Innovation resilient in face of global crisis

More than 50 per cent of manufacturing firms pursued innovation activity. Photo / Martin Sykes

A survey of businesses found 46 per cent reported innovation activity in 2009, the same rate as in a survey carried out in 2007.

The innovation rate in the Statistics New Zealand report was defined as the proportion of businesses that undertook any activity in the past two financial years that resulted in the development or introduction of new or significant goods or services, operational processes, organisational or managerial processes, or marketing methods.

Innovation was important as it encouraged growth, knowledge transfer, and entrepreneurship, SNZ said.

Many of the results in the latest survey were similar to those in 2007, suggesting the overall patterns of innovation activities had not changed.

In the 2009 survey the information media and telecommunication services industry reported the highest rate of innovation, at 60 per cent.

Industries with rates of more than 50 per cent were manufacturing; wholesale trade; electricity, gas, water and waste services; financial and insurance services; administrative and support services; and professional, scientific, and technical services.

This country had a slightly lower innovation rate than Australia for the same business size and industry coverage, with New Zealand having 48 per cent and Australia 52 per cent.

Existing staff were reported as being key sources of information to innovating business 74 per cent of the time, with customers 61 per cent, and new staff 54 per cent, the report said.

Fewer than 10 per cent of businesses rated either universities or polytechnics, or Crown Research Institutes, other research institutes or associations as important sources of information.

Increasing revenue was the most common reason for carrying out innovations, being a factor for 90 per cent of innovating businesses, while increased productivity was a factor for 78 per cent, increasing responsiveness of customers was 73 per cent, reducing costs 72 per cent, and increasing market share 72 per cent.

Innovating firms reported an increase in sales in 47 per cent of cases compared with 35 per cent for non-innovators, productivity was higher for 39 per cent of innovators and 23 per cent of non-innovators, while 34 per cent of innovators reported a rise in profitability compared with 29 per cent of non-innovators.

Businesses spent almost $2.5 billion on product development and related activities in 2009, equating to 0.5 per cent of business' total spending, with manufacturing spending $773 million, professional, scientific and technical services $414 million, wholesale trade $332 million, and retail trade $307 million, the report said.

Industries with the highest average spend per business were telecommunications at $830,000, some machinery and equipment at $691,000, finance $666,000, and insurance $603,000.

The survey found that 45 per cent of businesses which invested in product development or related activities spent less than $1000 per employee, while the average spend per employee was $2115.

The 4 per cent of businesses in the survey with 100 or more employees accounted for 50 per cent of all employees and 47 per cent of all product development expenditure.

Only 8 per cent of all businesses did research and development, although for those with 100 or more employees the amount was 20 per cent.

Patents, as a form of protection for intellectual activity, were used by 11 per cent of innovators and 4 per cent of non-innovators, with this country ranked 21st in the OECD for its patent rate at 11.8 per million population.

Costs to develop or introduce innovation hampered 19 per cent of businesses' ability to innovate to a high degree and 21 per cent to a medium degree, while a lack of management resources hampered 15 per cent to a high degree and 20 per cent to a medium degree.

- NZPA