Determinants of Innovation: Evidence from Small and Medium Sized Australian Manufacturing

This study examines how firm size, market structure, profitability and growth influence innovative activity in small to medium sized Australian manufacturing businesses, using the recently released Confidentialised Unit Record File drawn from the Business Longitudinal Survey of the Australian Bureau of Statistics (ABS). Regression analysis is conducted to determine the factors of subsequent innovative activity for the full sample of businesses, as well as sub-samples of firms from high and low-technological opportunity industries. Most variables, including size, R&D intensity, market structure and trade shares are found to be conducive to further innovative activity for the full sample and for high-tech firms. For low-tech industries the fewer variables are significant. The findings are compared with overseas studies and discused in the context of Australia R&D policies.