This chapter focuses on the reasons why businesses undertake innovation and what the perceived benefits are. Both are key factors for understanding innovation activities.
Please view tables 10a–11 (in chapter 17 of the pdf or in the available files section online) along with this chapter.
Reasons for innovation
The Business Operations Survey asked all innovating businesses to indicate their reasons for undertaking innovation. Innovation included all four subcategories (goods or services, operational processes, organisational or managerial processes and marketing methods).
Overall results for all businesses are shown in figure 6.01.
The most common reasons for innovating were to:
- increase revenue (90 percent of all innovating firms)
- increase productivity (78 percent)
- increase responsiveness of customers (73 percent)
- reduce costs (72 percent)
- increase market share (72 percent).
These findings were generally similar across most business-size classes and industries (see detailed tables 10a and 10b in chapter 17 or in the available files section online for a full breakdown). However, larger businesses tended to indicate more reasons, and cited reducing costs, reducing environmental impact, and reducing energy consumption more frequently than small businesses did. Some industry-specific trends can also be seen in tables 10a and 10b.
Most of the reasons for innovating in 2009 are similar to those of 2007.
Figure 6.01
Relationships between different types of innovation
Businesses may need to undertake certain activities in support of others, and so, innovation of one type may necessitate innovation of other types. This explains why the overall innovation rate as presented in chapter 2 is less than the sum of the rates for product, process, and marketing innovations.
For example, businesses may need to innovate their processes to accommodate new goods or services they introduce. They may also need to introduce marketing innovations in support of new goods or services, or occasionally, restructure their organisation to accommodate these changes.
The Business Operations Survey specifically asked businesses with process innovations if these were required because of product innovations they had introduced.
Thirty-nine percent of businesses with process innovations performed them because of new goods or services.
The industries with the highest rates of operational process innovation due to the introduction of new goods or services were:
- accommodation and food services (60 percent)
- telecommunications (59 percent)
- arts and recreation services (56 percent)
- education and training (55 percent).