Wider Debate Needed on Business Innovation

Business innovation is the result of a range of commercial and business strategies and not just R&D spend, a survey of BCA Members has found.

The report showed that process adaptation, applications of new technologies and capital investment in new plant and equipment are some of the ways BCA Member companies are achieving innovation success.

The survey found that large companies typically invest in research in order to grow their businesses, in particular by:

  • capturing or maintaining market share;
  • benefiting from emerging technologies; and
  • finding new markets through the development of new products and services.

BCA Chief Executive Ms Katie Lahey said the survey aimed to shed light on the commercial imperatives that guide large companies to invest in research and development.

"This way we can create a wider and more meaningful debate on business innovation in Australia.

"It will be innovation – not the level of research and development spend – that will increase productivity," Ms Lahey said.

"It is essential that public policy decisions do not inhibit the capacity of businesses to innovate cost-effectively and in line with their business strategies."

The survey confirmed that BCA Member Companies make substantial, targeted investments in research and development. Twenty respondents spent $768 million on R&D in 2002–03, representing at least 10 per cent of total business expenditure on research and development (BERD).

While respondents on average spent most of their funds using in-house expertise, around $100 million of research and development expenditure was directed to universities and publicly-funded research institutions.

For many companies, innovation did not always occur through traditional research and development spending but through process adaptation, applications of new technologies or the outcome of capital investment in new plant and equipment – none of which are included in the Australian Bureau of Statistics BERD measurements.

The BCA will next examine how well business innovation is supported by current public policy frameworks.

Research and Development Investment by Australia's Leading Businesses