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Innovation Index
of New Zealand / 2013

Overall Index

The overall Innovation Index is a weighted composite of Research and Development (R&D), Intellectual Property and Business Innovation. The base weight for each component is 25 percent, adjusted based on the deviation of each component from the average. For example, if an industry has an above-average number of IP registrations per business, it would have a greater weight for IP. If it has an above-average rate of R&D staffing/expenditure, it would have a greater weight for R&D.

The 2013 version offers a deep 'dive' into the drivers for innovation in each industry, using an algorithmic weighting system to reflect the relative importance of different types of innovation for each industry in the results. Challenges remain to measuring this complex topic, including small data sets in some industries, absence of some industries from Statistics New Zealand's R&D Survey and exclusion of core Government from the Statistics New Zealand Business Operations Survey.

Research & Development (R&D)

The R&D index is based on the Statistics New Zealand R&D Survey. The full-time equivalent number of staff (FTE) employed in research is divided by the total FTE in an industry and converted into an index (2007 base) for the R&D FTE index. The same is done for basic, experimental and applied research expenditure, using current price GDP for that industry.

The weighting for the overall R&D index is a two-level weighted composite index. The first level is based on the R&D labour/expenditure ratio of each industry. The higher the R&D labour/expenditure ratio for each industry, the higher its R&D FTE weighting will be. The weights are adjusted so that R&D FTE will be weighted at 33 percent for an industry with the average R&D labour/expenditure ratio between 2007-2011. The remaining weight is reserved for R&D expenditure, and divided based on the average proportion of each type of expenditure between 2007-2011.

Due to Statistics New Zealand's confidentiality rules, where individual types of R&D expenditure are too small, total R&D expenditure is used.

The four research types captured by Statistics New Zealand's are:

Intellectual Property (IP)

The IP index uses the Intellectual Property Office's data on trademarks, patents, Plant Variety Rights (PVRs) and designs registered in a given calendar year. Each IP type was sorted by industry using the Business Frame, then divided by the total number of businesses in the Business Frame for that industry and converted to an index (2007 base).

The overall IP index is a weighted composite of the indices for each type of IP, based on its average importance between 2003-2011. For example, 38 percent of IP registered between 2003-2011 by Agriculture businesses was for Plant Variety Rights, therefore PVRs are an important component of the IP score for Agriculture. Only two percent of IP registered by Retail Trade during the same period was for PVRs, therefore they are an insignificant part of its IP score. Trademarks are handicapped by a factor of 0.1 (prior to weighting), since there are a disproportionate number of trademarks.

Individuals, overseas entities and NZ companies that are not part of the Business Frame cannot be sorted into industries, therefore they were not counted in the results. Because of this, insights from the IP section must be validated with the raw data. Some of the data was also suppressed by due to confidentiality; these numbers are small (by definition) and do not affect the overall results, but it means some data for some industries have to be hidden.

Business Innovation

The Business Innovation index is calculated directly from the Statistics New Zealand Business Operations Survey (BOS). Every second year the survey asks innovation-specific questions about whether that business undertook Goods & Services, Operational, Organisational or Marketing innovation. The response to each question is converted into an index (2007 base). The top-level Business Innovation index is a measure of the proportion of businesses that reported any of the four types of innovation.

The four types of Business Innovation reported in the BOS survey are:

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