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Business Innovation1.3 Benefits of Innovation

1.3.1 Benefits of introduced innovation

Most Australian innovation-active businesses (86.5 per cent in 2016-17) report having reaped some kind of benefit from innovation. Increased revenue and improved customer service have been the most frequently reported benefits over the period from 2010-11 to 2016-17, followed by gaining a competitive edge and reduced costs (NOTE: In responding to this survey question, innovation-active businesses could identify more than one type of benefit). In each iteration of the survey, roughly a quarter to a third of businesses say that it is too early to measure the benefits of innovation for the given reference period of one financial year. This suggests that at least some are pursuing longer-term investments.[26] In addition to these direct benefits, innovation often provides spillover benefits that accrue to local industries, communities and the rest of society.

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1.3.2 Business performance by innovation status

Compared to Australian firms that do not innovate, a significantly larger proportion of innovation-active firms consistently report increased sales, profitability, productivity, and other growth-related performance measures. For example, innovation-active firms in 2017-18 were over seven times more likely to report improved performance in their targeted export markets compared to the previous year. The performance measures and activities with the largest reported improvements from the previous year are consistently income from sales of goods or services, profitability and productivity.[27][28] Furthermore, the positive impact of innovation gets stronger when firms innovate more frequently. Persistent innovators significantly outgrow other firms in terms of sales, value added, employment and profit growth.[29]

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1.3.3 Collaboration and employment, sales and productivity outcomes

Innovation-active firms are consistently more likely to report increased employment, sales and productivity, compared to firms that do not innovate. This is even more pronounced for innovation-active firms that undertake collaboration compared to those that do not. The evidence is less clear about differences in the scope of collaboration in terms of collaboration partners. It appears that once firms collaborate outside their own sector they gain advantages, irrespective of whether their collaboration partners were from multiple other sectors or just one. Innovation-active firms that collaborate internationally do, however, tend to report better outcomes more often than other collaborators but the difference is only marginal and may not be statistically significant. [30]

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