Australian Innovation Research Centre

Business Sector Innovation

Innovation research and measurement is not new, with surveys conducted in several countries on an experimental basis since the 1980s, and in a more systematic way since the 1990s in over 60 developed and developing countries, including Australia and New Zealand. The AIRC has taken an innovative approach to measuring innovation. Rather than taking a sample of firms in a limited number of sectors, the AIRC conducts censuses instead. This means that all private sector firms located in a discrete area – in this case, the state of Tasmania – with five or more employees, in all sectors, are surveyed.

Professor Anthony Arundel (head of the AIRC innovation measurement team) says that, “We often tend to default to the manufacturing sector when talking about innovation, but innovation occurs in all sectors of an economy. By looking at data for specific sectors we can identify where the capabilities to innovate are found and what are the weaknesses and problems faced by firms in a sector. Innovation is affected by a large number of factors, including intellectual property rights, collaboration, networks between companies and knowledge pathways and consequently careful analysis is required to identify the innovative characteristics of a sector.”

The Tasmanian Innovation Census (TIC) has been conducted twice, first in 2007 and again in 2010 (see project details). Each TIC asked similar questions to those used in the world’s largest innovation survey covering all 27 European member states. This permits some comparisons between the results for Tasmania and the results for European countries. In addition, the TIC included unique questions of relevance to the Tasmanian economy.

The TIC also included the agriculture, forestry, mining and fishing industries. These industries are very important to the Tasmanian economy, though are often excluded in other innovation surveys, along with many service sectors. Another member of the innovation research team, Kieran O'Brien, says, “Currently, there is a paucity of available data at an industry level. The census helps to fill those gaps, as well as provide useful information to policy makers who want real data they can understand. This can also include more in-depth analysis using econometrics.”

Each TIC collected an important piece of qualitative information that provided unique insights into how managers perceive innovation. At the end of each interview, participants were asked to describe, in their own words and without any guidelines or constraints, what they considered to be their ‘most important innovation.’ This information was invaluable for identifying the types of innovations that are of greatest value to firms. In many cases, these consist of inexpensive changes to organisational methods or internet capabilities.

Innovation is a very broad concept, encompassing everything from R&D projects to technology adoption. “For a firm to be innovative, it doesn’t necessarily mean that the innovation has to be new to the world. It only needs to be new to the company that implements it – it must be different to something that the firm has done before. The Australian economy is an example of this process at a larger scale. Australia only produces two percent of the world’s patents and publishes three percent of the world’s papers. The Australian economy would be in terrible shape if it had to rely only on knowledge produced within Australia. But Australian firms and the Australian public sector have the capability to rapidly adopt and modify to its own needs new technology and ideas produced by the rest of the world. This helps to maintain high levels of productivity and high living standards in Australia. The same process happens for each individual firm – some ideas are developed in-house, while many others are adopted from other firms or sometimes from universities” says Professor Arundel.

While the census data reveals that innovation in Tasmania is largely low key, the public perception that Tasmania is a low innovation economy appears to be ungrounded. Tasmania is far from being a rural backwater – especially in the service sector. “It’s about recognising new ways of doing things,” says Professor Arundel.

The field of innovation research is relatively new and still evolving. The AIRC’s pioneering Innovation Census not only provides an information and analysis resource that is unique in the world, but it will also create a wealth of new opportunities for future innovation research.