ZEW Innovation Survey - German Enterprises Hit a Record in Innovation Expenditure

The German economy continues to invest heavily in innovation. In 2013, EUR 144.6 billion were spent on the development and implementation of new products and processes. This is the largest sum ever spent in a single year, exceeding the 2012 figure by 5.3 per cent. Large enterprises account for the lion's share with more than 70 per cent. Companies are planning to further expand innovation expenditure in 2014 (to EUR 146.1 billion) and 2015 (to EUR 148.2 billion). At the same time, revenues from product and process innovations are stagnating, and the rate of innovators, which is determined by small enterprises, decreased in 2013.

These are the findings of this year's survey on the innovation behaviour of the German economy conducted by the Centre for European Economic Research (ZEW) on behalf of the Federal Ministry of Education and Research (BMBF). The survey has been carried out annually in collaboration with the Institute for Applied Social Sciences (infas) and the Fraunhofer Institute for Systems and Innovation Research (ISI) since 1993.

With an increase of 5.3 per cent in 2013, the innovation expenditures of the German economy topped the previous peak value of EUR 137.4 billion from 2012. The main contributors are the large enterprises with 1,000 or more employees in Germany. The strongest increase with a growth of seven per cent was reported by low-tech manufacturing. Innovation expenditure of high-tech manufacturing grew by 5.1 per cent. The knowledge-intensive services sector increased their innovation expenditures by 5.8 per cent.

As in previous years, high-tech manufacturing made the strongest contribution to total innovation expenditure, spending EUR 92.6 billion, that is, 64 per cent of total innovation expenditure in Germany. According to the ZEW survey, these trends in innovation behaviour will continue in 2014 and 2015.

Until 2015 innovation expenditure of the German economy is expected to increase by EUR 10.8 billion, as compared to 2012. The automotive industry is the most important driver of this increase, accounting for EUR 5.5 billion. Growing innovation budgets are also expected for IT and telecommunication with an increase of EUR 2.6 billion as compared to 2012, for the chemical and pharmaceutical industries with an increase of EUR 1.4 billion, and for the electrical industry with an increase of EUR 1.1 billion. By contrast, technical and R&D services, the transport sector, the food, beverage and tobacco industry, as well as the textile, clothing and leather industry are planning to reduce their innovation expenditures until 2015.

Financing innovation activities through the returns generated by previous innovations is becoming more and more difficult. The share of revenue generated through product innovations remained unchanged at 12.9 per cent. The ZEW survey also shows that small and medium-sized enterprises (SMEs) are increasingly retreating from the innovation business.

The rate of innovators, i.e., the share of companies that have successfully introduced innovations in the total number of companies, decreased for the third consecutive time in 2013 and currently stands at 37.1 per cent. In 2012 the rate was 38.3 per cent. The number of innovators in the sectors considered in the survey fell from 106,000 in 2012 to 103,000 in 2013. Researchers expect a further decrease for 2014 and 2015.

The ZEW Innovation Survey

The annual ZEW Innovation Survey is based on the Mannheim Innovation Panel (MIP) and considers the industrial sector (mining, manufacturing industry, energy and water supply) as well as a range of services sectors (wholesale, transport, postal services, telecommunication, financial services, IT/software, technical services, public relations and business consultancy, other business services, media, and waste management). The survey includes Germany-based legally autonomous companies with five or more employees. About 6,000 companies participate in the annual survey. In addition, a telephone survey of about 4,500 companies addresses specific parameters of innovation behaviour. The results of the innovation activity are projected for the individual sectors, business sizes and for east and west Germany.

Find the complete report on the 2014 Innovation Survey at

ftp://ftp.zew.de/pub/zew-docs/mip/14/mip_2014.pdf

For more information please contact

Dr. Bettina Peters, Phone +49(0)621 1235-174, b.peters@zew.de

Dr. Christian Rammer, Phone +49(0)621/1235-184, E-mail rammer@zew.de