Abstract
Innovation is crucially important for the future competitiveness of Australian manufacturing industry. This report offers an in-depth survey of a sample of small and medium-sized Australian manufacturing firms conducted as part of a large international study. The study sought to develop a more finely-grained view of the nature of innovation in these firms beyond the aggregate of research and development expenditure and the introduction of new products. The study found that, while there is evidence of manufacturers engaging in some innovative business practices, especially towards achieving production efficiencies, they generally fail to appreciate and employ innovation as a decisive competitive strategy. Unlike their European counterparts, there is little evidence that Australian manufacturers see innovation as a tool to transform the way they do business or to respond proactively to the problems and/or opportunities presented by an increasingly globalised, knowledge-intensive marketplace. European firms were two-and-a-half times more likely to consider innovation/technology as an important factor for their competitiveness.