About innovation in Australian business statistics
The development or introduction of new or significantly improved goods, services, processes or methods is generally considered to be innovation. As innovation is often seen as a continuous process and aspects can be intangible, it can be difficult to measure. 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 assist in measuring the process of innovation. This manual, updated in 2005, forms the basis of concepts and definitions used to measure the incidence of innovation by the Business Characteristics Survey (BCS). The BCS collects information about the broad types and status of innovation undertaken by Australian business in a 12 month reference period. For more detail about these concepts and definitions, please refer to the Explanatory Notes and the Glossary.
Key measures of innovation
The Business Characteristics Survey (BCS) covers three innovation statuses (that is, introduced, still in development and abandoned) across four broad types of innovation (that is, goods or services, operational processes, organisational/managerial processes and marketing methods) during the 2016-17 period. Using these characteristics, businesses are grouped into two categories of innovation: innovating businesses (includes businesses that introduced at least one type of innovation during the reference period) and innovation-active businesses (includes businesses that undertook any innovative activity irrespective of whether the innovation was introduced, still in development or abandoned during the reference period).
The commentary below builds on information from Summary of IT Use and Innovation in Australian Business, 2016-17 (cat. no. 8166.0).
Summary of innovation in Australian business
Summary of innovative activity in Australian business, key indicators(a), 2012-13, 2014-15 and 2016-17
| 2012-13 | 2014-15 | 2016-17 | |||
|---|---|---|---|---|---|
| Estimated number of businesses(b) | '000 | 770 | 776 | 831 | |
| Businesses that introduced any new or significantly improved:(c) | |||||
| goods or services | % | 20.0 | 19.3 | 17.4 | |
| operational processes | % | 16.9 | 15.6 | 16.7 | |
| organisational/managerial processes | % | 20.2 | 17.4 | 17.3 | |
| marketing methods | % | 18.8 | 16.5 | 16.4 | |
| Businesses that introduced innovation (innovating businesses) | % | 36.6 | 38.2 | 38.3 | |
| Businesses with innovative activity that was:(c) | |||||
| still in development(d) | % | 22.8 | 21.2 | 20.9 | |
| abandoned | % | 5.9 | 7.7 | 7.1 | |
| Businesses with any innovative activity (innovation-active businesses) | % | 42.2 | 45.0 | 44.5 | |
a. Proportions are of all businesses in each output category.
b. Business counts are provided for contextual information only, and the total may not sum to the total of the components due to rounding. Refer to the Explanatory Notes.
c. Businesses may be counted in more than one category.
d. As at the end of the reference period.
All data in the commentary below relates to the 2016-17 reference period:
Innovative activity in Australian businesses, selected indicators(a), by employment size, 2016-17
| 0-4 persons | 5-19 persons | 20-199 person | 200 or more persons | Total | ||
|---|---|---|---|---|---|---|
| % | % | % | % | % | ||
| Businesses that introduced any new or significantly improved: (b) | ||||||
| goods or services | 15.4 | 20.1 | 22.4 | 27.1 | 17.4 | |
| operational processes | 13.0 | 21.7 | 25.9 | 38.5 | 16.7 | |
| organisational/managerial processes | 12.6 | 23.9 | 27.2 | 44.8 | 17.3 | |
| marketing methods | 12.6 | 22.1 | 24.6 | 23.5 | 16.4 | |
| Businesses that introduced innovation (innovating businesses) | 30.6 | 50.0 | 52.2 | 62.8 | 38.3 | |
a. Proportions are of all businesses in each output category.
b. Businesses may be counted in more than one category.
Detailed information related to innovation
- One in ten businesses introduced operational processes innovation for supporting activities for business operations, such as maintenance systems or processes for purchasing accounting or computing (11%), organisational/managerial processes innovation for new methods of organising work responsibilities and decision making (10%) and marketing methods innovation for new media or techniques for product promotion (12%).
- Of the goods and/or service innovations implemented, 8% were new to the world.
- Over half of all innovation-active businesses sourced their ideas and information for the development of innovation from within the business or another owned by the same company (53%).
- Nearly half of all innovation-active businesses spent between $1 and $25,000 on any innovation activity (49%), with acquisition of machinery, equipment or technology the most common innovation expenditure (43%). Further information about innovation expenditure can be found in Appendix 1.
Innovation-active businesses and collaboration
Measuring collaboration provides insight into the linkages between businesses, particularly innovation-active businesses and other organisations. Linkages are important in understanding the business dynamics of initiating pooled undertakings of innovation.
Collaboration is defined as the arrangement where businesses work together for mutual benefit, including some sharing of technical and commercial risk. Each participant in the collaboration did not need to benefit commercially. Collaboration explicitly excludes straight fee for service, and franchise arrangements.
The BCS collected from all businesses the type of collaborative arrangement businesses were involved in; and for innovation-active businesses, whether that collaboration was for innovation purposes, and if so, the type of organisation they had collaborated with and the location of that organisation.
Collaboration partners for the purposes of innovation
- Nearly one in five innovation-active businesses collaborated with others when implementing innovation (18%). The most common collaboration partners were suppliers of equipment, materials, components or software (40%) and clients, customers or buyers (37%). This equates to approximately 26,000 and 24,000 businesses respectively.
- Consists of the top six types of organisations businesses collaborated with only. Estimates by all types of organisations collaborated with, can be found via the Data downloads section.
- Proportions are of innovation-active businesses that reported collaboration for innovative purposes.
- Businesses could identify more than one location and/or type of organisation.
Factors limiting collaboration for the purposes of innovation
For the first time, Innovation-active businesses were asked to report any factors preventing or limiting collaboration with others to develop or introduce any new goods, services, processes or methods.
Factors preventing or limiting collaboration, by employment size(a)(b), 2016-17
| 0-4 persons | 5-19 persons | 20-199 persons | 200 or more persons | Total | ||
|---|---|---|---|---|---|---|
| % | % | % | % | % | ||
| No expected benefit | 11.0 | 8.8 | 9.8 | 9.1 | 10.0 | |
| Unable to find a suitable collaboration partner | 8.3 | 6.2 | 5.6 | 6.3 | 7.2 | |
| Lack of access to knowledge or advice about collaborative arrangements | 6.4 | 4.9 | 4.6 | 4.9 | 5.6 | |
| Lack of skills within the business | 4.9 | 4.2 | 7.0 | 6.4 | 4.8 | |
| Insufficient time | 19.7 | 20.0 | 14.5 | 13.5 | 19.3 | |
| Insufficient funds | 22.0 | 19.1 | 14.6 | 10.0 | 20.1 | |
| Government regulations or compliance | 4.8 | 4.1 | 4.5 | 10.1 | 4.6 | |
| Reasons relating to collaboration partner(s): | ||||||
| Differences in priorities or outcomes sought | 2.4 | 1.7 | 2.9 | 2.5 | 2.2 | |
| Different work practices | 1.8 | 1.6 | 1.5 | 2.1 | 1.7 | |
| Confidentiality or trust concerns | 3.2 | 2.4 | 3.0 | 4.0 | 2.9 | |
| No factors | 56.1 | 59.8 | 63.2 | 66.2 | 58.3 | |
a. Proportions are of innovation-active businesses that reported factors that limited or prevented collaboration for innovation purposes.
b. Businesses could report more than one factor.
Selected industry data
The following industry data is for innovation-active businesses only.
Detailed information on all industries can be found via the Data downloads section.
Information, media and telecommunications industry
- Overall, the Information, media and telecommunications industry had the highest proportion of all businesses that introduced new goods and/or services (29%), operational processes (25%), organisational/managerial processes (25%) and marketing methods (27%).
- More than a quarter of businesses in the Information media and telecommunications industry that introduced new goods and/or services reported they were new to the world (27%).
- Proportions are of all businesses in each output category.
- An innovating business is one which has introduced a new or significantly improved goods or service, operational process, organisational/managerial process or marketing method.
Arts and recreation services
- The Arts and recreation services industry had the highest proportion of all businesses that reported introducing marketing methods innovation for new media or techniques for product promotion (23%) and new methods of product placement or sales channels (6%).
- Just over a quarter of innovation-active businesses in this industry collaborated with others to develop or introduce new goods, services, processes or methods (28%). The main type of organisation that these businesses reported collaborating with were consultants (44%), clients, customers or buyers (37%) and competitors and other businesses from the same industry (38%).
Wholesale trade
- Wholesale trade recorded the highest proportion of innovating businesses that reported increased revenue (50%) and gained a competitive edge (33%) as a benefit of innovative activity.
- While under a fifth of businesses in the Wholesale trade industry reported collaborating with others for innovative activity (18%), 32% of those businesses collaborated with overseas suppliers of equipment, materials, components or software, the highest overseas collaboration rate reported of any industry and type of organisation.
- Proportions are of all businesses in each output category.
- Businesses were asked if there were any benefits to the introduction of new or significantly improved goods or services, operational process, organisational/managerial process or marketing methods.