Callaghan InCite

Unlocking New Zealand's productivity

Factors at play in boosting innovation

Innovation means different things to different people. An internationally accepted definition (Oslo Manual: Guidelines for collecting and interpreting innovation data, 3rd Edition, 2005) says innovation involves the implementation of a new or significantly improved good, service or process, or a new organisational method. 

A number of different methods are used globally to stimulate innovation. In New Zealand, the Government created — among other things — Callaghan Innovation’s R&D grants programme for businesses. R&D spending is recognised as having a direct effect on innovation outcomes, not just for individual firms, but for the broader economy. 

But it’s not all about getting the money to spend on R&D — the funding on its own would be wasted. It’s about businesses having the know-how and can-do to direct resources to get the best outcomes from a project and be truly innovative. As well as administering the grants programme, Callaghan Innovation’s role is to reduce the risks for businesses by providing research and technical advice and services, and helping to build capability and make valuable connections.

How best to measure the effects of government support on innovation outcomes is the subject of vigorous international discussion and study. Important factors in the complicated equation for innovation inputs, outcomes and impacts are:

  • the length of time before a tangible result is achieved or an outcome becomes evident
  • the intangible spillover effects of new knowledge on other businesses
  • the pace of technological change and impossibility of predicting where that change will lead.

While grants are just one way of supporting increased investment in R&D, we have good evidence to show they are working. Callaghan Innovation’s analysis clearly shows our grants for businesses doing R&D are stimulating the private sector to increase its own spending on R&D. Between 2014 and 2016, business spending on R&D grew 29%. Our internal analysis of a sample of customers shows their reported R&D spend increased by 46% over the same period. And businesses that used another Callaghan Innovation programme or service as well as receiving a grant spent even more.

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Updated: 25 July 2017