Australia finished the London Olympics of 2012 with a total count of 35 medals of which 7 were gold, 16 were silver and 12 were bronze. This placed us 10th in terms of gold medal winners and 7th in terms of overall medal count. This performance was considered to be something of a national disappointment, particularly when compared to the 2008 Beijing Olympics where we ranked 6th on medal counts and won 14 gold, 15 silver and 17 bronze medals.
This Olympic Games performance triggered a wave of chatter throughout the media calling for various remedies. These solutions ranged from the spending of more money on sports development, through to the requirement for a greater emphasis to be placed on sport in our schools.
Global Innovation Index
It is interesting to compare this response to the rather more muted reaction to how Australia has performed on the 2012 Global Innovation Index (GII). The GII is an initiative of the French Business School INSEAD and the World Intellectual Property Organization (WIPO), an agency of the United Nations.
The GII is based on a complex analysis of inputs and outputs that are then compiled into the final index. The model illustrated in the diagram below represents the GII framework. As shown there are five input factors, each of which has three sub-categories. These comprise institutions, human capital and research, infrastructure, market sophistication and business sophistication. There are two output factors, each of which also has three sub-categories. The two output factors are knowledge & technology and creative outputs.
The GII finds Australia ranked 23rd overall. This places us well behind Canada in 12th place and New Zealand in 13th place. The Top-10 countries in order of ranking are:
- Switzerland
- Sweden
- Singapore
- Finland
- United Kingdom
- Netherlands
- Denmark
- Hong Kong
- Ireland
- United States
Australia’s innovation performance on inputs is better than its outputs. In terms of inputs Australia ranks 13th overall, but in terms of outputs the ranking is only 31st out of 141 countries. However, our measure of innovation efficiency within other high income economies is a dismal 107th place.
Australia’s GII performance
The diagram below shows Australia’s GII performance on all the inputs and outputs. As can be seen the worst area of our performance in terms of inputs was found in our knowledge absorption, which was ranked 61st. This is a measure of the way in which our business community invests in R&D, whether it is a net importer or exporter of high technology, and its ability to generate royalty and licence fees from its intellectual property.
The next worst of our inputs was our ecological sustainability (ranked 59th), which is a measure of how well our industry engages with environmentally sustainable investments and its energy efficiencies. Other weak areas of input were our innovation linkages, and our education and tertiary education sectors. The innovation linkages area encompasses collaboration between our universities and industry, the creation of industry clusters, joint ventures, patent filings and level of offshore R&D financing. In terms of education some of the worst performance was in terms of public expenditure on our students, and the number of science and engineering graduates our universities are producing.
In terms of outputs the worst performing area was knowledge diffusion (ranked 83rd), which is a measure of our exporting of high technologies and the royalties and license fees generated from our intellectual property. Other weak areas were knowledge impact (ranked 50th ) and knowledge creation (ranked 31st ).
Knowledge impact measures worker productivity, quality assurances, expenditure on computing software and new business formation. Worker productivity was the worst performing area. Knowledge creation measures the registration of patents and the publication of scientific papers. It is interesting to note that while our ranking for scientific article publication was 10th, our ranking for patenting was 46th.
Australia also ranked poorly in terms of creative intangibles (ranking 59th ) and creative goods and services (ranked 37th ). The first of these is a measure of how well our industries generate registered trademarks and whether these trademarks are registered as international brands. It also looks at ICT and business model creation. The second area measures such things as our production of feature films, newspaper circulation and exports of creative goods and services. Here the worst performances were found in the areas of creative goods exports, national feature film production and the registration of domestic trademarks.
Australia an inefficient leader
Australia’s overall GII ranking has fallen since 2011 and the analysis undertaken by the team that creates this index view us as an inefficient leading nation. As illustrated in the figure below Australia lies within the leader nations, but it is classified as inefficient due to its poor innovation efficiency ranking.
Within our region Singapore is the highest ranked economy and it can be seen that there are several learner countries, particularly China, that are likely to move quickly towards the leadership group over the coming decades.
If this performance was replicated in the pool or on the playing field at the Olympics Australia would be concerned and there would be a call for a national effort to ensure that the decline was arrested. However, we have heard little about this from either the media or the government.
Perhaps we need an Innovation Olympics to get Australia’s national innovation system kick started in the right direction?
Tim Mazzarol
Winthrop Professor, Entrepreneurship, Innovation, Marketing and Strategy at University of Western Australia
As an addendum to this article I should also point out that one of our worst performing areas was in the field of "trade and competition".
This is a measure of tariffs, non-agricultural market access, the importation of goods and services as a % of GDP and the intensity of local competition.
Here we did quite badly over imports of goods and services as a % of GDP with a ranking of 131 and also our exports of goods and services as a % of GDP with a ranking of 126.
It suggests that we need to enhance our exports beyond commodities and look to more value adding.
Patrick Ross
Senior Industry Fellow - Department of Management
Good article Tim! However, the need for an "Olympics" to drive sustainable innovation may be step 3 or 4...
Read moreWhenever we debate the relative lack of innovation in Australia, the discussion focuses on the aspects "what innovation" or "how (do we do) innovation". But the root cause may well lie in the "why innovation" area.
There is still a perception in many industry sectors that innovation is an important, but costly "activity", and should therefore be judiciously managed. This is not wrong, but…
Tim Mazzarol
Winthrop Professor, Entrepreneurship, Innovation, Marketing and Strategy at University of Western Australia
Hi Patrick
Thank you for your comments. I agree with you that we need to clearly define the area of "innovation".
Sadly, the word "innovation" is one of the most misunderstood and abused words in the English language. It is often viewed as R&D or more funding for basic research so that more academic papers can be published in peer reviewed journals.
It is not about those things, although they can and do play a key role.
There is a significant amount of low to mid-tech innovation within…
Read morePatrick Ross
Senior Industry Fellow - Department of Management
Tim, once again, great reply! You're right, technological innovation is not the only show in town, but please excuse my technological roots!
But the real issue is that whilst we are genuinely debating the boundaries of where innovation lies and/or how far it should go, the reality is that it's not on the national agenda, or at least not close enough to the top. As you mentioned, it requires Strategic Leadership, but the question is 'why is not at the top of our leaders' agendas?'.
This is a complex issue, but I think it is simply that our leaders (in business, government, academia) reflect more or less our own national psyche. I think your reference to "believe that we are going to be OK because the minerals and oil and gas we have in the ground will just keep the economy tracking on" may be part of the answer!
It's been a pleasure Tim!
Seán McNally
Market and Social Researcher
Tim, a quick read of the method behind the report shows results are scaled to GDP. Given the size of our primary industres (mining and agriculture) in our export, is Australia being unfairly disadvantaged? Only USA in the top 10 list a country of any geographic size, and more of an importer than exporter of primary industry output.
It would be interesting to see how we stack up when we are not having to carry the weight of primary industry?
Tim Mazzarol
Winthrop Professor, Entrepreneurship, Innovation, Marketing and Strategy at University of Western Australia
Dear Sean
Thank you for this comment. I am very pleased to see someone has gone to the trouble of reading into the source material, well done.
I agree that there may be some issues with the way these ratings were done. I have noted that some are "hard" figures from international data sets and others are "soft" measures based on CEO opinion surveys and the like.
In the creation of any global ranking system there will be problems of methodology. The Global Entrepreneurship Monitor (GEM) is one such example.
However, the GII has done a better than average job of putting these measures together. Nevertheless you may be right and it is clear that we don't have firms that generate patents and trademarks quite the way that Switzerland does. For example, the likes of Nestle, Novartis, Hoffmann-La Roche, ABB, UBS, Swatch and Rolex.