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8163.0 - Patterns of Innovation in Australian Businesses, 2005  
Latest ISSUE Released at 11:30 AM (CANBERRA TIME) 01/11/2007   
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NOTES


INQUIRIES

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SUMMARY COMMENTARY


PATTERNS OF INNOVATION IN AUSTRALIAN BUSINESSES 2005

Main features

The proportion of businesses that undertook one or more of the three types of innovation (new goods or services, new operational process and new organisational processes) increased from around 30% of businesses in the 2002 to 2003 calendar year period to around 34% of businesses in the 2004 to 2005 calendar year period.

  • Among the innovating businesses in Australia, about 22% of these businesses were involved in two or more forms of innovation activity. For businesses in this category, the majority undertook all three types of innovation.

The proportion of innovating businesses increased across all three types of innovation activities between the 2002 to 2003 and the 2004 to 2005 calendar years.
  • The proportion of businesses that introduced or implemented goods or services and/or organisational processes innovation increased by about 6 percentage points since the 2002 to 2003 calendar years. There was around a 3 percentage point increase in the proportion of operational processes innovation and an increase in the proportion around 7 percentage points for businesses that undertook organisational processes innovation since the 2002 to 2003 calendar years.

The proportion of businesses that only undertook innovation by providing new goods and/or services in the 2004 to 2005 calendar years (19 percentage points) is lower than the proportions of businesses that only undertook operational processes innovation (22 percentage points) or only undertook organisational processes innovation (25 percentage points) in the same period. This result is consistent with the patterns of innovation measured in the 2002 to 2003 calendar years.


The proportions of innovation novelty for "New to the industry", "New to Australia" and "New to the world" have all declined since the 2002 to 2003 calendar years. Innovation novelty for "New to the business" increased by 13 percentage points since 2002 to 2003. This is an interesting development on which further detailed research may provide some key insights.


The proportion of innovation novelty in the 2004 to 2005 calendar years shows that when compared to the European Union, Australia has a relatively low proportion of businesses introducing or implementing innovations which are "New to the industry", "New to Australia" or "New to the world".

  • The proportions of innovation novelty have declined between the two survey reference periods as follows: from 17% to 8% for "New to the industry", from 18% to 10% for "New to Australia" and from 11% to 8% for "New to the world".
  • Novelty in "New organisational processes" innovation in the 2004 to 2005 calendar years was mainly concentrated in the "New to the business" category (about 94% of total businesses that introduced or implemented new organisational processes) and "New to the industry" innovation (about 5%). "New to Australia" and "New to the world" innovation novelty for "New organisational processes" were both less than 1%.


Innovation proportions at the State and Territory level

  • During the 2004 to 2005 calendar years, South Australia and Western Australia recorded the highest proportions (about 40% and 37% respectively) of innovating businesses. Victoria and Queensland each represent around 34% of innovating businesses. All other States and Territories had around 30% of their businesses identified as innovating.

The proportion of turnover generated from new goods or services innovation
  • For the 2004-05 financial year, about 65% of businesses introducing new or significantly improved goods or services generated "10% or less" of their turnover from these goods or services.
  • Among all industries, the Mining and Property and Business services industries reported the largest proportion of turnover generated by innovation (about 11% and 10% respectively). The Electricity, gas and water supply, Construction, Retail trade and Communication services industries reported the lowest (about 4% each) proportions of turnover generated by innovation in the 2004-05 financial year. The overall turnover attributed to new goods or services in 2004-05 was about 7%.

Industry with the highest proportional increase in innovation
  • The Accommodation, cafes and restaurants industry showed the highest proportional increase in innovation amongst all industries, increasing by around 13 percentage points since the 2002 to 2003 period to about 36% in 2004 to 2005 calendar years. All three types of innovation showed an increase since the 2002 to 2003 calendar years. Innovation in the Mining industry and the Wholesale trade industry each showed an increase of seven percentage points since the earlier period.

Age of the business under current ownership
  • Results from the 2005 Innovation Survey show that the overall proportion of innovation activity varies significantly across business age categories and ranged between 31% (businesses under current ownership of "Nine years or more") and 38% (businesses under current ownership between "1 year to less than 4 years"). About 35% of businesses in the "Less than 1 year" category indicate that they have engaged in innovation activities, especially new organisational processes.

Business size, foreign ownership and innovation in the 2004 to 2005 calendar years
  • For businesses with 250 or more employees, 58% were identified as innovators. The medium sized businesses ("20 to 49" and "50 to 99" employees) had 46% and 48% of businesses innovating respectively. For businesses with "5 to 9" employees, 25% were innovating, while 34% of businesses with "10 to 19" employees were innovating.
  • "New to the business" innovation in goods or services was the largest among other innovation novelties (ranging between 60% and 80%) in all business sizes. Businesses in the "5 to 9" employees category and the "250+" employees category showed similar proportions in each innovation novelty especially "New to the world" and "New to Australia".
  • The proportion of innovating businesses in the "Greater than 50%" foreign ownership category has declined since the 2002 to 2003 calendar years.

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