Innovation in Australian Business Fact Sheet 

Key points

• In 2008-09, 35 per cent of Australian businesses reported implementing an innovation, down from 39.1 per cent in 2007-08.
• This was due to a fall in the number of product and operational process innovators compared with 2007-08, partly offset by a rise in the organisational/managerial process and marketing method innovators.
• In 2008-09, 18.2 per cent of businesses reported introducing new goods or services, 16.3 per cent of businesses implemented new operational processes, while 19.4 per cent and 17.2 per cent of businesses, respectively, implemented new organisational/managerial processes and new marketing methods.
• The two industries (out of the 16 industry divisions covered in the survey) recording the highest proportion of innovating businesses in 2008-09 were Wholesale Trade at 43.6 per cent and Manufacturing at 42.2 per cent; the lowest was Construction at 26.2 per cent.
• The proportion of innovators was positively correlated with business size.   Of the businesses employing 200 or more persons, 60.9 per cent reported introducing an innovation in the reference period compared with 43.9 and 28.1 per cent of businesses employing 5-19 and 0-4 persons, respectively.
• The detailed statistics on innovation for the 2008-09 reference year (e.g. indicators on drivers, barriers, collaboration etc.) will be released by the ABS on 26 August in their Innovation in Australian Business publication (Cat. No. 8158.0).  The last available detailed statistics on Australian business innovation were for the 2006-07 reference year and are presented below.

Latest Available Statistics on Collaboration, Drivers and Sources of Innovation (2006-07 Reference Year)

• About 17 per cent of innovation-active businesses collaborated for the purpose of innovation in 2006-07. In terms of the types of organisations collaborated with, 42 per cent of innovation-active businesses collaborated with clients, customers or buyers compared with 1.6 per cent who reported collaborating with universities or other higher education institutions.
• In 2006-07, the class of competition, demand and market related drivers were the most commonly reported reason for undertaking innovative activity being cited by 76.9 per cent of innovation-active businesses, followed by profit related drivers (75.9 per cent) and production and delivery drivers (58.0 per cent). On the other hand, 12.1 and 11.4 per cent, respectively, of innovation-active businesses indicated that innovation was undertaken to reduce environmental impacts and in response to government regulations/standards.
• The most frequently reported sources of ideas for innovative activity by innovation-active businesses in 2006-07 were within the business or related company (55.6 per cent), followed by clients, customers or buyers (44.1 per cent).

Background and figures

Each year, the Australian Bureau of Statistics (ABS) collects statistics on innovation in Australian businesses as part of the Business Characteristics Survey (BCS). Summary statistics on innovation, use of IT and the selected characteristics of Australian business are produced annually in two publications: Innovation and Use of IT (Cat. No.8166.0) and Selected Characteristics of Australian Business (Cat. No.8167.0), starting with the 2005-06 reference year and most recently for 2007-08. The BCS also includes a detailed innovation module every second year and the data are published in the Innovation in Australian Business (Cat no.8158.0) publication.  The latest detailed statistics on innovation are for the 2008-2009 reference year and are expected to be released on 26 August 2010.

A random sample of approximately 9,500 businesses, stratified by industry and employment size, was surveyed for the 2007-08 Business Characteristics Survey (BCS). All businesses on the ABS Business Register identified as having 200 or more employees were included in the sample. The reference period was for the year ending 30 June 2009. 

Due to changes in the survey population frame and stratification since 2005-06, the ABS has advised against comparing the current data with that from the 2004-2005 and 2001-2003 surveys.

Table 1.  Proportion of innovators by firm size in 2008-09 (Source: ABS, 8166.0).

The ABS has applied the definitions of innovation as recommended the Oslo Manual (3rd edition, 2005, OECD/Eurostat) to their innovation surveys.

Definitions

An Innovation is the implementation of a new or significantly improved product (goods or services), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations (Oslo Manual 3rd ed., 2005). 

The minimum requirement for an innovation is that the product, process, marketing method or organisational process must be new (or significantly improved) to the firm. Also, a common feature of an innovation is that it must have been  implemented.

Innovation activities are all scientific, technological, organisational, financial and commercial steps which actually, or are intended to, lead to the implementation of innovations. Some innovation activities are themselves innovative, others are not novel activities but are necessary for the implementation of innovations. Innovation activities also include R&D that is not directly related to the development of a specific innovation.

Types of Innovations

• A product innovation is the introduction of a good or service that is new or significantly improved with respect to its characteristics or intended uses. This includes significant improvements in technical specifications, components and materials, incorporated software, user friendliness or other functional characteristics.
• A process innovation is the implementation of a new or significantly improved production or delivery method. This includes significant changes in techniques, equipment and/or software.
• An organisational innovation is the implementation of a new organisational method in the firm’s business practices, workplace organisation or external relations.
• A marketing innovation is the implementation of a new marketing method involving significant changes in product design or packaging, product placement, product promotion or pricing.