Competing in the Global Economy – The Innovation Challenge

Fig 58. Percentage of turnover from novel products for product innovators
Percentage
Large businesses are always more likely to engage in innovation activity than small,
although they have a lower share of their turnover from new products than SMEs.
This probably reflects size effects (larger firms have a wider product range). The greater
market reach of larger firms means that innovations have much greater economic
impact. Product innovating firms in London generate 43 per cent of their turnover from
new or improved products, well over the UK average of 34 per cent.
The position is similar for novel products. Of those firms that introduced novel
products SME’s generated a much higher percentage of their turnover from these
products than large firms. The only region where this was not true, Northern Ireland
relied by far the least on novel products for its turnover (three times less than the UK
average). Also novel innovators in London made the greatest percentage of turnover
from novel products at 32 per cent.
Further analysis shows that variations in the propensity to innovate and the degree of
innovation intensity are larger between industries than between regions, suggesting
that regional innovation levels are substantially the result of industry location effects.
The Community Innovation Survey 210 covered in some detail the networks of
communication through knowledge transfer or co-operation between business and the
science and engineering base. A higher share of businesses in the North East report
the science and engineering base as an important source of information while the
lowest share was in London (Fig 59).
The next level of engagement with the range of external sources of innovation
capability or knowledge is more formal co-operative research projects. Eight percent of
firms surveyed in the UK said that they had one or more formal cooperation
agreements on innovation projects with a variety of other businesses and institutions
210 In this extract from the results of the community innovation survey respondents were asked to rank the importance of several
potential sources of information for innovation as being not used, low, medium or high. Science, Engineering and Technology Base
sources include:
• Universities or other higher education institutes
• Government research organisations
• Other public sector such as business links and government offices
• Private research institutes
75
35
30
25
20
15
10
5
0
London
East
South East
Wales
South West
North East
UK
Yorks and Humbs
North West
West Midlands
East Midlands
Scotland
Northern Ireland