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For more information on this release:
E-mail: sbs_rap@cso.ie Barry Kelleher +353 21 453 5208 Deirdre O'Connor +353 21 453 5206 Alan Finlay +353 21 453 5211
For general information on CSO statistics:
information@cso.ie (+353) 21 453 5000 On-line ISSN 2009-8413
CSO statistical release, , 11am

Innovation in Irish Enterprises

2014-2016

Type of Innovation expenditure by enterprises1 2012, 2014 and 2016
 2012201420162012 - 20162014 - 2016
 €m€m€mPercentage change (%)
In-house Research and Development1,861.41,881.92,174.416.815.5
Purchase of external Research and Development525.3373.3619.117.965.9
Acquisition of machinery, equipment and software921.71,239.21,441.156.416.3
Acquisition of other external knowledge236.8229.3138.2-41.6-39.7
All other innovation activities109.169.3243.4123.1251.0
Total innovation expenditure3,654.23,793.04,616.326.321.7
1 Enterprises with 10 or more employed in Industry and Selected Services sectors.

Total spending on innovation activities in Ireland during 2016 increased by almost 22% to €4.6 billion

Figure 1: Percentage share of innovation expenditure by type, 2014 and 2016
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The total spend on innovation activities in Ireland was €4.6bn in 2016, a 22% increase on the 2014 figure of €3.8bn. The main driver for this increase was a 15.5% rise in expenditure for in-house Research and Development (R&D) from €1.9bn in 2014 to €2.2bn in 2016. This was the highest share of spend and accounted for 47% of all innovative expenditure.

Acquisition of machinery, equipment and software at €1.44bn represented 31% of total spend.

The acquisition of external R&D at €619m represented 13% of total spend. This involves enterprises contracting-out R&D to public or private research organisations or to other enterprises.

Please note, care should be taken in interpreting the results from the Community Innovation Survey (published as Innovation in Irish Enterprises) as those enterprises who confirmed they had innovative activity, their spend represented 1.6% of their turnover and this low expenditure level can lead to volatility in the results over time. See Figure 1 and Headline table.

Industrial enterprises spend on machinery, equipment and software accounted for a quarter of total innovation expenditure

Of the total spend of €4.6bn by enterprises on innovation activities, the Industrial sector accounted for €2.7bn compared to €1.9bn for the Selected Services.  

Industrial sector enterprises spent €1,119m on machinery, equipment and software amounting to almost a quarter, 24.2%, of total innovation expenditure. Investment in in-house R&D amounted to  €1,069m followed by €421m on external R&D,  €42m on acquisition of external knowledge and €91m on all other innovation activities.

Selected Services sector enterprises spent €1,105m on in-house R&D and €322m on machinery, equipment and software. A further €198m was spent on external R&D, €97m on acquisition of external knowledge, and €153m on all other innovation activities. See Table 1.

Foreign enterprises accounted for 64% of total innovation expenditure

Even though foreign owned enterprises accounted for only 19% of all relevant enterprises, they accounted for €2.9bn or 64% of all innovation-related expenditure, including €1.4bn on in-house R&D. 

Irish owned enterprises, which accounted for 81% of all relevant enterprises, spent €1.7bn on innovation related activities in 2016 or 36% of the total, of which €793m was spent on in-house R&D.

The distribution of innovation expenditure between Irish and foreign owned enterprises has stayed broadly consistent over the period 2010-2016. See Figure 2 and Table 1.

For long labels below use
to display on multiple lines
%
Irish
owned
enterprises
36.4803562713254
Foreign
owned
enterprises
63.5196437286745

66% of large enterprises had innovation expenditure in 2014-2016 compared with 36% of SMEs

Nearly 38% of all enterprises had innovation expenditure in 2016. By size class, 33% of all small enterprises and 51% of medium enterprises, which equates to 36% of SMEs reported expenditure on innovation. When looking at large enterprises, 66% had such expenditure. 

The largest 50 enterprises with innovation expenditure, representing 0.7% of all relevant enterprises, accounted for 72% of total innovation expenditure.

Almost 48% of Industrial enterprises had innovation expenditure compared with 32% of enterprises in the Selected Services sector. While 33% of enterprises in the Industry sector purchased machinery, equipment or software relating to innovation activities, the corresponding figure for Selected Services was 19%.

When looking at nationality of ownership and business sectors the breakdown of enterprises that are active innovators has remained relatively stable over the last number of years. See Figure 3 and Table 2.

IndustrySelected Services
In-house R&D35.409556313993218.6975717439294
Acquisition of machinery,
equipment and software
33.105802047781618.8079470198675
Acquisition of external
knowledge
8.233788395904445.34216335540839
External R&D13.18259385665537.32891832229581
All other innovation
activities
10.66552901023896.99779249448124

Over 43% of foreign owned enterprises had innovation expenditure

When looking at innovation expenditure by nationality of ownership 36% of Irish owned enterprises had innovation expenditure compared to 43% of foreign owned enterprises. Over 23% of Irish owned enterprises performed in-house R&D relating to innovation activities compared to 30% of foreign owned enterprises. See Figure 4 and Table 2.

Irish ownedForeign owned
In-house R&D23.166577012730929.6067848882035
Acquisition of machinery,
equipment and software
23.184507799892425.8288357748651
Acquisition of external
knowledge
6.311637080867856.47648419429453
External R&D8.7681549220010811.7193523515806
All other innovation
activities
7.5488613950152411.2567463377024

57% of all enterprises were innovation active during 2014-2016

Of the enterprises surveyed in the Industry and Selected Services sectors, 57% were innovation active in the period 2014-2016. These enterprises generated 77% of total turnover and employed almost three quarters of total persons engaged in these two sectors.

Enterprises classed as innovation active are those enterprises that have carried out a product, process, organisational or marketing innovation between 2014-2016. They may also exercise an intellectual property right. See Figure 5 and Table 3.

Total IndustryTotal Selected ServicesAll innovative enterprises
Total enterprises with
innovation activities
63.225255972696254.260485651214157.3319755600815
Total turnover that is generated by
enterprises with innovation activities
93.834573476161567.762145538813677.0510751103635
Total persons engaged who work in
enterprises with innovation activities
82.81048369154167.601363425009773.8154273415892

Almost 43% of all enterprises had technological innovation during 2014-2016

Enterprises that are classed as technological innovation active are those enterprises that had carried out a product or process innovation.

Overall, it was found that 43% of all enterprises with ten or more persons engaged in the Industrial and Selected Services sectors were technologically innovative in the reference period. These enterprises generated 69% of all turnover and employed 62% of persons engaged in the Industry and Selected Services sectors. See Figure 6.

Activity rates
% of total enterprises with
technological innovation activities
42.8425952865871
% of total turnover generated
by enterprises with technological
innovation activities
68.9452639643446
% of total persons engaged who work
in enterprises with technological
innovation activities
61.7836826806603

European Innovation Rankings

The Community Innovation Survey is carried out in all EU member states. The most recent data available from Eurostat is taken from the 2012-2014 survey and allows comparisons across the entire community. When analysing the 2012-2014 results, Ireland shows the 4th highest innovation rates of all countries for whom data has been published, at 61%.

While the innovation activity rate for enterprises in Industry and Selected Services sectors decreased to 57% in Ireland in the period 2014-2016, comparable innovation activity rates will not be available for the other EU member states until Q4 2018. See Figure 7.

%
Ireland (2016)57.3
EU-28 (2014)49.1
Germany67
Luxembourg65.1
Belgium64.2
Ireland (2014)61
United Kingdom60.2
Austria59.5
France56.4
Netherlands55.3
Finland55.3
Sweden54.2
Portugal54
Greece51
Denmark49.5
Italy48.7
Slovenia45.9
Lithuania43.3
Czech Republic42
Cyprus41.8
Malta41.2
Croatia39.7
Spain36.4
Slovakia31.8
Estonia26.5
Bulgaria26.1
Hungary25.6
Latvia25.5
Poland21
Romania12.8

A marketing innovation is the implementation of a new marketing concept or strategy that differs significantly from an enterprise’s existing marketing methods and which has not been used before. It requires significant changes in product design or packaging, product placement, product promotion or pricing.

Ireland had the highest rate of marketing innovative enterprises at 39.6% in the period 2012–2014, with Germany having the second highest rate at 35.9%.

Figures for 2014–2016 show marketing innovation had fallen in Ireland to 34.7%. However, comparable innovation activity rates will not be available for the other EU member states until Q4 2018. See Figure 8.

%
Ireland (2016)34.7
EU-28 (2014)22.8
Ireland (2014)39.6
Germany 35.9
Luxemburg34.1
Greece32.5
Austria29.8
Denmark29
Portugal29
Belgium28.4
Sweden28.1
Finland25.9
Cyprus25.5
France25.3
Slovenia25.1
Croatia23.6
Italy23.5
Czech Republic20.5
Malta20
Netherlands20
Lithuania18.7
United Kingdom18.5
Slovakia16.8
Spain15.8
Latvia13.6
Estonia12.1
Bulgaria11.7
Hungary11.3
Poland7.8
Romania6.6

Nearly 31% of enterprises were engaged in process innovations, with 29% engaged in product innovations

Nearly 31% of enterprises in the Industry and Selected Services sectors had process innovations in the period 2014-2016, while 29% were engaged in product innovations. Over one in five, 21%, of those enterprises were engaged in both process and product innovations.

Almost 40% of Industry enterprises were engaged in process innovation compared to 26% of enterprises in Selected Services. Foreign owned enterprises were more likely to engage in product innovations, process innovations or both compared to Irish owned enterprises. See Figure 9.

Product innovationProcess innovationProduct and process innovation
Industry36.774744027303839.931740614334528.2423208191126
Selected Services 25.12141280353225.651214128035316.7549668874172
Irish owned27.272727272727329.87269141115319.6880043033889
Foreign owned36.931380107941433.30763299922924.9036237471087
All enterprises29.095141111434430.520803025894720.6720977596741

New to firm or new to market innovations generated 17% of turnover in 2016

Almost 17% of turnover for enterprises in 2016 was reported to be the result of new to firm or new to market innovations. This can be broken down into 14% from new to market and 3% from new to firm innovations.

Almost 21% of the turnover of foreign owned enterprises was generated as a result of new to the market and new to firm product innovations compared to 11% of the turnover of Irish owned enterprises. See Figure 10.

Turnover: New to firmTurnover: New to market
Industry4.1588024108452434.9944180111007
Selected Services 2.39543878754462.27479085371671
Irish owned4.486032677738596.30249633036267
Foreign owned2.1360116848728218.5631217343865
All enterprises3.0236794924468613.9319450321714

Almost two thirds of large enterprises introduced an organisational innovation

Enterprises were asked details of organisational innovations that they introduced in the period 2014-2016. An organisational innovation is a new organisational method in the enterprise’s business practices, workplace organisation or external relations that had not been previously used by enterprises.

Almost 41% of all enterprises carried out an organisational innovation in 2014-2016. New methods of organising work responsibilities and decision-making at 36% and the introduction of new business practices at 35% were the most cited forms of organisational innovation. An organisational innovation was introduced by 62% of large enterprises over the reference period. This compares with 37% of small enterprises and 52% of medium sized enterprises. See Figure 11.

Small (10-49)Medium (50-249)Large (250+)All enterprises
New business
practices
31.341350601295145.354729729729756.491228070175434.7977887692755
New methods of organising
work responsibilities and
decision-making
32.691951896392244.510135135135155.438596491228135.6851905731743
New methods of organising
external relations
13.67252543940818.7530.526315789473715.2313063718359
Any organisational
innovation
37.076780758556951.604729729729761.754385964912340.6022694210067

Primary marketing innovation was the introduction of new media or techniques for product promotion

A third of all enterprises carried out a marketing innovation in 2014-2016. The most common form of marketing innovation was the introduction of new media or techniques for product promotion and 23% of all enterprises indicated that they engaged in this activity. Significant changes to the aesthetic design or packaging of a good or service were implemented by 18% of all enterprises. A marketing innovation was introduced by 47% of large sized enterprises and 41% of medium enterprises between 2014 and 2016, while 33% of small enterprises introduced a marketing innovation. See Figure 12.

Overall, 35% of Industrial enterprises had a marketing innovation, with the same percentage reported by enterprises in Selected Services. Foreign owned enterprises introduced a marketing innovation in 33% of cases compared to 35% of Irish owned enterprises. Foreign owned enterprises introduced new media or techniques for product promotion in 20% of cases compared to 23% of Irish owned enterprises. Almost a fifth of foreign owned enterprises  at 18% introduced new methods of pricing goods or services compared to 15% of Irish enterprises.

Small (10-49)Medium (50-249)Large (250+)All enterprises
Significant changes to
the aesthetic design
or packaging of a
good or service
16.503237742830723.479729729729731.578947368421118.3299389002037
New media
techniques for
product promotion
21.221091581868628.12531.578947368421122.8542333430317
New methods for
product placement
or sales channels
16.207215541165622.043918918918924.210526315789517.5298225196392
New methods of
pricing goods or
services
14.634597594819616.891891891891925.263157894736815.4786150712831
Any marketing
innovation
32.802960222016740.62546.666666666666734.7250509164969

Technological innovation co-operation rates unchanged since 2010-2012

When developing new to market or new to firm product and process innovations, firms can develop these within their own firm or within their enterprise group. Alternatively, firms may engage in co-operation with other sources to help develop these technological innovations.

Of all technologically innovative enterprises, 30% indicated that they engaged in some co-operative activity when developing their innovations compared to 31% in the 2012-2014 survey. Enterprises reported in 24% of cases that they were engaged in technological innovation co-operation with partners located in Ireland, compared with 19% of enterprises engaged with partners in Other Europe. See Figure 13.

Over one in four Industrial enterprises and one in five Selected Services enterprises engaged in technological innovation co-operation with partners located in Ireland. One fifth of Industrial enterprises were engaged in technological innovation co-operation with partners in Other Europe compared to 17% of Selected Services enterprises.

Around one in five Irish owned enterprises were engaged in technological innovation co-operation with enterprises located in Ireland while 14% had co-operation partners located in Other Europe.

Almost 57% of large enterprises engaged in technological innovation co-operation with partners located in Ireland while 41% of large enterprises co-operated with partners located in Other Europe.

Location
Ireland24.0747028862479
Northern Ireland5.29711375212224
Other Europe18.8455008488964
All other countries12.3599320882852

Lack of internal finance the main factor in hampering innovation activities

The main factor cited by firms as hampering innovation activities, for both the Industrial and Selected Services sectors, was lack of internal finance. Over 15% of industrial enterprises reported this as an issue.This was followed closely by innovation costs being too high, with 13% of industrial enterprises and 12% of selected services enterprises indicating that innovation costs were an issue. See Figure 14.

IndustrySelected Services
Lack of internal finance15.40102389078512.7814569536424
Lack of external finance8.489761092150178.56512141280353
Innovation costs too high12.627986348122912.1192052980132
Lack of skilled employees9.641638225255979.95584988962472
Lack of collaboration partners3.498293515358364.50331125827815
Difficulty obtaining Government grants or subsidies9.300341296928338.45474613686534
Uncertain market demand8.916382252559737.32891832229581
Too much competition in your market10.494880546075111.0816777041943

An Intellectual innovation was reported by 13% of enterprises in 2014-2016

Intellectual Property Rights can involve applying for a patent or European utility model, registering a trademark or industrial design right, use of trade secrets or claiming copyright.

In 2014-2016, 13% of enterprises had an Intellectual innovation, with 7% registering a trademark and 6% applying for a patent. In general, large enterprises engage more in intellectual innovation than SMEs. See Figure 15.

Small (10 - 49)Medium (50 - 249)Large (250+)All enterprises
Applying for a patent4.292321924144319.2060810810810818.24561403508775.71719522839686
Applying for a
European utility
model
0.2960222016651250.9290540540540542.456140350877190.480069828338667
Registering an
industrial design
right
0.4070305272895471.773648648648653.508771929824560.771021239453011
Registering a
trademark
5.9944495837187811.570945945945915.43859649122817.34652313063718
Using trade secrets2.016651248843665.4054054054054113.33333333333333.06953738725633
Claiming copyright2.608695652173914.307432432432436.666666666666673.06953738725633
Table 1: Innovation expenditure by nationality of ownership, sector and size class, 2016
€m
 Nationality of ownershipSector of activitySize class 
IrishForeignIndustryServicesSmall Medium Large All enterprises
    (10-49)(50-249)(250+) 
In-house R&D793.11,381.31,069.41,105.0431.6569.21,173.52,174.4
Purchase of External R&D462.0157.1421.2197.9124.798.1396.4619.1
Acquisition of machinery, equipment and software346.31,094.81,118.8322.3247.5228.1965.51,441.1
Acquisition of other external knowledge23.7114.641.696.653.159.925.2138.2
Other expenditure58.9184.590.8152.7104.653.485.4243.4
Total innovation expenditure1,684.02,932.22,741.71,874.5961.61,008.82,645.94,616.3
Table 2: Percentage of enterprises engaged in technological innovation expenditure by nationality of ownership, sector and size class, 2016
       %
 Nationality of ownershipSector of activitySize class 
IrishForeignIndustryServicesSmall MediumLargeAll enterprises
    (10-49)(50-249)(250+) 
In-house R&D23.229.635.418.720.933.951.624.4
Purchase of external R&D8.811.713.27.37.414.125.69.3
Acquisition of machinery, equipment and software23.225.833.118.821.131.638.623.7
Acquisition of other external knowledge6.36.58.25.35.88.48.46.3
Training for innovation activities13.214.616.112.112.217.122.513.5
Market introduction of innovations9.111.610.79.08.712.115.49.6
Design12.213.514.511.411.614.720.412.5
Active - all other expenditure7.511.310.77.07.110.819.38.2
Total36.343.247.832.333.151.266.037.6
Table 3: Technological and non-technological innovation activity rates by sector and size class, 2014 - 2016
%
 Sector of activitySize class 
IndustryServicesSmall Medium Large All enterprises
  (10-49)(50-249)(250+) 
% of total enterprises with innovation activities63.254.353.170.981.457.3
% of total turnover that is generated by enterprises with innovation activities93.867.856.675.883.977.1
% of total persons engaged who work in enterprises with innovation activities82.867.654.972.284.473.8

Background Notes

Introduction

The Community Innovation Survey (CIS), also known as Innovation in Irish Enterprises (IIE) is a survey of innovation activities of enterprises in Ireland and other EU Member States. The CIS is carried out under the STATISTICS (COMMUNITY INNOVATION SURVEY) ORDER 2017 (S.I. No 40 of 2017) made under the Statistics Act, 1993. The survey collects information about product and process innovation, as well as organisational and marketing innovations and other key variables during the three year period 2014 to 2016 inclusive. Most questions cover new or significantly improved goods or services or the implementation of new or significantly improved processes, logistics or distribution methods.

The CIS (IIE) was previously conducted by Forfás but is now solely conducted by the CSO to increase efficiency in the collection of statistical data and to reduce the burden on the participating enterprises. Data were collected in accordance with Section 33 of the Statistics Act, 1993 and with EU law and the survey was carried out under the agreed set of international rules as laid out in the OECD Oslo Manual. Data are strictly confidential and will be used only for statistical purposes.

Survey
The CIS (IIE) survey sampled enterprises with ten or more persons engaged in the Selected NACE categories as included in the table below. The CSO conducted a postal survey in 2015. A total of c. 4,500 survey forms were issued to the sampled enterprises from the CSO’s Business Register. The response rate was 66%.

NACE Rev. 2

Sections and Divisions Description
Industry  
B (05-09) Mining and quarrying
C (10-33) Manufacturing
D (35) Electricity, gas, steam and air conditioning supply
E (36-39) Water supply; sewerage, waste management and remediation activities
Selected Services   
G (46) Wholesale trade, except of motor vehicles and motorcycles
H (49-53) Transportation and Storage
J (58-63) Information and communication
K (64-66) Financial and insurance activities
M (71-73) Architectural and engineering activities; technical testing and analysis; scientific research and development; advertising and market research

Questionnaire
The CIS questionnaire is available on the CSO Website as follows: CIS 2016

Other Europe
Other Europe includes the following European Union (EU) countries, EFTA or EU candidate countries: Albania, Austria, Belgium, Bosnia and Herzegovina, Bulgaria, Croatia, Cyprus, Czech Republic, Denmark, Estonia, Finland, France, Germany, Great Britain, Greece, Hungary, Iceland, Italy, Kosovo, Latvia, Liechtenstein, Lithuania, Luxembourg, Macedonia, Malta, Montenegro, Netherlands, Norway, Poland, Portugal, Romania, Serbia, Slovakia, Slovenia, Spain, Sweden, Switzerland, and Turkey.

Definitions:

PRODUCT INNOVATION:
The market introduction of a new or a significantly improved good or service with respect to its capabilities, user friendliness, components or sub-systems. The product innovation could either be new to the market or new to the firm.

PROCESS INNOVATION:
The implementation of a new or significantly improved production process, distribution method, or support activity for goods and services. The process innovation could either be new to the market or new to the firm.

NEW TO MARKET INNOVATION:
An innovation activity, which saw the introduction of a new or significantly improved good or service by the firm onto its operating market before other competitors.

NEW TO FIRM INNOVATION:
An innovation activity which saw the introduction of a new or significantly improved good or service to the firm, and which was already available from competitors in the operating sector.

INNOVATION EXPENDITURE:
Spending on activities to support and implement production or process innovations.

ORGANISATIONAL INNOVATION:
The implementation of new or significant changes in firm structure or management methods that are intended to improve your firm’s use of knowledge, the quality of your goods and services or the efficiency of work flows.

MARKETING INNOVATION:
The implementation of a new marketing concept or strategy that differs significantly from your enterprise’s existing marketing methods and which has not been used before. It requires significant changes in product design or packaging, product placement, product promotion or pricing.

TECHNOLOGICAL INNOVATION:
Technological innovations comprise new products or processes, whether ongoing or abandoned during the survey period.

NON TECHNOLOGICAL INNOVATION:
Non Technological innovations refer to either organisational or marketing innovations.

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