INNOVATION ACTIVITY OF BUSINESSES

Innovation is generally considered to be the development, introduction or implementation of new or significantly improved goods, services, processes or methods. Innovation is a key driver of economic growth.

The 2009–10 innovation data were collected in the 2009–10 Business Characteristics Survey (BCS). The scope of innovative activity as measured by the BCS covers four types of innovation by businesses in Australia: goods or services, operational processes, organisational/managerial processes and marketing methods. The survey also covered three statuses of innovation: introduced or implemented, still in development and abandoned.

Based on the combination of type and status of innovative activity, two statistical measures of business innovation have been produced:

• Innovating businesses – businesses which had undertaken any innovative activity during the survey reference period, including businesses which introduced any of the four types of innovation and/or work on the innovative activity was still in development at the end of the period or abandoned at the end of the period or abandoned during the period.
• Innovation-active businesses – businesses which introduced any of the four types of innovation during the survey reference period.

During the year ended 30 June 2010, 44% of Australian businesses were innovation-active. Innovating businesses in Australia represented 39% of all businesses; innovation which was still in development as at 30 June 2010 was undertaken by 20% of all businesses; and innovation which had been abandoned during the year was undertaken by 7% of all businesses (table 26.9).

Over half of all businesses in Wholesale trade, Arts and recreation services, and Manufacturing were innovation-active (table 26.10).

26.9 SUMMARY OF INNOVATIVE ACTIVITY IN AUSTRALIAN BUSINESS(a), Key indicators
			2008–09(b)	2009–10(b)	2009–10(c)
Estimated number of businesses(d)		'000	713	717	776
Businesses which introduced any new or significantly improved:(e)
	goods or services	%	18.2	20.8	19.8
	operational processes	%	16.3	17.0	16.9
	organisational/managerial processes	%	19.4	21.2	20.7
	marketing methods	%	17.2	17.1	16.7
Businesses which introduced innovation (innovating businesses)		%	35.0	39.5	38.6
Businesses with innovative activity which was:
	still in development	%	17.6	20.4	19.9
	abandoned	%	6.5	7.5	7.3
Businesses with any innovative activity (innovation-active businesses)		%	39.8	44.7	43.8
(a) Proportions are of all businesses.
(b) Excludes businesses in the Agriculture, forestry and fishing industry.
(c) Includes businesses in the Agriculture, forestry and fishing industry.
(d) Business counts are provided for contextual information only, please refer to explanatory notes 20 and 21 of Summary of IT Use and Innovation in Australian Business, 2009–10 (8166.0).
(e) Businesses may be counted in more than one category.
Source: Summary of IT Use and Innovation in Australian Business, 2009–10 (8166.0).

GOODS OR SERVICES INNOVATION

One-fifth (20%) of businesses introduced new or significantly improved goods or services during 2009–10. A slightly higher proportion of businesses introduced new services (13%) than new goods (11%). The proportion of businesses which abandoned the development or introduction of new goods or services was 3%. Businesses in Wholesale trade (32%), Retail trade (27%) and Manufacturing (20%) were most likely to have introduced new goods. Businesses in Arts and recreation services (29%) and Financial and insurance services (21%) were most likely to have introduced new services.


OPERATIONAL PROCESS INNOVATION

During 2009–10, 17% of all businesses introduced new or significantly improved operational processes. New supporting activities for business operations, such as maintenance systems or processes for purchasing, accounting or computing was the most reported type of operational process innovation (10%). Businesses with 200 or more persons employed were more than three times as likely (40%) to introduce any new operational processes than businesses with 0–4 persons employed (12%). Businesses in Mining had the highest proportion of operational processes still in development (14%).


ORGANISATIONAL/MANAGERIAL PROCESS INNOVATION

Overall, 21% of all businesses introduced new or significantly improved organisational/managerial processes in 2009–10. Arts and recreation services had the highest proportion of businesses introducing organisational/managerial innovation (28%), followed closely by Professional, scientific and technical services (26%), In contrast, businesses in Transport, postal and warehousing (13%) had the lowest proportion of businesses introducing some form of organisational/managerial innovation.


MARKETING METHODS INNOVATION

During 2009–10, 17% of businesses introduced new or significantly improved marketing methods. Businesses were three times as likely to introduce new media techniques for product promotion (12%) than any other type of marketing method innovation. Accommodation and food services had the highest proportion of businesses that introduced some form of marketing innovation (26%). Businesses in Manufacturing and Rental, hiring and real estate services were most likely to have abandoned marketing methods innovation (both 6%).


INNOVATION STILL IN DEVELOPMENT

One-fifth (20%) of businesses had innovation activity that was still in development in 2009–10. Businesses with 200 or more persons employed were the most likely to report any innovation still in development (44%), compared to 15% of businesses with 0–4 persons employed. New marketing methods was the most commonly reported type of innovation that was still in development (10%) as at 30 June 2010. Wholesale trade (30%) had the highest proportion of businesses with innovative activity still in development.


ABANDONED INNOVATIVE ACTIVITY

In 2009–10, 7% of Australian businesses abandoned at least one innovative activity. New marketing methods was the most commonly reported type of innovative activity that was abandoned during the year ended 30 June 2010 (4%). By industry, the highest proportion of abandoned innovative activity was reported by businesses in Wholesale trade (12%), while the lowest was Transport, postal and warehousing (2%).

26.10 SUMMARY OF INNOVATIVE ACTIVITY IN AUSTRALIAN BUSINESS, Selected characteristics(a)—2009–10
		Businesses which:
		Introduced innovation (innovating businesses)	Started but did not yet complete any innovative activity	Started but abandoned any innovative activity	Were innovation-active
		%	%	%	%
Employment size
	0–4 persons	30.5	15.0	6.5	35.7
	5–19 persons	49.2	26.4	8.5	54.7
	20–199 persons	56.6	30.4	8.8	61.2
	200 or more persons	69.7	44.5	9.4	74.3
Industry(b)
	Agriculture, forestry and fishing	27.7	14.2	4.9	32.5
	Mining	38.2	25.5	6.5	45.8
	Manufacturing	46.5	25.6	10.6	50.7
	Electricity, gas, water and waste services	33.4	15.3	11.3	42.0
	Construction	30.9	15.5	6.1	37.6
	Wholesale trade	49.5	30.5	11.9	59.0
	Retail trade	47.6	24.1	8.0	49.7
	Accommodation and food services	42.8	17.8	9.4	46.9
	Transport, postal and warehousing	20.6	8.3	2.5	22.5
	Information media and telecommunications	41.0	27.3	9.4	48.9
	Financial and insurance services	45.0	25.1	9.4	49.1
	Rental, hiring and real estate	40.2	18.3	10.0	46.9
	Professional, scientific and technical services	42.9	23.8	6.6	49.2
	Administrative and support services	31.7	17.9	5.6	37.2
	Health care and social assistance	40.9	20.7	6.6	45.6
	Arts and recreation services	52.4	24.4	7.6	55.8
	Other services	35.5	17.0	6.3	40.8
Total		38.6	19.9	7.3	43.8
(a) Proportions are of businesses in each employment size and industry category.
(b) Classified according to the Australian and New Zealand Standard Industrial Classification (ANZSIC), 2006 edition (1292.0). Source: Selected Characteristics of Australian Business, 2009–10 (8167.0).

Overall, 45% of businesses had at least one barrier to innovation, with the most common being lack of access to additional funds (18%). Businesses in Manufacturing (56%) were the most likely to have at least one barrier to innovation. Businesses in Manufacturing and Construction were the most likely to cite lack of skilled persons within the labour market as a barrier to innovation (20%).