Shades of green in business innovation

Woman and man looking at business charts.
Less than a half of Australian businesses invested in innovation in the two years up to June 30, 2023, | Photo: Patamaporn Umnahanant (iStock)

A third of Australian businesses which invested in innovation saw environmental benefits.

The latest Innovation in Australian Business data from the Australian Bureau of Statistics (ABS), released today, found 46 percent of all businesses reported innovation activity in the two years up to June 30 last year.

ABS Head of Business Statistics Robert Ewing said this was the first time businesses were asked about the environmental benefits of their innovation activity.

“Of the businesses that implemented new or improved goods and services, 33 percent saw environmental benefits,” Mr Ewing said.

“Environmental benefits were experienced across businesses of all sizes, ranging from 45 percent of large businesses to 29 percent of micro businesses.”

He said the benefits included the ability to recycle products after use (16 percent), reduced energy use (15 percent), and extended product life (13 percent).

Overall, the number of businesses reporting innovation activity fell from 52 percent in the two years to June 30, 2021.

“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,” Mr Ewing said.

“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.”

Mr Ewing said economic pressures continued to be the leading barrier to innovation with one in five businesses (19 percent) reporting a lack of access to additional funds.

He said this was followed by a lack of skilled workers in the labour market (16 percent), and a lack of skilled workers within the business (14 percent).

The financial pressures also impacted spending on innovation.

“Just under a third of businesses that reported innovation activity (30 percent) spent nothing on their innovation,” Mr Ewing said.

Of the businesses with innovation activity, three out of every four businesses (74 percent) reported spending less than $25,000 on innovation.

“Of the businesses that spent nothing on their innovation activity, some were doing this by improving their marketing activities to attract new customers. 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,” Mr Ewing said.

“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.

Mr Ewing said micro businesses had the greatest proportion (8 percent) of earning three quarters or more of their total income from new or improved goods and services.

“In contrast, less than one per cent of large businesses (businesses with 200 or more employees) said their new and improved goods and services generated three quarters or more of their total income.”