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Recession has made Irish businesses more innovative

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16 September 2014

A survey by KMPG and RedC has found that the prevailing attitudes among Irish businesses is that the recession has made Irish companies more innovative.

The survey was carried out among 200 finance directors or equivalents in companies from 10 employees upwards. It found that eight out of 10 (81%) respondents believed that Irish companies are more innovative since the onset of the recession, representing an increase of 4% on last year, and 9% over 2012.

“As Ireland moves out of recession, disruptive technologies and intense competition are impacting every sector,” said Ken Hardy, partner and head of R&D, KPMG, Ireland. “It’s good to know that more and more Irish businesses see innovation as a way of future proofing their business.”

Nearly nine out of 10 firms (87%) surveyed believe that Irish companies are either more innovative or the same as other countries, which is an increase of 5% on the previous year. When asked which country they believe is the most innovative country in the world, nearly half (44%) of respondents listed the USA, with only 10% listing Ireland. Germany fared best of European countries and remains second overall, at 12%.

Over three quarters (76%) of Irish firms are currently innovating, with a further 13% planning an innovative project in the near future, reports the survey. As with previous years, the survey found that large companies are more likely to be currently innovating than small companies (82% compared to 73%), though this gap has reduced somewhat since previous years. The availability of qualified in-house personnel continues to top the list of innovation influencers among Irish industry, with 67% ranking it the most important factor in deciding to innovate, with grant funding (52%) and R&D tax credit (38%) coming in at second and third place.

“It’s encouraging,” said Hardy, “to see smaller Irish companies increasing their planned innovation. Taking advantage of an upturn means looking at new, better products and processes to help secure competitive advantage.”

Innovation and government
Some 39% of those surveyed are dissatisfied with the Government’s efforts to help nurture innovation in Irish firms, and believe more could be done to support them. More than half (51%) think there is a need for more financial incentives or grants and more than a third (36%) believe the Government needs to address taxation issues to support innovation in Irish industry.

“The R&D tax credit regime has enabled businesses to invest in new or enhanced products, services and processes in a wide range of sectors,” said Hardy. “However, as with all policies, it needs constant review as Ireland competes as a business location with many other destinations with equal ambition.”

Funding innovation
The vast majority of respondents (86%) believe that access to funding is very important to the successful completion of an innovation project. However, only 16% of companies believe there is sufficient information available relating to R&D and innovation funding, such as grants and tax incentives.

The number of companies in receipt of grant funding for innovation projects remains steady at 18% (19% in 2013/14). Of those that are currently innovative, 20% have received a grant, compared to 23% last year.

Collaboration for innovation
The number of companies collaborating with a third-level institution has levelled out since a notable dip last year (9%), according to the survey, and now stands at 18% of all companies. More than half (52%) of companies feel there is insufficient information available on collaboration with a third level institution, pointing, the survey suggests, to an ongoing issue with the dissemination of important information to companies seeking to innovate.

“Collaboration between industry and academia is an area of focus for the Government, specifically called out in various elements of the Action Plan for Jobs. We would therefore expect these figures to improve in the near future as steps are taken to address the relatively low levels,” said Hardy.

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