Latest ABS data shows larger businesses are more innovative

Elizabeth Barry 28 July 2016

business-innovation

Bigger firms are twice as likely to experiment with new ideas.

The Australian Bureau of Statistics (ABS) annual Business Characteristics Survey has again looked at the innovation of Australian businesses, this time finding the proportion of businesses actively engaging in innovation to increase the more employees they had. The results are surprising, with innovation usually being associated with smaller, agile startups that have few employees.

The survey splits businesses into two groups; innovating businesses (those that introduced at least one type of innovation in the period) and innovation-active businesses (those that undertook any innovative activity irrespective of whether the innovation was introduced, still in development or abandoned).

The proportion of businesses with over 200 employees that were innovation-active (73%) was almost twice the number of businesses with between zero and four persons employed (37%). However, the number of businesses in each group varies considerably. There were approximately 3,000 businesses counted with over 200 employees that were innovation-active, but the businesses with between zero and four employees numbered 173,000.

ABS Business Innovation

Source: ABS

Developed in line with the Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data, the Business Characteristics Survey covers four types of innovation: goods or services, operational processes, organisational/managerial processes and marketing methods.

The focus of the government's innovation agenda has been creating an environment where startups can create innovations. However, data shows that one of the main barriers to innovation for all businesses, but particularly smaller businesses, was the lack of additional funds. Innovation-active businesses with between five and 19 employees had the highest percentage of businesses (29%) report a lack of access to additional funds as a barrier to innovation. The next highest percentile group of innovation-active businesses was businesses with between zero and four employees with 25.9%.

ABS business innovation data

Source: ABS

While The Business Characteristics Survey has been running since 2004-5, innovation has only recently become part of the national agenda as part of Prime Minister Malcolm Turnbull's National Innovation and Science Agenda. The focus on Australia's startup and fintech community saw the introduction of several policies such as a regulatory sandbox and a government fintech advisory group, all designed to foster innovation.

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