2013 German Innovation Survey - Expenditures on Innovation Rise Though Less Firms Introduced Innovations

Enterprises in Germany are planning to expand innovation expenditure in 2013 and 2014. Having reached an impressive value of EUR 137.4 billion in 2012, the expenditures on innovation of the German economy will increase by 3.7 per cent in 2013, thus reaching EUR 142.6 billion. A further increase of innovation budgets by 3.0 per cent to EUR 146.9 billion is planned for 2014. These are the findings of the current German Innovation Survey, which was carried out in spring and summer of 2013. For this survey, more than 16,100 enterprises from the industry and services sector were asked about their actual and planned expenditures on innovations. The survey is carried out annually by the Centre for European Economic Research (ZEW) in Mannheim in collaboration with the Fraunhofer Institute for Systems and Innovation Research as well as the infas Institute for Applied Social Sciences on behalf of the Federal Ministry of Education and Research.

A closer examination of the expenditures on innovation in 2012 shows that large enterprises (500 or more employees) again contributed heavily to the increase of 4.8 per cent to 137.4 billion euros, as compared to 2011. Smaller enterprises continued to put the brakes on innovation activities in 2012 against the background of an economic environment that remains largely unpredictable due to the eurozone crisis. The share of enterprises introducing innovations to the market accordingly fell to 38.3 per cent. With 12.6 per cent, the turnover generated by new products in 2012 was significantly below the 2011 figure of 14.6 per cent.

Research-intensive manufacturing accounts for the highest share of innovation expenditures

By far the greatest share of the overall innovation expenditures of the German economy was spent – as in the previous years – by research-intensive manufacturing. Enterprises in this sector spent 87.8 billion euros, that is, almost 64 per cent of total innovation expenditures. Within the research-intensive sectors, the vehicle manufacturing industry had by far the largest innovation expenditures (44.0 billion euros). The knowledge-intensive services sector and other industrial sectors accounted for about 15 per cent, respectively. Other service industries spent about 8.6 billion euros on innovations in 2012, corresponding to a share of well over six per cent.

Note that innovation expenditures include all expenditures for research and development (R&D) as well as further expenditures for machines, devices, software, intellectual and industrial property rights, advanced training, marketing, design, construction, and further activities regarding the development and introduction of product and process innovations.

Share of innovators further decreasing

Innovators are enterprises that have introduced product or process innovations. Their share in the total number of enterprises decreased to 38.3 per cent in 2012, thereby falling by 1.1 per cent below the level of 2011. Before the 2008 financial market crisis, the share of innovative enterprises was 47.0 per cent. The number of innovators has since dropped by 18 per cent (as of 2012).

The share of innovative enterprises decreased across all sectors considered in this survey in 2012. A particularly low share of innovative firms exists in the sectors of water supply and disposal, as well as the transport sector. By contrast, IT and telecommunication, chemical and pharmaceutical industries, as well as the engineering and electrical industry are the sectors with especially high shares of innovative enterprises.  

More product and less process innovators

A separate consideration of product and process innovations shows contrasting developments. In 2012 the share of product innovators increased by about one percentage point as compared to 2011, while the share of process innovators dropped by two percentage points. The share of enterprises that have implemented both product and process innovations remained unchanged.

Innovation intensity reaches highest level since 2007

In 2012, the share of innovation expenditures in the total turnover of the German economy – the “innovation intensity” – reached the highest level since 2007. From 2.58 per cent in 2011, it climbed to 2.71 per cent. Innovation intensity has increased since enterprises expanded their innovation expenditures despite stagnating sales. Across the sectors, however, this indicator varies considerably: the vehicle manufacturing industry with 10.2 per cent and the electrical industry with 8.7 per cent reported the highest innovation intensities in 2012. In the financial services, the sectors of wholesale, energy supply (including mining and oil refining), business support services as well as water supply and disposal, less than one per cent of turnover is invested in innovation projects.  

Turnover generated by innovative products declines

In 2012 the German economy generated a turnover of about 644 billion euros with product innovations, which makes up 12.6 per cent of the total turnover. The share in turnover has thus fallen considerably below the level of the previous year (14.5 per cent). The increased share of product innovators has not yet resulted in higher new product sales, since many freshly introduced products do not generate higher sales before the second or third year after their introduction to the market.

The German economy was able to reduce average unit costs by 3.3 per cent in 2012 by means of process innovations. The extent of process innovation-driven cost savings has thus decreased for the fifth consecutive year. In 2007 cost reductions of 4.1 per cent were achieved. Revenues resulting immediately from quality-improving process innovations were also on the decline in 2012. These revenues are measured through sales increases that are due to a specific quality improvement. In 2012 this indicator decreased for all main sectors considered here.

For further information please contact

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