With the federal budget now just four months away, the government is being urged to put its money where its mouth is and support innovation within the SME sector.
Andrew Conway, head of the Institute of Public Accountants (IPA), said the National Innovation and Science Agenda is a step in the right direction, but there is much more that can be done to support SMEs to take their ideas in the open market.
“Australia needs sound public policy to be developed to encourage innovation among SMEs,” he said.
“Governments can play a vital role by providing strong support to research and development; enabling better linkages between cutting edge universities and industry; providing support to firms to adapt existing technologies and innovation; and encouraging firms to develop their ability to search for new options, evaluate them and successfully implement them to their specific context.
“Accordingly, public innovation policy should encourage value capture and business model innovation more generally.”
According to Mr Conway, large firms tend to struggle with changing their business model to capture value and bring new innovations to life, making the SME sector the key driver of an innovation economy.
“Firms that can adopt continuous improvement methods to imbed incremental innovation can generate large productivity improvements,” he said.
“Talent not technology is the key. Without addressing wider skills requirements, research indicates it is likely to create bottlenecks downstream in the innovation process.”
Mr Conway added: “Public policy towards entrepreneurs should shift from increasing quantity to increasing quality, with the focus being on encouraging the growth of a smaller percentage of firms that have the potential to grow, rather than encouraging more new entrants, regardless of quality.”
Innovation was one of four pillars the Productivity Commission said is desperately needed if the Australian economy is to avoid “mediocrity”.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.