Australian small and medium businesses failing to innovate

SmartCompany /

Australian small and medium business are failing to innovate – most don’t even identify it as a priority. For many, a lack of skilled staff is holding them back, according to new statistics from the Australian Bureau of Statistics.

A total of 19% of businesses reported the introduction of new goods or services during the year ended 30 June 2006. But this type of innovation was done mainly by big companies.

Only 16.5% of employers with less than four staff introduced new products of services, compared to 43.4% of employers with more than 200 staff.

New operational processes were introduced by 21% of businesses during the year ended 30 June 2006. Again the smaller businesses were under-represented with only 15.7% introducing an operational process innovation, compared to 45.9% of businesses employing more than 200 staff.

The new figures show that innovation is simply not a priority for most Australian businesses. Only 14% of Australian businesses surveyed said they measured their business success to a major extent on innovation.

More than a third (34%) reported that innovation was not at all an extent of their focus for business performance. Quality and financial matters were a much greater focus for many.

A higher proportion of businesses introduced new services (13%) than new goods (10%).

Barriers to innovation

A total of 38% of businesses reported at least one barrier to innovation during the year ended 30 June 2006.

Lack of skilled people within the labour market was the most commonly reported barrier to innovation within their industry, reported by 17% of businesses. This was particularly a problem for small employers.

More large employers identified a lack of skilled people within the business as the biggest barrier to innovation. Lack of skilled people within the business (14%) and cost of development or introduction/implementation (11%) were other barriers for all businesses.

But the good news for smaller businesses is that they have less of a problem than large businesses in creating an innovation culture.

The ABS figures show that the greater the employment size of a business, the more likely it is that attitude of staff towards change was a perceived barrier to innovation: 19% of businesses that employed 200 or more people reported this as a barrier to innovation compared to only 4% and 10% of businesses that employed 0-4 staff and 5-19 staff, respectively.


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