Business Operations Survey: 2005

Business Operations Survey

The Business Operations Survey (BOS) replaces the former Innovation and Business Practices surveys. It collects additional information on a wide range of business practices and behaviours that may have some impact on business performance. The survey has been developed by Statistics NZ in conjunction with the Ministry of Economic Development (MED) and the Ministry of Research, Science and Technology (MoRST).

This is the first release of Business Operations Survey highlights by Statistics NZ. Further papers focusing on additional areas of interest covered by the survey will be published over the next 12 months. A more detailed report on innovation in New Zealand will be published in late 2006 and a further detailed report will be published by MED at a later date, using business practices-related data from the survey.

Guide to interpreting the data

There are a number of issues to consider when assessing the BOS results. The results from the survey are subject to statistical error (sampling and non-sampling). Given the nature of the data collected, there are additional non-statistical limitations on the level of accuracy that can be expected from the survey. Records may not be kept in the form required for the survey and some estimation may be required.

While the survey has been designed to encompass content formerly measured by the Innovation and Business Practices surveys, there are differences in population coverage and definitions. These changes were necessary in order to have a population coverage encompassing all previous ones and also to reflect evolving international guidelines in the collection of some data, such as innovation. This should be kept in mind when drawing comparisons between data collected in these earlier surveys. Please refer to the Technical notes for further details.

Business operations

Export sales

Seventeen percent of businesses had export sales in their last financial year. This represents over 5,800 New Zealand businesses. Fifty-six percent of those exporting businesses had export sales of less than $5 million.

The most export-intensive industry was manufacturing, in which 41 percent of businesses were exporters. These businesses made up 39 percent of all exporting businesses. The next most export-intensive industry was agriculture, forestry and fishing, in which 32 percent of businesses were exporters, accounting for 17 percent of all exporting businesses.

The survey found that 5 percent of businesses entered new export markets during their last financial year.

Tourism sales

The accommodation, cafes and restaurants industry had the highest proportion of businesses with tourism-related sales during their last financial year (74 percent). In the transport and storage, retail trade, and cultural and recreational services industries, more than a quarter of businesses had tourism-related sales.

Research and development

Businesses can engage in a number of activities that give rise to innovation, including research and development (R&D). Overall, 8 percent of businesses indicated that they undertook or funded R&D activities in their previous financial year. The proportion of businesses undertaking or funding R&D increases with business size. Of all industry groups, the manufacturing industry had the highest proportion (17 percent) of businesses undertaking or funding R&D.

R&D statistics are covered in detail in the Research and Development Survey, run jointly by Statistics New Zealand and MoRST.

Innovation rates

Survey results show that 52 percent of businesses engaged in innovation over the past two years. The innovation rate rises with business size. Sixty-eight percent of businesses with 100 or more employees engaged in innovation, compared with 50 percent of businesses with 6–19 employees. The industries with the highest innovation rates were finance and insurance (68 percent) and manufacturing (65 percent).

The overall rate is made up of four distinct types of innovation, although an individual business can engage in more than one of these categories, as shown in the following table:

The highest innovation rate in any of these categories was goods or services innovation in the manufacturing industry (49 percent).

Innovation activities

Among innovating businesses, the most common activity undertaken in support of innovation was employee training (78 percent), followed by the acquisition of computer hardware and software (72 percent).

Factors hampering innovation

Lack of management resources was rated as the biggest constraint on innovation. Nineteen percent of businesses rated this as limiting innovation to a high degree, while 43 percent rated the impact as medium or low.

Comparisons with previous innovation surveys

Comparisons of this ‘overall innovation rate’ to that of previous innovation surveys can be misleading, as there have been changes in the way innovation is measured, driven by emerging international understandings of innovation activity and how to measure it.

The 2003 Innovation Survey was designed to measure innovative activities in accordance with the OECD Oslo Manual (1996), which focused on technological product and process (TPP) innovation. The OECD Oslo Manual was updated in 2005 to include a widened scope, in order to measure both the previous TPP scope, as well as non-technological or intangible aspects of innovation. The Business Operations Survey was designed to reflect the new, wider scope.

A high-level summary of the changes made is included here for indication purposes, but all innovation results in this publication relate to the new measurement frameworks.

1) Detail of Innovation Survey methodologies can be found in the Innovation in New Zealand 2003 report on Statistics NZ’s website.
(2) The 2005 innovation rate corresponding to the TPP scope used in 2003 was 42 percent, although this is not directly comparable to the 2003 figure due to the coverage changes above.

Business planning to set goals

Thirty-three percent of businesses stated that they planned up to a year ahead, the most common planning horizon when setting goals. Eleven percent of businesses indicated no goals were set for their business. Business planning horizons were previously examined in the 2001 Business Practices Survey. Comparison of results between surveys indicates businesses are planning further ahead. Over 40 percent of businesses indicated they planned more than one year ahead when setting goals, up from 18 percent in 2001.

Larger businesses were more likely to set long-term goals. Forty-eight percent of businesses with 100 or more employees set goals more than two years ahead, compared with only 17 percent of businesses with 6–19 employees.

Benchmarking

Benchmarking the goods or services that a business produces against those of their rivals is an effective method of ensuring that the range and prices being offered are competitive. Overall, 17 percent of New Zealand businesses monitored their competitors’ goods or services very closely, while 12 percent indicated that they did not monitor them at all.

Larger businesses were more likely to monitor competitors’ goods or services than smaller businesses. Thirty-seven percent of businesses with 100 or more employees monitored competitors’ goods or services very closely, compared with 15 percent of businesses with 6–19 employees.

Almost half of businesses compared their performance or processes systematically with other businesses, mostly with other New Zealand businesses in the same industry.

Employee practices

Training employees is one way of ensuring that a business has the appropriate mix of skills relevant to its activities. Forty-four percent of surveyed businesses signalled that they assessed the skills gaps and training needs of their employees in a systematic way.

Overall, 27 percent of businesses indicated that over 75 percent of their employees had received some form of training during their last financial year. Only 13 percent of businesses had no employees that participated in training during their last financial year.

For technical information contact:
Hamish Hill or Julia Gretton
Wellington 04 931 4600
Email: info@stats.govt.nz