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Australian Innovation System Report 2017Wednesday, December 6, 2017
Since 2010, the Australian Innovation System Report series has tracked Australia’s innovation performance by providing an annual analysis of key innovation indicators. As well as identifying the relative strengths and weaknesses of Australia’s innovation system, each report is themed to explore an aspect of the innovation system in depth.
The Australian Innovation System Report 2017 provides novel research on firms that make an outsized contribution to economic growth in Australia, termed high-growth firms (HGFs). Between 2004-05 and 2011-12, Employment HGFs represented only 9 per cent of firms but contributed 46 per cent of net positive employment growth. Turnover HGFs represented just 15 per cent of firms, but contributed 66 per cent of the net positive sales growth and 69 per cent of the net positive value added growth in the period.
Exceptional growth is fleeting, so over time the composition of HGFs as a group changes. Between 2005 and 2014 the proportions and growth rates of Australian HGFs gradually declined. In 2014, the median turnover growth rate of Turnover HGFs was 38 per cent and the median firm in this cohort recorded almost $184 million in sales revenue.
Innovation has a positive effect on firm growth. Across all firms, product innovation is estimated to lift turnover growth by 3.3 percentage points. For HGFs, the additional growth benefit from product innovation is even higher.
There has been considerable policy interest in HGFs as potential vehicles for job creation and income growth. However, there is little evidence to show that targeting HGFs has had a significant impact on economic performance. Policy that addresses framework conditions can lay the foundations for HGFs to emerge.