Australian Innovation System Report 2017
Mark Cully, Chief Economist, presented the outcomes of the 2017 Australian Innovation System Report on 8 December 2017 to a packed house at the Mint in Sydney.
Mark Cully, our Chief Economist, presented to a packed house of Business Council of Australia’s Innovation taskforce members, Innovation Nation participants and business leaders, using the forum to build connections between government and business within our innovation network.
The first AIS report was released in 2010 and originally looked at the state of innovation in Australian. Over the past few years the AIS report has been looking at different innovation themes with this year focusing on High Growth Firms (HGF).
HGF’s have been a subject of study in other OECD countries because, as Mark simply explained, ‘they punch above their weight in the economy’. Mark and his colleagues at the Department of Industry were motivated to understand by how much do they punch above their weight, what, were and how are they created and can government policy create an environment that fosters their growth.
When we look at Australia on the global stage, we are at best middling but more likely towards the lower end in how we stack up against other OECD countries in terms of innovation.
Surprisingly however, 48% of all Australian employing firms who competed the ABS’s business characteristics survey in 2015-16 were defined as innovation-active, meaning in that calendar year they self-reportingly delivered a new or significantly improved type of innovation to the market.
Mark explained that there is always a positive correlation between innovation-activity and business performance, but he has a hunch that it more likely ‘reflects something innate about the businesses themselves, those (innovation-active) businesses are just more likely to be better run and innovative and that is what is showing up with the correlation with performance’.
Mark explained that this positive correlation equates to close to 10 percentage points in growth, stating that ‘business that have a strategic focus on innovation, outgrow businesses that don’t by 10%’
From a policy perspective, HGF’s are very seductive. However, they are hard to identify and have a short half-life, leaving Mark to suggest focusing on improving macro-economic conditions and the economy’s framework the best way to foster HGFs and improve all firms.
Mark did make the point that there is an agenda on how we identify mid-size businesses and help them scale up as Small and Medium Enterprises are 10x more likely to shrink down to being a small business then they are to grow to become a large business.
You can view the presentation in its entirety here.