Innovation and business performance

Turnbull, Jennifer and Slow, Jonathan and Richmond, Kenny (2019) Innovation and business performance. Fraser of Allander Economic Commentary, 43 (3). ISSN 2046-5378

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    Innovation is critical for business performance and is a key driver of productivity growth. Innovation can take many forms, including R&D, product and process development and elements of marketing and organisational change. This paper explores which types and combinations of innovation have the greatest impacts on business performance. Using data from the UK Innovation Survey, the paper explores the prevalence of innovation type before considering the impact on turnover, employment and productivity growth. The analysis considers size of business to assess any differential impacts at specific stages of growth. The analysis shows that product and/or process innovation are particularly effective in increasing business performance. Product and process innovation are the core of business growth and encouraging more businesses to be innovative remains a crucial policy direction, across all sizes of business.