Frequencies, impacts and costs of innovation: results of an Australian pilot survey Anthony Arundel, Kieran O’Brien, Dominique Bowen-Butchart, Sarah Gatenby-Clark Canberra Sept 2015

Goals Test questions for possible inclusion in the Business Characteristics Survey or for one-off surveys –Cognitive testing (33 interviews) –Pilot survey: 359 responses out of an in-scope sample of 1,600 businesses. RR = 22.4% Test survey methodologies (online versus mailed) Canberra Sept 2015

Survey response rates

Frequency of innovation Canberra Sept 2015 Item response rates from 87.4% to 92.8%

Frequency of different types of innovations, innovative firms only Canberra Sept 2015

External expenditures on innovation: item RR = 78.1% During the year ended 31 December 2014, approximately how much did this business spend on the following external activities to develop, or introduce new or significantly improved goods, services, processes or marketing methods? % non- zero response % total external expenditure Purchase of machinery, equipment or technology (including hardware and software) with functions or capabilities that were new or significantly improved for this business 74.0%88.3% Purchase of research services from other businesses 15.9% 0.2% Purchase of design, marketing or training services from other businesses 48.0%9.8% Purchase of licenses to use patents or other types of intellectual property owned by other businesses 15.8%1.7%

External innovation expenditures by employment class Employees% total expenditures Median expenditure 0-4 persons0.3%$3, persons0.2%$7, persons1.4%$46, persons or more98.2%$150,000 All businesses100.0%$33,000 Canberra Sept 2015

Estimated expenditures on external innovation activities for all Australian businesses Low estimate (based on median expenditures standardized by employment class) 3.5 – 4.0 billion For comparison, total R&D expenditures by Australian businesses approx. 18 billion in FY 2011/12 Canberra Sept 2015

Distribution of in-house innovation expenditures Expenditure categoryN% Zero209.8% $1 to less than $25, % $25,000 to less than $50, % $50,000 to less than $100, % $100,000 to less than $250, % $250,000 to less than $1,000, % $1,000,000 to less than $5,000, % $5,000,000 or more31.5% % Canberra Sept 2015

Cost in person months to develop the firm’s most important innovation In total, how many person-months were required to develop and introduce this most important [innovation]? % of valid responses Less than 1 month29.0% 1 month to less than 6 months36.7% 6 months to less than 12 months19.3% 12 months to less than 24 months9.2% 24 months or more5.8% 100.0% Canberra Sept 2015 Item response rate by innovative firms: 92.3%

Innovation impacts What percentage of this business’s sales income during the year ended 31 December 2014 was due to new or significantly improved goods or services introduced after 01 January 2014? 0%  Greater than 0% and less than 5%  Greater than 5% and less than 10%  Greater than 10% and less than 25%  Greater than 25%  Canberra Sept 2015 Item RR = 96.1%

Distribution of effect of innovation on sales share, innovative firms only Canberra Sept 2015

Conclusions Two questions adopted by the ABS for the next BCS: innovation sales share (impact) and in- house innovation expenditures. External expenditure question meets the requirements for the European CIS. Innovation expenditures dominated by a small number of firms with > 200 employees. –Is it worth collecting data for small firms? Online surveys without a valid address don’t work for businesses.