Businesses are now concentrating on goods and services innovation
Nearly half, or 46%, of Australian businesses reported innovation activity in the two years to June 30, 2023, according to data released today by the Australian Bureau of Statistics (ABS).
“This is a drop from 52% in the two years to June 30, 2021,” said Robert Ewing (pictured above), ABS head of business statistics. “It follows a spike in process innovation driven by the COVID-19 pandemic that saw businesses trying to adapt to operating under heavy safety measures.
“Businesses are now shifting their focus away from process innovation, to concentrating on their goods and services innovation. They’re now adjusting to the current economic conditions as cost-of-living pressures hit households and businesses.”
The latest ABS innovation data for Australian businesses showed that economic pressures continued to be the leading barrier to innovation, with 19% of businesses reporting a lack of access to additional funds. This was followed by a lack of skilled workers in the labour market (16%) and within the business (14%).
Financial pressures also impacted spending on innovation. Nearly a third of businesses that reported innovation activity (30%) spent nothing on their innovation. Of the businesses with innovation activity, 74% reported spending less than $25,000 on innovation.
For micro businesses – those with four or fewer employees, over 80% spent under $25,000 on innovation, with 32% spending nothing and 49% spending less than $25,000.
“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 focussed on improving internal work practices to adapt to economic conditions.
“This shows that businesses continue to find ways to innovate that don’t require substantial expenditure, which is especially important for very small businesses.”
Innovation was also more important to the income of smaller businesses, with micro businesses having the greatest proportion (8%) of earning three-quarters or more of their total income from new or improved goods and services. In contrast, less than 1% of large businesses – those with 200 or more employees – said their new and improved goods and services generated three-quarters or more of their total income.
Of businesses that spent money on innovation, 41% focused on buying machinery, equipment, or technology. This was followed by marketing activities and training, both at 37%.
“This was also the first time businesses were asked about the environmental benefits of their innovation activity,” Ewing said. “Of the businesses that implemented new or improved goods and services, 33% saw environmental benefits.
“Environmental benefits were experienced across businesses of all sizes, ranging from 45% of large businesses to 29% of micro businesses.”
These benefits included the ability to recycle products after use (16%), reduced energy use (15%), and extended product life (13%).
Businesses in the Northern Territory were most likely to report innovation activity, at 48%, followed by Queensland and Victoria, both at 47%.
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