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Innovation in New Zealand: 2003

The development of the Government’s Growth and Innovation Framework has reinforced the need for detailed statistics on business innovation. Innovation has been cited as a key factor in sustaining economic growth, and in developing a more flexible New Zealand economy capable of competing successfully on the international stage. This report presents a statistical picture of the current state of business innovation in New Zealand, where innovations include new or significantly different business processes, products and services.

The information presented in this report was collected in the Innovation Survey conducted by Statistics New Zealand in August 2003 sponsored by the Ministry of Research, Science and Technology. The Innovation Survey collected information on a number of aspects of innovation activity and their impact on business performance. Initial results from the survey were released in April 2004. This report contains more detailed information on results from the survey.

Overview

What is Innovation?

The Innovation Survey is designed to collect innovation data in accordance with the definitions contained in the "OECD Oslo Manual" (1996). (The Oslo Manual is available from: www.oecd.org/).

Innovation is defined very broadly. It includes the 'never done before' as well as changes that others have already done, but that a business is doing for the first time.

For the Innovation Survey 2003, an innovation is defined as:

  • the introduction of a new or significantly improved product or service to the market, or
  • the introduction of a new or significantly improved process within a business.

Innovation could be the result of the introduction, adaptation or adoption of new knowledge or technological developments. It could also be the result of the combination of existing technologies in novel ways.

Rate of innovation

  • Results from the Innovation Survey 2003 show that 44 percent of New Zealand businesses reported innovation activity during the last three years.
  • The propensity to innovate was greater in larger businesses. Fifty-nine percent of businesses with more than 50 employees recorded innovation activity, compared with 50 percent for businesses with 30 to 49 employees and 40 percent for businesses with 10 to 29 employees.
  • The proportion of those innovative businesses who considered their innovations as being successfully carried out (as opposed to being ongoing or abandoned) was similar across all business sizes (91 percent).
  • There was variation across industries in the proportion of businesses with innovation activity. The highest proportion (57 percent) was recorded in the manufacturing industry, closely followed by finance and insurance (55 percent). The lowest proportion (25 percent) was recorded in the construction industry.

The results from the Innovation Survey 2003 are consistent with those from the most recent innovation survey conducted in the European Union (EU), which also indicated an overall innovation rate of 44 percent. The EU survey looked at similar indicators of innovation activity and success during the 1998–2000 reference period. There are some differences in groupings compared with the New Zealand survey, due to the different size of businesses in the EU and a different spread across industries. (The EU survey is available from: www.europa.eu.int/comm/eurostat/).

Types of innovative activity

  • Businesses can engage in a number of activities that give rise to innovation, through development or improvement of products, processes or services. These activities can occur within a business, or be acquired from other businesses.
  • The survey results indicate New Zealand businesses spent $1.8 billion on innovation activities in their last financial year. This represents 1.5 percent of total operating expenditure and expenditure on fixed assets over the same period.
  • The most prevalent type of innovation activity was research and development (R&D) undertaken within the business. Seventy-six percent of all businesses who undertook some sort of innovation activity indicated they carried out internal R&D.
  • Other forms of internal innovation activities used by a majority of businesses included staff training (60 percent), acquisition of enabling equipment (59 percent), marketing (54 percent), and other supporting activities (58 percent).
  • Less common was the acquisition of R&D or other types of enabling knowledge from organisations outside the business. Only 23 percent of businesses indicated that they had acquired R&D externally.

Outcomes of innovation

  • The actual outcomes of innovation activities may or may not be the same as the intended results when the innovations were begun. This survey focused on the achieved outcomes of innovations which had been implemented, as opposed to those in progress or abandoned.
  • Eighty percent of businesses which had implemented innovations in the last three years reported an increased range of goods and services as a result.
  • The majority of businesses also reported increased profitability (79 percent), improved efficiency (75 percent), and new or expanded markets within New Zealand (64 percent).
  • Less than one third of businesses reported outcomes resulting in new overseas markets (30 percent), reduced environmental impact (21 percent), or reduced energy consumption (18 percent).

Barriers to innovation

  • Fifty-six percent of all businesses surveyed rated a lack of management resources as the biggest impediment to innovation, hampering it to a high (18 percent), medium (22 percent) or low (16 percent) degree.
  • Other factors rated by a majority of businesses as hampering innovation were the cost to develop new products, processes or services (53 percent), and lack of appropriate personnel (51 percent).
  • The availability or cost of intellectual property rated as the lowest impediment to innovation, with only 23 percent of businesses identifying this as hampering innovation activity.

Printable version

The 'Innovation in New Zealand 2003' report is available to view as an Adobe Acrobat file. If you do not have the Adobe Acrobat Reader you may download the reader to view or print the contents of the available file.

Update – 27 August 2004

The Innovation Survey 2003 included a question which asked respondents to indicate the value they had received from Government assistance to the development of new or improved products, processes or services. The responses showed that up to 77% of respondents that had received government assistance found it to be of 'no value'.

A qualitative follow-up study was done to find out more about why businesses responded this way.

This follow-up study found that a majority of respondents had in fact not received funding or assistance and had either:

  • selected ‘no value’, when they meant to select ‘received no assistance’; or
  • selected ‘no value’, to indicate that they had received no financial benefit from the assistance

Of the respondents who did actually receive funding or assistance, those who indicated it was of ‘no value’ can have their reasons summarised as either:

  • ‘insufficient funding’; or
  • ‘unsuccessful outcomes’

These results mean that Statistics New Zealand does not recommend the use of information in the government assistance section in further analysis, publications or reports.

If you require more information on the results of this follow-up study please contact: businessperformance@stats.govt.nz.  

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