Innovation stimulates employment growth
High-growth firms (HGF) embracing innovation comprise just 9% of companies in Australia but contribute to nearly half (46%) of the nation’s net positive employment growth, according to the latest Australian Innovation System report.
The report found that between the 2005 and 2012 financial years, turnover of high growth firms likewise represented just 15% of firms but contributed two-thirds (66%) of net positive sales growth.
While the proportion of HGFs has been in decline since the 2007 financial crisis, Australia is still punching above the OECD average in this regard.
In 2014, the median turnover growth rate of turnover HGFs was 38%, with the average company in this group recording nearly $184 million in sales revenue.
The report also found that 48% of employing firms were innovation active in the 2016 financial year. Innovation active companies specialise in adapting and modifying innovations introduced by other Australian organisations.
The most innovation active industries in Australia in the 2016 financial year were manufacturing (58.3%), retail trade (58.1%) and arts and recreation services (57.9%).
“The 2017 report uses newly obtained data from the Business Longitudinal Analysis Data Environment (BLADE) to analyse the phenomenon of high-growth firms in Australia,” Assistant Minister for Industry, Innovation and Science Craig Laundy said.
“The report shows that innovation-active firms are more likely to report increases in sales, profitability, productivity, firm, size and other growth-related measures than firms which do not innovate. That is why the government’s innovation and science agenda is so important.”
Speaking on the two-year anniversary of the government’s National Innovation and Science Agenda (NISA), Laundy also said the initiative has helped stimulate innovation and growth among Australians.
“The NISA is helping our young people get the skills they need for jobs today and tomorrow. It’s boosting investment in Australian businesses, helping our businesses and world-class researchers to collaborate and innovate,” he said.
“Venture capital fundraising was a record $1.32 billion in 2016–17, more than double the previous year. Total investment was also up 24%... This is not only vital funding for Australia’s small business and start-up community, but a clear expression of confidence in their potential for growth and success.”
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