Australian Businesses Shift Focus: Innovation Spending Drops Amid Economic Pressures

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Article: New data released by the Australian Bureau of Statistics (ABS) reveals a decline in innovation activity among Australian businesses over the past two years.

Approximately 46% of businesses reported innovation activity up to 30 June 2023, compared to 52% in the two years prior.

This change reflects a shift in focus from process innovation to goods and services innovation, as businesses adapt to the current economic conditions and cost-of-living pressures.

The leading barrier to innovation remains economic pressures, with 19% of businesses citing a lack of access to additional funds.

Skilled worker shortages in both the labor market (16%) and within businesses (14%) also pose significant challenges.

As a result, a third of businesses with innovation activity spent nothing on their initiatives, while 74% spent less than $25,000.

Micro businesses, employing four or fewer employees, are more likely to rely on innovation for income.

However, the majority (80%) spent less than $25,000 on innovation, with 32% spending nothing and 49% investing less than $25,000.

These businesses often improve marketing activities and internal work practices to adapt to economic conditions without substantial expenditure.

Of businesses that invested in innovation, 41% focused on machinery, equipment, or technology.

Marketing activities and training followed at 37% each.

This was also the first time businesses were asked about the environmental benefits of their innovation activity, with 33% reporting positive environmental impacts, such as recycling, reduced energy use, and extended product life.

Innovation activity varied across regions, with the Northern Territory reporting the highest rate (48%) of businesses engaged in innovation.

Queensland and Victoria followed closely, with 47% of businesses reporting innovation activity.

Despite the economic pressures, businesses continue to find ways to innovate and adapt, demonstrating resilience in the face of challenges.