• Summary
• Downloads
• Explanatory Notes
• Related Information
• Past Releases

16th February 2007: Note: This release contains data cubes relating to methods used to acquire knowledge or abilities by location, methods used to acquire knowledge or abilities from higher education or research institutions, drivers of innovation, sources of ideas, and intellectual property protection methods. A comparison between Australian and New Zealand innovation survey results is also included in this release. Comparison between the European Union Community Innovation Survey IV (CIS4) and Australia will be released as soon as possible. This is the third release relating to the 2005 Innovation Survey and adds to the data released in 'Innovation in Australian Business, 2005' (cat. no. 8158.0).


29th January 2007 Note: Data contained in Barriers to Innovation worksheet (Summary Table) contained a formatting error which presented data relating to Innovating Businesses and Non-Innovating Businesses incorrectly. Data labelled Innovating Businesses actually related to Non-Innovating Businesses and vice versa. This has now been corrected. No other worksheets within the release were affected.


19th January 2007 Note: This publication contains only summary data from the 2005 Innovation Survey. Data at least equivalent to that included in the 2003 issue of this publication will be released in spreadsheet format available free of charge from the ABS web site. These spreadsheets include detailed (including some cross-classified) industry, state and employment data by topic as well as accompanying summary commentary. The following sets out the schedule for release of these detailed data:

• 7 December 2006 - Innovation indicators, financial indicators and selected innovation indicators based on European Union (EU) Community Innovation Survey scope.
• 19 January 2007 - Detailed data for Skills and capabilities, Collaboration and Barriers. International comparisons for Australia, the European Union and New Zealand.
• 16 February 2007 - Detailed data for Drivers, Source of ideas and Methods for acquiring knowledge and Intellectual Property.
  

COMPARABILITY WITH 2003 INNOVATION SURVEY

Since the conduct of the 2003 Innovation Survey, a number of improvements have been made that impact on the comparability between the 2003 published estimates and those presented in this publication. The two most significant changes were: the move from a three year reference period to a two year reference period for innovation activity and characteristics topics; and the scope of innovative activity was extended to include work that started but was not yet complete or was abandoned during the reference period. Therefore, users are cautioned against making comparisons between innovation activity and characteristics topics included in the 2003 issue and this publication. Where comparison is possible, modelled 2003 data have been included in the commentary and tables presented in this publication. Please see the Appendix for more details.

REVISIONS IN THIS ISSUE

Revisions have been made to 2003 estimates of innovation expenditure, innovation expenditure as a proportion of total business expenditure and expenditure on Research and Experimental Development. See Explanatory Notes paragraphs 15-19.

PUBLICATION CONTENT AND OTHER DATA RELEASES

This publication presents summary results for all topics collected in the 2005 Innovation Survey. This publication is considerably reduced in content in comparison to the 2003 issue. The more detailed information that was included in the 2003 issue, plus additional and expanded outputs, will be released progressively in spreadsheet format available free of charge from the ABS web site. Release dates and content details are summarised in Explanatory Notes paragraph 21.

Comprehensive and updated data for the European Union were not available at the time of publication preparation, therefore, the international comparisons tables presented in the 2003 issue have not been updated for inclusion in this publication. International comparisons will be made available via the ABS web site as soon as possible.

FUTURE COLLECTION OF INNOVATION STATISTICS

The 2005 Innovation Survey was the last stand-alone Innovation Survey to be conducted by the ABS. From the 2005-06 reference period, innovation data will be collected through the new Business Characteristics Survey, in conjunction with a wide range of business characteristics data. As part of this new approach, key indicators of innovation will be collected annually and more detailed information about innovation activity will be collected every second year. The first detailed innovation activity collection will take place in respect of the 2006-07 reference year and results are expected to be released in the latter half of 2008.

INQUIRIES

For further information about these and related statistics, contact the National Information and Referral Service on 1300 135 070 or Peter Hodgson on Perth (08) 9360 5367.

SUMMARY COMMENTARY


INTRODUCTION TO MAIN FEATURES CHAPTER

Innovation is a key driver of economic growth. The development, introduction or implementation of new or significantly improved goods, services or processes is generally considered to be innovation. Innovation is often seen as a continuous process. Therefore, it can be difficult to measure and aspects of the process can also be intangible. An international framework, the 'Oslo Manual, Guidelines for Collecting and Interpreting Innovation Data', has been developed jointly by Eurostat and the Organisation for Economic Co-operation and Development (OECD) to aid in measuring the process of innovation (including innovation activities, expenditures and linkages), the introduction or implementation of an innovation, the factors that influence innovation and the outcomes of innovation. This manual forms the basis of concepts used and content included in the 2005 Innovation Survey.

INNOVATION BASED ON TYPE AND STATUS

The 2005 Innovation Survey collected information about three types of innovative activity:

• New or significantly improved good or service - any good or service or combination of these which is new to a business and its characteristics or intended uses differ significantly from those previously produced.
• New or significantly improved operational process - a significant change for a business in its methods of producing or delivering goods or services.
• New or significantly improved organisational/managerial process - a significant change to the strategies, structures or routines of a business which aim to improve performance.

• Implemented or introduced - the business has successfully implemented or introduced an innovation (although the innovation does not need to have been commercially successful).
• Started but not yet complete - the business has ongoing activity which is intended to result in the implementation or introduction of an innovation.
• Abandoned - the business has abandoned innovative activity before implementation or introduction.

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

• Innovating businesses - businesses that introduced or implemented an innovation during the reference period.
• Innovation-active businesses - businesses that had undertaken any innovative activity, including introduction or implementation of an innovation and/or businesses with an incomplete and/or abandoned innovative activity.

Innovation in Australian business, 2002 & 2003 and 2004 & 2005(a)
		2002 & 2003(b)(c)	2004 & 2005(c)
		%	%
Proportion of businesses which introduced or implemented
	Any new or significantly improved goods or services	13.4	19.4
	Any new or significantly improved operational processes	18.9	21.6
	Any new or significantly improved organisational/managerial processes	18.4	24.9
	Any new goods, services or processes (innovating businesses)	29.6	33.5
Proportion of businesses which started but did not yet complete or abandoned any innovative activity(d)		. .	12.2
Proportion of businesses that were innovation-active		. .	34.9
. . not applicable
(a) Proportions are of all businesses.
(b) Data for 2002 & 2003 are from the 2003 Innovation Survey and have been adjusted for the change in reference period from three years to two years. See Appendix paragraphs 2-6 for more information.
(c) Calendar years.
(d) Innovative activity includes any work that was intended to result in the introduction or implementation of new or significantly improved goods, services or processes.

Innovation in new goods or services occurred in 19.4% of businesses. 21.6% of businesses reported new operational processes and 24.9% reported new organisational/managerial processes. Compared with 2003 data, these were increases of 6.0 percentage points, 2.7 percentage points and 6.5 percentage points respectively.

The most frequently reported type of innovation in the 2005 survey was implementation of new organisational/managerial processes whereas in the 2003 survey it was new operational processes.

During the two calendar years ended December 2005, 34.9% of Australian businesses were innovation-active. Innovation which was incomplete at the end of the reference period, or had been abandoned during the reference period, was undertaken by 12.2% of all businesses.

Innovative activity which was incomplete at the end of the reference period, or had been abandoned during the reference period, was not collected in 2003. The 2005 survey outputs include data from businesses that only reported incomplete or abandoned innovative activity (1.4% of all businesses), i.e. did not report any introduced or implemented innovation. The contributions of these businesses are relatively minor and therefore are not excluded from the estimates in Chapter 2 of this publication.

BUSINESS SIZE

The proportion of innovating businesses increased with business size. This is most noticeable in the difference between innovating businesses that employ 5-19 persons (28.4%) and the results for businesses that employ 20-99 persons and 100 or more persons (46.6% and 51.5% respectively). This pattern is followed for each type of innovation with the exception of businesses that employ 20-99 persons which recorded the highest proportion of businesses that introduced new goods or services.

PROPORTION OF BUSINESSES INNOVATING, 2004 AND 2005, Types of innovation undertaken, by employment size

STATE/TERRITORY

Most states and territories reported proportions of innovating businesses between 30% and 35%. The exceptions were South Australia (40.1%), Western Australia (37.1%) and the Australian Capital Territory (28.4%).

Across all states and territories, introduction of new organisational/managerial processes was the predominant type of innovation introduced. Businesses in South Australia reported the highest proportion for this type of innovation (32.4%). For the other two types of innovation (new goods or services and new operational processes), businesses in Western Australia (25.8%) and South Australia (26.6%) had the highest proportions respectively.

INNOVATING BUSINESSES, 2002 & 2003 AND 2004 & 2005, by states and territories(a)

INDUSTRY

In the Electricity, gas and water supply industry, innovating businesses represented 48.8% of all business. Of businesses in the Manufacturing and Wholesale trade industries, 41.7% and 43.4% were innovating. Businesses in the Retail trade industry recorded the lowest level of innovation (27.5%). The Communications services industry, had the highest proportion of businesses that introduced new goods or services (28.5%).

INNOVATING BUSINESSES, 2002 & 2003 AND 2004 & 2005, by industry

Manufacturing industry

Overall, the proportion of businesses innovating in the Manufacturing industry increased from 39.5% in 2003, to 41.7% in 2005. The most noticeable change in the proportion of businesses innovating was in Other manufacturing, increasing from 28.6% in 2003 to 47.0% in 2005. Decreases were recorded in the Food, beverage and tobacco and Petroleum, coal, chemical and associated product industries (down by 3.7 and 10.0 percentage points respectively).

Manufacturing Industry(a)
	2002 & 2003(b)(c)	2004 & 2005(c)
	%	%
Food, beverage and tobacco	43.8	40.1
Textile, clothing, footwear and leather	30.3	37.5
Wood and paper product	35.8	36.6
Printing, publishing and recorded media	41.2	44.4
Petroleum, coal, chemical and associated product	52.4	42.4
Non-metallic mineral product	33.4	33.8
Metal product	33.6	35.8
Machinery and equipment	47.5	47.9
Other manufacturing	28.6	47.0
Total Manufacturing	39.5	41.7
(a) Proportions are of businesses in each output category.
(b) Data for 2002 & 2003 are from the 2003 Innovation Survey and have been adjusted for the change in reference period from three years to two years. See Appendix paragraphs 2-6 for more information.
(c) Calendar years.

The proportion of businesses in the Manufacturing industry that introduced new or significantly improved goods or services increased from 23.0% in 2003 to 26.9% in 2005. With the exception of businesses in the Petroleum, coal, chemical and associated product industry (down slightly by 0.3 percentage points), all other industries recorded increases ranging from 0.9 to 7.4 percentage points.

The proportion of businesses in the Manufacturing industry that introduced new or significantly improved operational processes increased from 24.5% in 2003 to 27.3% in 2005. Within the Manufacturing industry, the largest increases in percentage point terms were in the Other manufacturing industry (up 10.4 percentage points) and the Textile, clothing, footwear and leather industry (up by 9.7 percentage points). The main industries to show a decrease between 2003 and 2005 were Machinery and equipment (down 1.3 percentage points) and Wood and paper product industry (decreased by 0.9 percentage points).

Manufacturing Industry, by selected type of innovation(a)
		2002 & 2003(b)(c)	2004 & 2005(c)
		%	%
Proportion of businesses which introduced any new or significantly improved goods or services
	Food, beverage and tobacco	22.3	27.2
	Textile, clothing, footwear and leather	19.0	26.3
	Wood and paper product	17.6	21.2
	Printing, publishing and recorded media	23.5	24.9
	Petroleum, coal, chemical and associated product	31.3	31.0
	Non-metallic mineral product	18.2	22.1
	Metal product	21.3	22.2
	Machinery and equipment	29.3	36.7
	Other manufacturing	17.0	22.9
	Total Manufacturing	23.0	26.9
Proportion of businesses which implemented any new or significantly improved operational processes
	Food, beverage and tobacco	27.9	31.6
	Textile, clothing, footwear and leather	16.9	26.6
	Wood and paper product	23.8	22.9
	Printing, publishing and recorded media	28.9	31.5
	Petroleum, coal, chemical and associated product	27.6	27.5
	Non-metallic mineral product	19.2	23.1
	Metal product	20.5	24.4
	Machinery and equipment	28.6	27.3
	Other manufacturing	19.1	29.5
	Total Manufacturing	24.5	27.3
(a) Proportions are of businesses in each output category.
(b) Data for 2002 & 2003 are from the 2003 Innovation Survey and have been adjusted for the change in reference period from three years to two years. See Appendix paragraphs 2-6 for more information.
(c) Calendar years.

INNOVATION RELATED FINANCIAL INDICATORS

Caution should be exercised when using estimates of income from and expenditure on innovation (excluding expenditure on Research and Experimental Development) as many businesses do not keep records that allow accurate estimates of these items to be provided.

Income from innovation

Businesses were asked to report the proportion of their total income from sales of new goods or services, in the 2004-05 financial year, that could be attributed to new goods or services introduced during the survey reference period. Innovating businesses reported that approximately 4.5% (or just over $40 billion) of their total income from sales of goods or services during 2004-05 could be attributed to new goods or services introduced or implemented in the reference period.

Expenditure on innovation

Subsequent to the release of the 2003 issue of this publication, more up-to-date information for innovation expenditure has been obtained for the 2002-03 financial period and estimates presented in that issue have been revised in this issue. See Explanatory Notes paragraphs 17-19 for more details.

Since the 2003 publication was released, a decision has been made to source estimates of expenditure on research and experimental development from the ABS survey Research and Experimental Development - Businesses. An R&D activity indicator is available and this will assist in understanding expenditure by innovating and non-innovating businesses as well as who performed the R&D. Please refer to Table 2.15 for more details.

EXPENDITURE ON INNOVATION RELATED ACTIVITIES(a)
	2002-03(b)		2004-05(b)
	Expenditure	Proportion of total expenditure	Expenditure	Proportion of total expenditure
	$m	%	$m	%
Expenditure on new goods or services	na	na	14 853.7	1.8
Expenditure on new operational processes	na	na	10 458.9	1.3
Expenditure on new organisational/managerial processes	na	na	5 270.3	0.6
Total expenditure on innovation(c)(d)	r21 897.7	r2.9	30 582.9	3.7
Expenditure on research and experimental development(e)	6 903.4	0.6	8 068.0	0.6
na not available
r revised
(a) Expenditure estimates should be used with caution, see Technical Note paragraph 4.
(b) Businesses reported for the relevant financial year ended on or before 30 September.
(c) Includes any expenditure related to the development, introduction and implementation of new goods, services or processes. Only innovation-active businesses were asked to report these data.
(d) When using the revised 2002-03 estimates, users are advised to take into consideration the 95% confidence interval described in Explanatory Notes paragraphs 17-19. Caution should be exercised when comparing 2002-03 to 2004-05 estimates of innovation expenditure.
(e) Estimates of expenditure on research and experimental development are sourced from the ABS survey 'Research and Experimental Development - Businesses'. See Explanatory Notes paragraphs 15-16 for more detail. It is not possible to provide separate estimates for innovating and non-innovating businesses.

Total expenditure on innovative activity (including Research and Experimental Development) by all business was $38,650.9 million. Expenditure on innovative activity by innovating businesses was $30,582.9 million and represented 3.7% of their total business expenditure.

Expenditure on Research and Experimental Development by all businesses increased by $1,164.6 million from the 2002-03 estimate of $6,903.4 million to $8,068.0 million in 2004-05.

Innovating businesses introducing new goods or services spent 1.8% of their total business expenditure on this activity. Expenditure on implementing new operational processes or organisational managerial processes was 1.4% and 0.6% of total business expenditure respectively for innovating businesses.

The proportions of businesses reporting new operational processes (21.6%) and new managerial/organisational processes (24.9%) are higher than the proportion reporting new goods or services innovation (19.4%). However, the reverse appears to be true for proportion of business expenditure on innovative activity. This suggests that the process type innovative activities do not require as much investment in comparison to introducing new goods or services. This is not unexpected as much of the activity included in organisational/managerial innovation are strategies, structures or routines that aim to improve the performance of the businesses. These are not necessarily items that require substantial direct expenditure or expenditure that is readily measurable. Operational innovation which includes new or significantly changed methods of producing or delivering goods often includes acquisition of technology where the novelty or new knowledge is already embodied in the product and the business only has to pay for the purchase and possible adaptation to their environment.

Innovation in Australian businesses, 2004 and 2005(a), by selected business characteristics(b)(c)
			Proportion of businesses which introduced or implemented			Proportion of
		Total number of businesses as at 31 December 2005(d)	Any new or significantly improved goods or services	Any new or significantly improved operational processes	Any new or significantly improved organisational/ managerial processes	Businesses innovating	Businesses which started but did not yet complete or abandoned any innovative activity	Businesses which were innovation -active
		no.	%	%	%	%	%	%
Employment size
	5-19 persons	103 416	15.8	16.9	20.7	28.4	10.1	29.8
	20-99 persons	32 268	29.2	34.4	35.6	46.6	17.2	47.9
	100 or more persons	5 571	28.9	34.7	40.0	51.5	21.4	54.8
Total income
	Less than $1m	57 568	15.2	15.4	18.9	25.4	10.6	27.1
	$1m-Less than $5m	56 839	18.9	22.8	24.7	34.7	11.5	35.9
	$5m or more	26 847	29.5	32.3	38.1	48.3	16.8	49.6
State
	New South Wales	49 599	18.8	18.6	23.0	31.0	11.3	32.6
	Victoria	35 764	18.4	22.9	25.9	34.3	13.8	36.3
	Queensland	26 360	19.3	22.3	23.6	33.6	7.9	34.2
	South Australia	9 099	19.5	^26.6	^32.4	^40.1	^21.6	^41.4
	Western Australia	14 008	25.8	25.0	27.4	37.1	14.2	38.4
	Tasmania	2 678	^17.0	^18.2	^19.5	^30.1	10.4	^31.7
	Northern Territory	1 310	^15.9	^23.3	^28.6	^32.4	6.1	^33.0
	Australian Capital Territory	2 435	16.6	^20.1	^24.3	^28.4	9.5	^28.5
Region
	Capital cities	99 067	19.6	21.2	25.3	33.8	13.2	35.5
	Other areas	42 188	18.9	22.6	23.9	32.6	9.8	33.4
Industry
	Mining	771	10.6	17.6	22.2	31.4	14.9	34.5
	Manufacturing	18 201	26.9	27.3	27.9	41.7	16.5	43.1
	Electricity, gas and water supply	187	23.0	31.5	40.7	48.8	26.6	52.1
	Construction	13 774	16.5	22.0	26.2	30.8	10.0	31.0
	Wholesale trade	13 299	25.5	26.4	33.2	43.4	17.2	46.8
	Retail trade	30 644	15.8	15.4	18.8	27.5	7.5	28.2
	Accommodation, cafes and restaurants	13 591	23.6	25.0	27.8	35.6	9.6	35.7
	Transport and storage	5 477	18.1	25.1	26.9	34.0	10.9	34.3
	Communication services	446	28.5	25.3	27.1	35.5	18.2	36.3
	Finance and insurance	4 359	18.9	25.7	30.7	37.9	15.1	39.5
	Property and business services	36 019	16.4	20.1	22.6	30.3	13.4	32.7
	Cultural and recreational services	4 487	18.0	18.9	26.3	32.9	12.6	34.4
Total		(e)141 254	19.4	21.6	24.9	33.5	12.2	34.9
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
(a) Calendar years.
(b) Proportions are of businesses in each output category.
(c) See Explanatory Notes paragraphs 4-10 for the scope, coverage and definition of business used in the Innovation Survey.
(d) See Explanatory Notes paragraphs 13-14 for guidance in the use of business counts.
(e) Where figures have been rounded, discrepancies may occur between the sum of the component items and the total.

Summary of Innovation, 2002 & 2003 and 2004 & 2005(a), by innovation type, by selected business characteristics(b)
		Total proportion of businesses innovating		Businesses which introduced or implemented any new or significantly improved goods or services		Businesses which introduced or implemented any new or significantly improved operational processes		Businesses which introduced or implemented any new or significantly improved organisational/managerial processes
		2002 & 2003(c)	2004 & 2005	2002 & 2003(c)	2004 & 2005	2002 & 2003(c)	2004 & 2005	2002 & 2003(c)	2004 & 2005
		%	%	%	%	%	%	%	%
Employment size
	5-19 persons	25.0	28.4	11.2	15.8	15.7	16.9	14.9	20.7
	20-99 persons	41.0	46.6	17.8	29.2	26.2	34.4	28.1	35.6
	100 or more persons	55.6	51.5	33.7	28.9	40.1	34.7	35.6	40.0
State or territory
	New South Wales	30.3	31.0	14.1	18.8	18.7	18.6	18.2	23.0
	Victoria	28.3	34.3	14.1	18.4	18.4	22.9	17.4	25.9
	Queensland	27.2	33.6	11.5	19.3	18.0	22.3	17.3	23.6
	South Australia	41.2	^40.1	19.5	19.5	25.6	^26.6	27.1	^32.4
	Western Australia	29.0	37.1	11.4	25.8	19.0	25.0	19.4	27.4
	Tasmania	23.7	^30.1	8.7	^17.0	15.6	^18.2	15.3	^19.5
	Northern Territory	^25.1	^32.4	10.2	^15.9	13.6	^23.3	^16.5	^28.6
	Australian Capital Territory	^24.9	^28.4	7.5	16.6	^19.5	^20.1	17.4	^24.3
Industry
	Mining	24.2	31.4	7.4	10.6	14.8	17.6	15.5	22.2
	Manufacturing	39.5	41.7	23.0	26.9	24.5	27.3	21.8	27.9
	Electricity, gas and water supply	45.3	48.8	17.2	23.0	28.2	31.5	30.6	40.7
	Construction	27.2	30.8	7.8	16.5	17.3	22.0	19.3	26.2
	Wholesale trade	36.1	43.4	21.8	25.5	19.6	26.4	24.1	33.2
	Retail trade	24.7	27.5	7.4	15.8	17.0	15.4	13.2	18.8
	Accommodation, cafes and restaurants	22.9	35.6	9.2	23.6	14.8	25.0	14.2	27.8
	Transport and storage	30.7	34.0	12.4	18.1	20.4	25.1	20.0	26.9
	Communication services	43.8	35.5	25.8	28.5	32.2	25.3	27.6	27.1
	Finance and insurance	38.7	37.9	18.2	18.9	24.6	25.7	28.3	30.7
	Property and business services	27.3	30.3	13.0	16.4	18.5	20.1	18.3	22.6
	Cultural and recreational services	32.2	32.9	16.0	18.0	16.3	18.9	22.0	26.3
Total		29.6	33.5	13.4	19.4	18.9	21.6	18.4	24.9
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
(a) Calendar years.
(b) Proportions are of businesses in each output category.
(c) Data for 2002 & 2003 are from the 2003 Innovation Survey and have been adjusted for the change in reference period from three years to two years. See Appendix paragraphs 2-6 for more information.

INTRODUCTION TO CHARACTERISTICS CHAPTER

This chapter presents summary data for characteristics of innovative activity. More detailed data for most of the topics included in this chapter will be released progressively over the next three months. Please see Explanatory Notes paragraph 21 for the schedule.

There are two issues users should be aware of when reading this chapter:

• The changes in reference period from three years to two years and how the reference period was specified in the questionnaire have had a major impact on the comparability for characteristics data between 2003 and 2005 outputs.
• It was not possible to exclude businesses that solely undertook innovative activity that has been started but not yet completed or abandoned from the estimates for the characteristics topics.

Innovating businesses were required to complete all sections of the survey. Non-innovating businesses were only required to provide data for a small number of characteristics topics. This differentiation between items collected from innovating businesses and non-innovating businesses is clearly outlined in the text and tables within this publication.

BUSINESS LONGEVITY

Businesses operating under current ownership for under 9 years had a higher propensity to innovate than businesses under current ownership for 9 years or more. The highest proportion was among innovating businesses that had been under current ownership for 1 year to less than 4 years (38.4%), which was not dissimilar to the proportions for businesses under current ownership for Less than one year and 4 years to less than 9 years (37.3% and 37.4% respectively). Businesses operating under current ownership for 9 years or more had the lowest proportion of innovating businesses (32.6%).

FOREIGN OWNERSHIP

Foreign ownership appeared to have an influence on the likelihood of businesses undertaking innovative activities. Of wholly Australian owned businesses, 33.6% innovated during 2004 and 2005. In contrast, 58.9% of businesses with Greater than or equal to 10% and less than or equal to 50% foreign ownership, and 58.5% of businesses with Greater than 50% foreign ownership indicated they had undertaken innovation.

BARRIERS TO INNOVATION

All businesses were asked to report barriers to innovation.

Non-innovating businesses were far more likely to report No barriers to undertaking innovative activity than innovating businesses. No barriers to innovation were reported by 48.1% of non-innovating businesses and 26.7% of innovating businesses.

The most commonly reported barrier to innovation, for both innovating and non-innovating businesses, related to costs. Over half of innovating businesses (58.4%) and over one third of non-innovating businesses (36.5%) cited cost related barriers as a factor hampering innovation. Of the cost related barriers, Direct costs too high at 31.6% for innovating businesses and 21.1% for non-innovating businesses was the most significant.

Market related barriers were seen by 36.7% of innovating businesses and 27.0% of non-innovating businesses as hampering innovation. Within market related barriers, 20.0% of innovating businesses and 14.3% of non-innovating businesses reported Potential market already dominated by established businesses as the main market related barrier.

Lack of skilled staff was reported as a barrier by 27.2% of innovating businesses and 20.6% of non-innovating businesses.

BARRIERS TO INNOVATION, 2004 and 2005, by innovator status

Within the broad grouping of Profit related drivers, the highest individual drivers were Increase revenue (71.5%) and Improve productivity (70.9%). Within Market related drivers the most commonly reported drivers were Increase responsiveness to customer needs (65.3%) and Increase market share (46.6%), while in Legal related drivers the most frequently cited driver was Improve safety or working conditions (37.0%).

These rankings were consistent across all employment ranges, with the exception of Legal related drivers for businesses with 5-19 employees, where Meet government regulations or standards (34.7%) was the most frequently reported driver.

Innovating businesses, Selected Drivers 2004 and 2005

ALL BUSINESSES, COLLABORATION, 2004 and 2005 (a)(b)
	Innovating businesses	Non-innovating businesses	Total businesses
	%	%	%
Some collaboration	26.0	6.4	13.2
No form of collaboration	74.0	93.6	86.8
(a) Calendar years.
(b) Proportions are of businesses in each output category.

86.8% of all businesses reported no collaboration for innovative or other purposes. The most commonly reported type of collaboration across all businesses was Joint marketing or distribution (7.2%) and Joint research and development (3.1%).

ALL BUSINESSES, COLLABORATION, 2004 and 2005(a), by purpose, by type(b)
		Purpose of Collaboration
		Collaboration for innovative purposes	Collaboration for other business purposes	Collaboration for any purpose
		%	%	%
Type of collaboration
	Joint marketing or distribution	5.1	2.8	7.2
	Joint manufacturing	1.4	0.5	1.7
	Joint research and development	2.6	0.6	3.1
	Other joint venture	1.7	1.8	2.8
	Licensing agreement	1.6	1.0	2.3
	Other form of collaboration/alliance	0.6	0.9	1.3
	Any collaboration	9.0	5.8	13.2
No collaboration		91.0	94.2	86.8
(a) Calendar years.
(b) Proportions are of businesses in each output category.

The likelihood of an innovating business undertaking any collaboration increased with employment size.
Joint marketing or distribution was the most frequently reported type of collaboration among innovating businesses employing 5-19 persons (13.1%) and 20-99 persons (17.7%). However, Joint research and development was most common in innovating businesses employing 100 or more persons (14.5%).

The types of organisations that innovating businesses collaborated with most frequently, from any location, were Other parts of a wide enterprise group to which the business belongs (12.6%), Clients or customers (12.0%) and Suppliers of equipment, materials, components or software (11.3%). For innovating businesses, the highest reported organisational type from overseas was Suppliers of equipment, materials, components or software (3.0%). Clients or customers (10.4%) and Other parts of a wider enterprise group to which the business belongs (6.4%) were most frequently collaborated with from within same State or Territory and from elsewhere in Australia, respectively.

IDEAS, KNOWLEDGE AND ABILITIES

The most reported source of ideas or information for innovative activity was Internal sources (75.8%). This included ideas or information sourced from Within the business or Other parts of a wider enterprise group to which the business belongs.

Market sources of ideas or information were reported by 69.6% of innovating businesses. Clients or customers, consultants and competitors along with Suppliers of equipment, materials, components or software were included in Market sources.

Institutional sources (7.7%) were least used by innovating businesses as a source of ideas or information. Institutional sources included Universities or other higher education institutions, Government agencies, Private non-profit research institutions and Commercial laboratories.

43.6% of innovating businesses sourced their ideas and information for innovative activity from Other sources, including professional conferences, meetings, fairs and exhibitions, along with web sites and journals.

A significant proportion of innovating businesses either Acquired new equipment or technology for producing the business's goods or services (46.5%), Employed new skilled staff (45.2%), or Used consultants (or other paid advisors) (40.6%) as a method of acquiring knowledge or abilities. All of these methods were most often sourced from within the same State or Territory.

INNOVATING BUSINESSES, SELECTED METHODS USED TO ACQUIRE KNOWLEDGE OR ABILITIES, 2004 AND 2005, by location of source

SKILLS AND CAPABILITIES

General business skills were the most common skills and capabilities sought by innovating businesses across all employment sizes.

In innovating businesses with 20-99 persons and 100 or more persons, the three leading skills sought for innovative activity were Information Technology (25.8% and 36.3% respectively), Marketing (18.5% and 26.2% respectively), and Engineering (14.9% and 23.6% respectively).

By contrast, innovating businesses with 5-19 persons General Business (16.7%), Marketing (14.9%) and Information Technology (12.5%) were the skills most frequently sought.

In most cases demand for skilled staff increased with the size of the innovating business.

INNOVATING BUSINESSES, SELECTED SKILLS AND CAPABILITIES SOUGHT, 2004 AND 2005, by employment size

For recruitment sources outside of the business, innovating businesses with 20-99 persons and 100 or more persons reported Businesses in Australia (36.1% and 44.4% respectively) and Overseas businesses (5.4% and 21.0% respectively). Businesses in Australia (20.6%) and Australian universities (3.4%) were significant recruitment sources for innovating businesses employing 5-19 persons.

INTELLECTUAL PROPERTY PROTECTION METHODS

Just under three quarters (73.0%) of innovating businesses reported that they had No formal methods in use to protect their intellectual property. Copyright or trademark was the most common formal method reported by innovating businesses (20.3%). Patents were the second most common formal method used by 7.3% of innovating businesses.

The use of formal methods ranged from 21.6% for innovating businesses which employed 5-19 persons to 41.8% for innovating businesses which employed 100 or more persons.

The majority of innovating businesses (68.5%) reported No informal methods in use. The most commonly used informal method of intellectual property protection was Secrecy (including electronic protection methods), reported by 23.2% of innovating businesses.

The use of Secrecy (including electronic protection methods), and Complexity of product design increased with innovating business size. However, Making frequent and rapid changes to the good or service and Other informal methods (8.6% and 2.9% respectively) were most commonly reported by innovating businesses employing 20-99 persons.

DEGREE OF NOVELTY

Introduction of goods or services that were New to the world was reported by 7.7% of innovating businesses. Less than 1% of innovating businesses reported introducing new operational or organisational/managerial processes that were New to the world. New goods or services New to Australia were introduced by 15.2% of innovating businesses while 74.0% of innovators introduced new goods and services New to the business.

Development within The business or a related company was reported most often for both new goods or services (74.7%), new operational processes (65.8%) and new organisational/managerial processes (75.9%). Proportions of innovating businesses who developed new goods, services or processes in co-operation with other businesses or institutions ranged from 18.7% to 25.6%. Smaller proportions reported new goods, services or processes developed by Other business(es) or institution(s) (ranging from 8.8% to 12.9%).

FINANCIAL INDICATORS

Businesses were asked questions related to their income from sales of new goods or services and expenditure on innovation for their most recent financial year ended on or before 30 September 2005. Readers should note that many businesses were only able to provide an estimate of their expenditure on innovation, and therefore these data should be used with caution. Negligible amounts recorded against expense items may be due to the unavailability of information rather than minimal spending. Caution is also required in interpreting these data as businesses classified as innovating were those that undertook innovation in the two calendar years to December 2005, whereas expenditure data were collected for the 2004-05 financial year.

Income from sales of new goods and services

The introduction of new or significantly improved goods or services had a greater impact on the income from sales of goods or services for innovating businesses with 5-19 persons than for innovating businesses with 100 or more persons employed. For businesses with 5-19 persons, 8.8% of total income from sales of goods or services was generated by the introduction of new or significantly improved goods or services. This equates to more than double the proportion (4.1%), of total income from sales of goods or services generated by the introduction of new or significantly improved goods or services for businesses with 100 or more persons employed.

Expenditure on innovation related activities

Businesses employing 5-19 persons reported the highest (2.5%) proportion of total expenditure related to the development, introduction and implementation of goods and services. Businesses employing 100 or more persons reported a slightly higher (1.3%) proportion of expenditure related to the development, introduction or implementation of operational processes compared with businesses in the other employment size categories.

Research and Experimental Development

Expenditure on research and experimental development (R&D) included in this publication is sourced from the ABS collection "Research and Experimental Development - Business, Australia, 2004-05" (cat no 8104.0), see Explanatory Notes paragraph 16 for more information. The 2005 Innovation Survey asked all businesses to indicate if they had performed Research and experimental development in-house or had acquired any research and experimental development from other businesses or organisations.

11.9% of all businesses reported some expenditure on R&D; 11.4% reported expenditure on R&D performed by the business and 2.6% of businesses reported expenditure on acquisition of R&D from other businesses or organisations. Over a quarter of innovating businesses reported expenditure related to the performance of R&D by the business.

Type of innovation related expenditure

Businesses were asked to indicate which types of expenditure related to innovative activity they had made during 2004-05. The highest reported category was Acquisition of machinery and equipment specifically purchased to develop, introduce or implement new goods, services or processes (39.9%). Other categories where a high proportion of innovating businesses recorded expenditure was Training related to new goods, services or processes (38.8%) and Marketing activities aimed at market introduction of new goods or services (35.2%).

The proportion of innovating businesses that reported expenditure on each type of innovative activity generally increased with business size.

Source of funds for expenditure on innovation related activities

The vast majority of innovating businesses used Internal sources (90.0%) as a source of funds for expenditure on innovation. Borrowings were used by 33.8% of innovating businesses, with 2.7% accessing the Federal government as a source of funds for innovative activity.

With respect to employment size, the highest proportion of innovating businesses reporting sources of funds in any category was in the 100 or more persons size range, with the exception of External equity (venture capital), where businesses employing 20-99 persons had the highest proportion (2.0%).

Business ownership, at December 2005(a), by length of current ownership(b)
		Proportion of total businesses at December 2005	Proportion of businesses innovating during 2004 and 2005(c)
		%	%
Length of current ownership
	Less than 1 year	6.3	^37.3
	1 year to less than 4 years	17.1	38.4
	4 years to less than 9 years	20.6	37.4
	9 years or more	55.9	32.6
	Total	(d)100.0	34.9
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
(a) See Explanatory Notes paragraphs 4-10 for the scope, coverage and definition of business used in the Innovation Survey.
(b) Proportions are of businesses in each output category.
(c) Refers to businesses which undertook any innovative activity during calendar years 2004 and 2005.
(d) Where figures have been rounded, discrepancies may occur between the sum of the components and the total.

Business ownership, at december 2005(a), by type of ownership(b)
		Proportion of total businesses at December 2005	Proportion of businesses innovating during 2004 and 2005(c)
		%	%
Degree of ownership
	Wholly Australian owned	94.4	33.6
	Greater than 0% and less than 10%	0.6	*41.7
	Greater than or equal to 10% and less than or equal to 50%	0.8	^58.9
	Greater than 50%	4.2	^58.5
	Total	(d)100.0	34.9
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
* estimate has a relative standard error of 25% to 50% and should be used with caution
(a) See Explanatory Notes paragraphs 4-10 for the scope, coverage and definition of business used in the Innovation survey.
(b) Proportions are of businesses in each output category.
(c) Refers to businesses which undertook any innovative activity during calendar years 2004 and 2005.
(d) Where figures have been rounded, discrepancies may occur between the sum of the component items and the total.

BARRIERS TO INNOVATION, 2004 and 2005(a), by innovation status(b)(c)
			Innovating businesses	Non-Innovating businesses	Total businesses
			%	%	%
Barriers
	Cost related barriers
		Excessive economic risk perceived by the business	19.0	11.5	14.1
		Excessive economic risk perceived by financiers	5.0	2.9	3.6
		Direct costs too high	31.6	21.1	24.8
		Cost or availability of finance	15.8	7.8	10.6
		Government regulations or standards	22.5	17.2	19.0
		Any cost related barriers	58.4	36.5	44.1
	Market related barriers
		Potential market already dominated by established business	20.0	14.3	16.3
		Lack of customer demand for new goods or services	10.0	12.0	11.3
		Unable to appropriate benefits from intellectual property	3.6	2.3	2.8
		Inability to secure strategic partnerships	4.8	2.0	3.0
		Market too small or unknown	11.6	5.8	7.8
		Lack of information on technologies	2.5	1.8	2.1
		Any market related barriers	36.7	27.0	30.4
	Lack of skilled staff		27.2	20.6	22.9
	Other barriers		4.6	4.9	4.8
	No barriers to innovation		26.7	48.1	40.7
(a) Calendar years.
(b) Businesses could identify more than one barrier.
(c) Proportions are of businesses in each output category.

INNOVATING BUSINESSES, DRIVERS OF INNOVATION, 2004 and 2005(a), by employment size(b)(c)
			Employment size
			5-19 persons	20-99 persons	100 or more persons	Total
			%	%	%	%
Drivers
	Profit related drivers
		Improve productivity	70.7	72.6	^64.7	70.9
		Increase revenue	71.6	70.3	77.0	71.5
		Reduce costs	51.7	58.4	^57.2	54.2
		Any profit related drivers	95.6	91.3	94.8	94.2
	Market related drivers
		Be at the cutting edge of the industry	32.8	41.4	46.4	36.4
		Increase responsiveness to customer needs	62.7	69.0	73.0	65.3
		Increase market share	40.7	57.4	^51.6	46.6
		Establish a new market	25.8	32.5	33.1	28.4
		Exploit new ways to manage this business's supply chain	17.7	23.7	^34.0	20.6
		Increase export opportunities	8.1	9.6	10.7	8.7
		High degree of price competition in this business's product markets	26.5	31.5	27.6	28.1
		Any market related drivers	86.8	92.8	91.1	88.9
	Legal related drivers
		Be environmentally responsible	17.6	19.6	26.6	18.8
		Improve safety or working conditions	33.0	44.8	37.3	37.0
		Meet government regulations or standards	34.7	34.8	29.8	34.4
		Any legal related drivers	51.5	55.8	56.0	53.1
	Other drivers		6.1	5.1	7.1	5.8
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
(a) Calendar years.
(b) Businesses could identify more than one driver.
(c) Proportions are of innovating businesses in each output category.

INNOVATING BUSINESSES, COLLABORATION, 2004 and 2005(a), by employment size(b)(c)
			Employment size
			5-19 persons	20-99 persons	100 or more persons	Total
			%	%	%	%
Type of collaboration for any purpose
		Joint marketing or distribution	13.1	17.7	12.8	14.5
		Joint manufacturing	3.7	5.4	4.4	4.2
		Joint research and development	6.4	8.0	14.5	7.4
		Other joint venture	6.6	3.2	8.0	5.7
		Licensing agreement	5.7	2.7	4.7	4.7
		Other form of collaboration/alliance	1.5	1.4	4.5	1.7
		Any collaboration	24.9	26.8	33.0	26.0
	No collaboration for any purposes		75.1	73.2	67.0	74.0
(a) Calendar years.
(b) Businesses could identify more than one type of collaboration.
(c) Proportions are of innovating businesses in each output category.

INNOVATING BUSINESSES, COLLABORATION 2004 and 2005(a), by location, by type of organisation(b)(c)
			Location of organisation
			From within same state or territory	From elsewhere in Australia	From overseas	Any location
			%	%	%	%
Type of organisation collaborated with
	Other parts of a wide enterprise group to which the business belongs		8.2	6.4	2.6	12.6
	Market organisations
		Clients or customers	10.4	5.0	2.1	12.0
		Suppliers of equipment, materials, components or software	8.8	5.0	3.0	11.3
		Consultants	5.6	3.2	1.3	7.5
		Competitors and other businesses from the same industry	7.7	2.9	1.3	9.2
		Any market organisations	18.3	8.9	5.3	21.4
	Institutional organisations
		Universities or other higher education institutions	2.0	0.7	0.1	2.3
		Government agencies	3.2	0.6	0.2	3.3
		Private non-profit research institutions	0.5	0.3	0.1	0.6
		Commercial laboratories/research and development enterprises	1.4	0.4	0.3	1.6
		Any institutional organisations	4.5	1.5	0.4	4.9
	Other types of organisations		1.2	0.1	0.1	1.4
(a) Calendar years.
(b) Businesses could identify more than one location or one type of organisation.
(c) Proportions are of businesses in each output category.

Innovating businesses, sources of ideas and information, 2004 and 2005(a), by employment size(b)(c)
		Employment size
		5-19 persons	20-99 persons	100 or more persons	Total
		%	%	%	%
Sources of ideas or information for innovative activity
	Internal sources	72.2	80.8	87.3	75.8
	Market sources	67.3	74.4	^67.6	69.6
	Institutional sources	7.6	6.2	16.2	7.7
	Other sources	43.6	44.0	^42.4	43.6
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
(a) Calendar years.
(b) Businesses could identify more than one source of idea or information.
(c) Proportions are of businesses in each output category.

Innovating businesses, methods used to acquire knowledge or abilities, 2004 and 2005(a), by location of source(b)(c)
		Location of source
		From within same state or territory	From elsewhere in Australia	From overseas	Any location
		%	%	%	%
Method used to acquire knowledge or abilities
	Employed new skilled staff	39.0	7.3	7.1	45.2
	Interchanged staff with another business	5.2	2.1	1.2	7.4
	Used consultants (or other paid advisors)	35.7	7.2	2.0	40.6
	Acquired new equipment or technology for producing this business's goods or services	33.9	10.3	8.7	46.5
	Merger/takeover with/of another business (in whole or part)	3.9	0.9	0.2	4.7
	Other methods to acquire knowledge and abilities	6.0	1.1	0.7	7.2
(a) Calendar years.
(b) Businesses could identify more than one location or method.
(c) Proportions are of innovating businesses in each output category.

Innovating businesses, methods used to acquire knowledge or abilities, 2004 and 2005(a), by location of institution(b)(c)
		Location of institution(b)
		From Australian higher education or research institutions	From overseas higher education or research institutions	Any higher education or research institutions
		%	%	%
Method used to acquire knowledge or abilities from higher education or research institutions
	Employed new graduate(s)	10.0	0.6	10.4
	Employed academic or research staff	2.7	0.7	3.1
	Used research results published by these institutions	2.9	1.4	3.8
	Used research facilities of these institutions	1.6	0.2	1.6
	Used patents, designs, or other intellectual property rights from these institutions	1.7	0.3	2.0
	Used consultants from these institutions	5.7	0.7	5.9
	Contracted out research and development to these institutions	1.6	0.2	1.6
	Other methods to acquire knowledge or abilities from institutions	2.3	0.3	2.4
(a) Calendar years.
(b) Businesses could identify more than one institution or method.
(c) Proportions are of innovating businesses in each output category.

Innovating businesses, Staff skills and capabilities sought, 2004 and 2005(a), by employment size(b)(c)
		Employment size
		5-19 persons	20-99 persons	100 or more persons	Total
		%	%	%	%
Skills sought for innovative activity
	Engineering	5.1	14.9	23.6	9.3
	Scientific	1.1	3.3	7.7	2.2
	Marketing	14.9	18.5	26.2	16.7
	Information Technology	12.5	25.8	36.3	18.2
	Product management	6.9	14.6	18.6	10.1
	General business	16.7	30.5	^41.2	22.6
	Other	5.4	5.5	5.1	5.4
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
(a) Calendar years.
(b) Businesses could identify more than one skill sought.
(c) Proportions are of innovating businesses in each output category.

INNOVATING BUSINESSES, SOURCES OF RECRUITMENT, 2004 AND 2005(a), by employment size(b)(c)
				Employment size
				5-19 persons	20-99 persons	100 or more persons	Total
				%	%	%	%
Where businesses recruited people for innovative activity
		People already within this business		24.7	36.4	63.4	30.7
		People outside this business from:
			Businesses in Australia	20.6	36.1	44.4	26.9
			Overseas businesses	2.2	5.4	^21.0	4.3
			Australian universities	3.4	2.3	3.9	3.1
			Overseas universities	-	-	0.6	0.1
			Australian public sector research agencies	0.1	0.2	1.8	0.2
			Other Australian public sector agencies	1.4	0.5	1.4	1.1
			Total people outside business	25.2	39.6	56.0	31.6
		Elsewhere		0.9	1.4	1.7	1.1
	Businesses that recruited people from anywhere for innovative activity			38.2	59.7	76.5	47.4
	Businesses that did not recruit people for innovative activity			61.8	40.3	23.5	52.6
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
- nil or rounded to zero (including null cells)
(a) Calendar years.
(b) Businesses could identify more than one source of recruitment.
(c) Proportions are of innovating businesses in each output category.

Innovating businesses, Intellectual property protection methods, 2004 and 2005(a), by employment size(b)(c)
		Employment size
		5-19 persons	20-99 persons	100 or more persons	Total
		%	%	%	%
Formal methods
	Patents	4.6	9.8	21.6	7.3
	Registration of design	2.9	3.6	15.0	3.9
	Copyright or trademark	17.8	23.6	29.4	20.3
	Other formal methods	2.8	4.0	4.1	3.3
	Any formal methods	21.6	35.0	^41.8	27.1
	No formal methods used	78.4	65.0	^58.2	73.0
Informal methods
	Secrecy (including electronic protection methods)	19.7	27.3	36.6	23.2
	Complexity of product design	6.1	10.8	18.1	8.3
	Making frequent and rapid changes to the good or service	4.3	8.6	4.0	5.6
	Other informal methods	2.2	2.9	1.6	2.4
	Any informal methods	26.8	38.6	44.3	31.6
	No informal methods used	73.2	61.5	55.8	68.5
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
(a) Calendar years.
(b) Businesses could identify more than one method of protection for intellectual property.
(c) Proportions are of innovating businesses in each output category.

Innovating businesses, characteristics of new goods, services or processes, 2004 and 2005(a), by innovation type(b)(c)(d)
		Proportion of businesses that introduced or implemented
		New goods or services	New operational processes	New organisational/ managerial processes
		%	%	%
Degree of novelty of the new goods or services or processes developed
	New to the business only	74.0	87.4	93.9
	New to the industry	20.0	10.8	5.5
	New to Australia	15.2	3.6	0.8
	New to the world	7.7	0.8	0.3
Where the new goods or services or processes were developed
	Within the business or related company	74.7	65.8	75.9
	In co-operation with other businesses or institutions	21.8	25.6	18.7
	By other businesses or institutions	10.4	12.9	8.8
(a) Calendar years.
(b) Excludes innovating businesses that only reported innovative activity not yet complete or abandoned.
(c) Businesses could provide more than one answer to each question. A ranking of importance was not asked.
(d) Proportions are of innovating businesses in each output category.

Innovating businesses, selected financial indicators, 2004-05(a), by employment size
			Employment size
			5-19 persons	20-99 persons	100 or more persons	Total
			%	%	%	%
Income(b)
	Proportion of income from sales of goods or services that resulted from the introduction of new or significantly improved goods or services(c)		8.8	4.9	4.1	4.5
Expenditure(b)(c)
	Proportion of total expenditure related to the development, introduction or implementation of:
		Any new or significantly improved goods and services	2.5	1.6	1.8	1.8
		Any new or significantly improved operational processes	1.0	1.0	1.3	1.3
		Any new or significantly improved organisational/managerial processes	0.9	0.5	0.6	0.6
		Any innovative activity	4.4	3.1	3.7	3.7
(a) Data relates to the most recent financial year ended on or before 30 September 2005.
(b) Proportions are of income from sales of goods or services and total expenditure reported by innovating businesses in each output category.
(c) Includes expenditure from all innovation-active businesses.

Research and experimental development, 2004-05(a), by innovator status(b)(c)(d)
		Innovating businesses	Non innovating businesses	All businesses
		%	%	%
Proportion of businesses which reported expenditure relating to
	Performing research and experimental development	26.0	3.5	11.4
	Acquiring research and experimental development from other companies or research institutions	5.3	1.1	2.6
Proportion of businesses which reported any expenditure on research and experimental development		27.1	3.7	11.9
(a) Data relates to the most recent financial year ended on or before 30 September 2005.
(b) Businesses could report one or both types of expenditure.
(c) Proportions are of businesses in each output category.
(d) See Explanatory Notes paragraph 15.

Innovating businesses, type of innovation related expenditure, 2004-05(a), by employment size(b)
			Employment size
			5-19 persons	20-99 persons	100 or more persons	Total
			%	%	%	%
Proportion of innovating businesses that reported expenditure on:
		Acquisition of machinery and equipment specifically purchased to develop, introduce or implement new goods, services or processes	35.6	47.4	^45.8	39.9
		Acquisition of licences, rights, patents, and other intellectual property	9.3	17.4	18.5	12.4
		New design work	11.4	20.3	23.9	15.0
		Training related to new goods, services or processes	32.5	48.7	^52.5	38.8
		Marketing activities aimed at market introduction of new goods or services	32.1	40.3	^40.2	35.2
	Other activities related to the development, introduction or implementation of any new or significantly improved
		Goods or services	14.5	22.3	26.7	17.7
		Operational processes	20.4	24.8	34.1	22.6
		Organisational/managerial processes	29.7	35.0	42.1	32.1
^ estimate has a relative standard error of 10% to less than 25% and should be used with caution
(a) Businesses were asked to indicate which activity they had any expenditure for during the financial year ended on or before 30 September 2005. Businesses were not asked to report actual expenditure for each item.
(b) Proportions are of innovating businesses in each output category.