Small businesses will be the second-biggest drivers of innovation within Australia over the next decade, according to a new report, but government support is considered a barrier to innovation.
The second installment of the GE Global Innovation Barometer is based on a survey of 2,800 senior business executives in 22 countries, including 100 respondents in Australia.
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When asked to identify the three countries they consider “innovation champions”, 65% of global respondents identified the United States, followed by Germany, Japan, China, Korea and India.
Only 2% of global respondents identified Australia as one of the top three innovation champions, compared to 19% of Australian respondents.
With regard to who will drive innovation the most in the next decade, 47% of Australian respondents said “a combination of players partnering together” while 30% nominated SMEs.
When asked to identify which sectors they believe would benefit the most from a more efficient innovation policy, backed by the government, 21% of Australian respondents nominated energy.
This was followed by healthcare (17%), telecommunications (11%), construction (11%), automotive (6%), financial services and banking (6%) and fast-moving consumer goods (5%).
The efficiency and intensity of government support were identified as negative factors with regard to innovation in Australia, along with private investors.
The speed at which innovative products are coming to market was also identified as a negative.
But there are some positives, including an appetite for innovation among younger generations, IP protection, and the readiness of universities to “prepare tomorrow’s leaders”.
When asked to identify the factors that could help them be more successfully innovative within their own companies, 41% said “having more people with advanced technical expertise”.
This was followed closely by “having more financial support for public authorities” and “having more creative people on the team; out of the box thinkers”.
According to an analysis of the barometer – the Milken Institute Innovation Report – 66% of Australian respondents do not think government support for innovation is efficiently organised.
But in terms of university-industry collaboration, Australia is considered a leader, thanks in part to the government.
“The government places strong emphasis on fostering partnerships and had so far committed almost $3.5 billion to establishing 44 cooperative research centres,” the report said.
Australia also rates “well above average” with regard to attracting venture capital, the report said, although it has dropped off recently in light of global economic conditions.
“The level of VC investment in Australia has dropped off slightly over the last few years, but this is not surprising given the recent global recession,” it said.
“Some 48% of survey respondents said that private investors were not supportive of companies that need funding – a response likely colored by the recession-related funding crunch.”
While venture capital may be hard to come by at present, Australia has an exceptional business climate with low barriers to entry, according to the report.
“It only requires two days and two procedures to start a business there, and the cost of the procedures involved is quite low,” it said.
“It is also quite easy for companies to obtain credit. The general ease of doing business has made Australia quite attractive to investors.”
In conclusion, the report indicated that while Australian respondents were fairly negative regarding a number of areas, the nation actually performs quite well.
“Although Australia was spared a severe downturn, the global recession certainly played a role in these responses,” the report said.
“A surprising 85% of respondents said that the recession had forced firms to take fewer risks, and only 69% replied that the innovation environment had improved over the past five years.”
“These perceptions do not completely match up with the improvements Australia has made to its innovation system.”