A third of Australian businesses spend nothing on innovation: ABS data

Australian business innovation has dropped six percentage points compared to the last recorded measure, according to new data from 2021-23 released by the Australian Bureau of Statistics (ABS).

Economic pressures were identified as a leading barrier to innovation, with one in five Australian businesses (19%) reporting to the ABS that a lack of access to funds was an impediment.

Another 16% of businesses cited a lack of skilled workers in the labour market, and 14% a lack of skilled workers within the business as additional barriers to innovation.

ABS head of business statistics Robert Ewing said nearly half of all businesses (46%) reported some innovation activity in the two years up to June 30, 2023, but that this was a marked decline compared to the last reporting period.

“Businesses are now shifting their focus away from process innovation, to concentrating on their goods and services innovation,” Ewing said.

“They’re now adjusting to the current economic conditions as cost-of-living pressures hit households and businesses.”

Spending on innovation was also impacted by financial pressures, with 30% of businesses reporting they had spent nothing on innovation.

A further three out of four businesses with innovation activity in the two years to June 30, 2023, invested less than $25,000 on innovation.

More than 80% of micro businesses – companies with four employees or less – reported spending less than $25,000 on innovation, and 32% of them spent nothing.

Ewing said the data indicated businesses were finding affordable ways to innovate, which was particularly important for the SME community.

“Of the businesses that spent nothing on their innovation activity, some were doing this by improving their marketing activities to attract new customers,” Ewing said.

“We heard businesses were using social media to advertise and promote their goods and services, while others focused on improving internal work practices to adapt to economic conditions.”

Innovation during the relevant two-year period for the ABS data was especially critical for SME income, with 8% of micro businesses earning three-quarters or more of their total income from new or improved goods. This represented the greatest proportion of businesses whose income was positively impacted by innovation.

Fewer than 1% of businesses classified as large (200 employees or more) reported three-quarters or more of total income was generated by new and improved goods and services.

NT businesses (48%) were the most likely to report to the ABS innovation activity in the two years to June 30, 2023. This was followed by Queensland and Victoria, respectively achieving 47% of businesses who reported innovation activity during the same period.

This latest ABS data survey release also included responses to questions about innovation expenditure and the types of activities businesses chose to put their money toward.

A total of 41% of survey respondents said they planned on spending their innovation investment on machinery, equipment, or technology.

Marketing activities and training were the next items identified for investment at 37%.

“This was … the first time businesses were asked about the environmental benefits of their innovation activity. Of the businesses that implemented new or improved goods and services, 33% saw environmental benefits,” Ewing said.

“Environmental benefits were experienced across businesses of all sizes, ranging from 45% of large businesses to 29% of micro businesses.”

This article was first published by The Mandarin.

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