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Business Innovation1.1 Innovation Activity

1.1.1 Innovation activity overall

The proportion of businesses undertaking innovation is a key measure of performance in the innovation system. Survey data published by the Australian Bureau of Statistics (ABS) cover three stages of innovation (introduced, still in development, and abandoned) across four types of innovation (goods or services, operational processes, organisational/managerial processes, and marketing methods). Using these characteristics, businesses can be either innovating businesses (i.e. businesses that introduced at least one type of innovation during the reference period) and innovation-active businesses (i.e. businesses that undertook any innovative activity irrespective of whether the innovation was introduced, still in development or abandoned during the reference period). In 2017-18, about half (49.8 per cent) of the surveyed businesses identified as innovation-active businesses.[3][4] The data for this indicator are collected through the Business Characteristics Survey (BCS) which alternates from year to year, resulting in two slightly different versions of the same data series, both of which are displayed in the chart. It is recommended the same version be used when looking at the estimates over time.

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1.1.2 Novelty of goods and services innovation

Australian businesses tend to specialise in modifying innovations introduced by other businesses also operating in the domestic market. Roughly three quarters of all innovation in goods and services introduced by Australian firms is new to the business only. Large firms are generally more likely than SMEs to introduce innovation that is new to the industry. In 2016-17, only 8.4 per cent of goods and services innovation was new to Australia and again 8.4 per cent was new to the world. The ability of so many Australian innovating businesses to successfully execute this relatively simple 'adopt and adapt' strategy is arguably a strength of Australia's innovation system. However, excessive focus on domestic modification may adversely affect Australia's international competiveness, since innovations with higher degrees of novelty areas generally more valuable, both domestically and internationally.[5]

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1.1.3 Barriers to innovation

Recent survey data reflects business' perceptions regarding the barriers that are most likely to derail their innovation activities or dissuade them from innovating. The most commonly reported barriers across both innovators and non-innovators include a lack of skilled persons and a lack of access to additional funds. Although there is no clear evidence that access to business finance is a widespread problem in Australia, a 2015 inquiry into business lending found that innovative businesses are more likely to face difficulties than non-innovators.[6] Businesses reported that barriers related to government regulations or compliance were not particularly significant, while adherence to standards and lack of access to knowledge or technology to enable development were reported the least.[7][8]

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