2019.
 

Glossary

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Broadband

Defined by the ABS as an 'always on' internet connection with an access speed equal to or greater than 256kbps.

Cable

Describes those technologies including coaxial cable, fibre optic cable and hybrid coaxial cable which are capable of transmitting data at speeds of up to 10Gbps.

Collaboration

Active joint participation with other organisations which involves some sharing of technical or commercial risk. Straight free-for-service arrangements are not deemed to be collaborative and are therefore excluded.

Digital Subscriber Line (DSL)

More properly referred to as xDSL as this covers several digital technologies (e.g. Asymmetric DSL or ADSL and Symmetric DSL or SDSL) for fast two-way data connections over the public switched telecommunications network.

Debt finance

Includes any finance the business must repay.

Equity finance

Includes finance provided in exchange for a share in the ownership of the business.

Financial reference period

Financial year ended 30 June 2019. Businesses with a different financial year were asked to report for a 12 month period starting between 1 October 2018 and ending the 30 September 2019.

Fixed wireless internet access

A terrestrial point-to-point microwave or radio link, generally building to building or tower to building, which allows subscribers within the receiving building to access the internet.

Foreign ownership

Businesses were asked to report their percentage of foreign ownership as at 30 June 2019 by selecting one of the four available options. A definition of foreign ownership was not specified.

Franchising agreements

Businesses were asked whether they were involved in any franchising agreements during the year ended 30 June 2019. Businesses could be identified as a franchisee (i.e. operated a franchise), franchisor (i.e. controlled a franchise system) or both.

Geographic markets (in which businesses sold goods or services)

Businesses were asked to identify in which geographic markets they sold their goods or services during the year ended 30 June 2019. There were four options: local (the immediate area, town or city in which the business is located), outside of local area but within the state/territory, outside of state/territory but within Australia, and overseas. Multiple responses could be provided.

Innovation

An innovation is the introduction of a new or significantly improved good or service; operational process; organisational/managerial process; or marketing method.

​​​​​​​Innovative activity

Innovative activity includes any work that was intended to, or did, result in the introduction of an innovation.

Main source of business income

Businesses were asked to identify their main source of income from the sale of goods or services during the year ended 30 June 2019. A list of sources was provided, however, definitions for large businesses or organisations and small and/or medium businesses or organisations were not.

Main supplier of goods or services

Businesses were asked to identify their main supplier of goods or services for the year ended 30 June 2019. A list of suppliers was provided, however, definitions for large businesses or organisations and small and/or medium businesses or organisations were not.

Measures of business innovation

Measures of business innovation included in this release:

  • Innovating businesses - businesses that introduced any type of innovation during the reference period.
  • Innovation-active businesses - businesses that had undertaken any innovative activity during the reference period including: introduction of any type of innovation; and/or the development or introduction either still in progress or abandoned.
  • Non innovation-active businesses - Businesses that, during the reference period, did not undertake any innovative activity.
     

Order

A commitment to purchase goods or services.

Social media

Social media presence includes web and mobile-based technologies which are used to turn communication into interactive dialogue among organisations, communities and individuals.

Status of innovation

Three statuses of innovation are included in this release:

  • Introduced - the business successfully introduced an innovation during the reference period (although the innovation does not need to have been commercially successful).
  • Still in development - the business was in the process of developing or introducing an innovation during the reference period but work on the innovation was still in progress at the end of the period.
  • Abandoned - the business abandoned the development and/or introduction of an innovation during the reference period (i.e. work on the innovation ceased without full introduction occurring).
     

Types of innovation

Two types of innovation are included in this release:

  • Goods or services - any good or service or combination of these which is new to a business (or significantly improved). Its characteristics or intended uses differ significantly from those previously produced/offered. This includes significant changes to aesthetic design or packaging.
  • Process - any new or improved business process for one or more business functions that differs significantly from the firm’s previous business processes and that has been brought into use in the firm.
     

Web presence

Web presence is a website, home page or, in the case of a presence on another entity's website, the business must have substantial control over the content. A website or home page is an electronic document that is accessed via a unique address on the World Wide Web. The document provides information in a textual, graphical or multimedia format. Web presence excludes on-line listings, directories, or a social media presence.

Working arrangements

Businesses were asked to identify the working arrangements they offered to their employees during the year ended 30 June 2019. Businesses were asked to report all of the arrangements that applied from the list provided.

Quality declaration

Institutional environment

The statistics presented in this release are compiled from the 2018-19 Business Characteristics Survey (BCS). The BCS provides population/cross sectional estimates for a range of business characteristics topics and themes (e.g. use of information technology and innovation). The BCS is conducted under the authority of the Census and Statistics Act 1905.

For information on the institutional environment of the Australian Bureau of Statistics (ABS), including the legislative obligations of the ABS, financing and governance arrangements, and mechanisms for scrutiny of ABS operations, please see ABS Institutional Environment.

Relevance

The collection of annual point in time core characteristics data including key indicators of Information Technology (IT) use and innovation with more detailed information collected for these two topics in alternating years. Population and cross-classified outputs can be produced for most BCS content not just use of IT and innovation.

Timeliness

The reference period for most of the characteristics items included in the BCS is during the year ended 30 June or as at 30 June. Financial data relates to the most recent financial year ended on or before 30 September.

Key indicators related to use of IT and innovation in Australian business are published within 12 months of the end of the reference period.

Accuracy

The ABS aims to produce high quality data from its industry collections, while minimising the reporting burden on businesses. To achieve this, extensive effort is put into survey and questionnaire design, collection procedures and processing.

The approach to quality assurance for the BCS aims to make the best use of ABS resources to meet user prioritised requirements, both in terms of data quality and timing of release. The approach specifies the level and degree to which each data item is quality assured, noting that only some of the total output from the BCS is able to be quality assured to the highest standards. Different priorities are assigned to groups of data items, with highest priority being assigned to key point in time data on business use of IT and innovation.

Some of the items collected in the BCS are dynamic in nature and the concepts measured are subject to evolution and refinement over time. As changes are made to the questions, survey scope and survey procedures, it is not possible to measure the impact of all of these changes on data quality.

In this publication, indications of sampling variability are measured by relative standard errors (RSEs). The relative standard error is a useful measure in that it provides an immediate indication of the errors likely to have occurred due to sampling, and thus avoids the need to refer to the size of the estimate. For more information about the sampling errors, please refer to the Technical Note for this release.

Coherence

There are established international frameworks or reporting models for the collection of use of IT and innovation data (i.e. the Organisation for Economic Co-operation and Development (OECD) model questionnaire and OSLO Manual). The application of these in ABS collections is in the context of the Australian situation and, for some elements, it is not appropriate to adhere to the international framework, although they are used, where possible, in the BCS.

The System of National Accounts and the Australian Accounting Standards are used for directly collected or administrative data as appropriate. The survey uses Standard Question Wording (which are used in most ABS economic business-based collections) to collect standard financial data items. A core set of characteristics questions has been developed.

Interpretability

Further information on the technical aspects (including item definitions) associated with the statistics from the BCS can be found in the Explanatory Notes and Glossary associated with this release.

Accessibility

In addition to the main features, data (in spreadsheet format) is included on the ABS website and ABS.Stat (Beta).

Prior to 2017-18, BCS data was published in separate releases (cat. no. 8166.0, 8158.0, 8129.0 and 8167.0); however from 2017-18 releases were published in one issue, Characteristics of Australian Business (cat. no. 8167.0).

If the information you require is not available as a standard product, inquiries can be made by contacting the National Information and Referral Service on 1300 135 070.