One in seven Irish companies abandoned or suspended an innovation project in 2020 due to the Covid-19 pandemic, according to the Central Statistics Office (CSO).
Innovation is defined by the CSO as a new or improved product, process or combination of both that differs from previous products or processes and that has been made available to users or brought into use.
While more than 22 per cent of enterprises introduced an innovation in response to Covid-19, nearly 14 per cent abandoned or suspended an innovation due to the pandemic.
Large enterprises of more than 250 employees reported the highest rate of innovation due to the pandemic (36.8 per cent), while enterprises of all sizes reported similar rates of abandoned innovation due to the virus.
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Total innovation expenditure by companies was €7.4 billion in 2020, which was an increase of 36.3 per cent on the 2018 figure of €5.5 billion. Enterprises involved in innovation employed more than 372,000 people in the Republic during the year.
The main driver for the increase on 2018 was a 100.6 per cent rise in expenditure for inhouse research and development (R&D) from €3 billion in 2018 to €6.1 billion in 2020. Inhouse R&D accounted for 81.8 per cent of all innovative expenditure.
In addition, the total expenditure on external R&D decreased 5 per cent from €853 million in 2018 to €811 million in 2020, while the expenditure on all other innovation areas decreased 65 per cent from €1.6 billion to €542 million.
More than 39 per cent of enterprises in the industry sector engaged in inhouse R&D compared with almost 26 per cent of enterprises in selected services.
The most common factor hampering innovation for both the industry sector and the selected services sector was having different priorities within the enterprise, followed by a lack of skilled employees, the lack of internal finance and high costs.
Irish-owned enterprises accounted for 27 per cent of innovation expenditure in the Republic, while foreign-owned enterprises accounted for 73 per cent.
The percentage of Irish enterprises active in innovation was 57.7 per cent in 2020 compared with the EU-27 average of 50.3 per cent in 2018.
Large enterprises had higher rates of engagement in intellectual property rights compared with small or medium enterprises. The most commonly reported reason for non-innovation was having no need due to market conditions (15.7 per cent).
CSO statistician Devin Zibulsky said enterprises reported higher rates of innovation and innovation spending in 2020 compared with 2018, “which may partially reflect the impact of the Covid-19 pandemic”.
“Most innovation expenditure [82 per cent] was for inhouse research and development, while large enterprises employing more than 250 people accounted for 73 per cent of the total expenditure,” he said.
“In response to the Covid-19 pandemic, 22 per cent of Irish-owned companies and 26 per cent of foreign-owned companies introduced new innovations.”
The CSO said care should be taken in interpreting the data. Innovation expenditure represents 2.9 per cent of the total turnover of the innovative enterprises in the data and it can vary greatly from year to year.
