Businesses, Covid effect: spending on innovation collapses

In the three-year period 2018-2020, 50.9% of companies carried out innovative activities, a share down by about 5 percentage points compared to the 2016-2018 period. Among the causes of the suspension or contraction of innovation there was the health emergency which affected 64.8% of companies with innovative activities, in particular the smallest ones (66.7% against 50.2% of large companies) . In 2020, the expenditure incurred for innovative activities amounted to a total of 33.6 billion euros, over a quarter less than in 2018 (45.5 billion). This is what emerges from the Istat report ‘Innovation in companies’ for the years 2018-2020.

With 58.5% of companies engaged in innovative investments, the Industry remains the sector with the greatest propensity for innovation but registers a drop of -7.2 percentage points. The Services sector also suffered a decline but more contained (-3.9 points.). On the other hand, Constructions, in which innovative activities are increasing (+3.3 pp). The propensity for business innovation appears to be diversified both in the Industry and in the Services sector. Significant increases were recorded in the share of companies in the Research & Development sector (+9.6 pp), in the manufacture of electrical equipment (+5.8 pp), in the retail trade (+5.7 pp) and in management activities business and management consulting (+5.6 pp). Signs of stability are seen in the furniture, automotive and electronics industries (respectively +1.2, +0.4 and +0.3 points) while the share of companies that have made innovative investments in pharmaceutical industry (-0.9 pp).

In the period 2018-2020, companies with innovative activities can be defined as innovators in most cases, that is, they have successfully introduced, on the market or within the company, at least one product or process innovation (45.9% of total number of enterprises). However, the share of innovative enterprises also decreased (-3.8 pp), although to a lesser extent than the broader category of enterprises with innovative activities (for which the innovative process did not produce results in the three-year period considered).

The ability to successfully develop and introduce innovations is more widespread among large enterprises (70.2%) than among small ones (43.5%). However, compared to the 2016-2018 period, the former recorded a worse trend than the average (-6.2 points against -3.8 for small businesses). To suffer the greatest losses is Industry (-7.8 percentage points among successful innovators) and, in particular, manufacturing (-8.0 points). The decline was more contained in the Services sector (-2.0 points), while in Construction, in contrast to the general trend, there was a significant growth (+6.0 points, going from 29.3% to 35, 3%).

The suspension / reduction of innovative activities during 2020 due to the health emergency led to a decrease in both the costs for innovation and the turnover obtained from the sale of innovative products. 23.3% of companies that incurred costs for innovation in 2020 declare that they had to reduce their expenses and most of these for a significant share, ranging from 11 to 50%. Large industrial companies were penalized most: 31.9% reduced their spending on innovation.

A third of the companies that have introduced innovative products on the market say they suffered a loss in turnover in 2020 (and for the most part from 11% to 50%), while 14.3% estimated an increase in turnover resulting from the sale of innovative products.

The most affected were small businesses (35.1% against 24.9% of large ones) and especially industrial ones (36.9%). The reduction in turnover deriving from product innovations is a widespread condition in all sectors, with higher shares in transport (49.3%), in the manufacture of other non-metallic mineral processing products (47.2%) and in clothing and leather goods sector (45.9%). Over half of the enterprises with innovative activities (55.6%) declare that they have introduced remote working (smart working) as a new measure of personnel management due to the health emergency; in particular, of these 31.1% adopted it only for employees, 21.9% for employees and external collaborators, while just 2.7% applied it only to external collaborators. The size of the company is important: if smart working was adopted for the first time by 51.2% of small businesses (10-49 employees), this percentage grows as the size increases, reaching 76.1% in medium size and reaches 82.2% in large.

A limited share of companies with innovative activities received some form of public support for R&D and innovation following the health emergency in 2020: 12.9% obtained financial support (capital contributions or in interest account or subsidized loans) and 19.8% benefited from tax concessions (tax credits, deductions or tax deductions). In financial support, small businesses were facilitated compared to large ones (13.7% against 6.9%), while mainly large companies benefited from tax concessions (23.3% against 18.7% of small ones) .

Source: RSS Economia by

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