New Zealand businesses have continued to innovate despite a challenging global financial environment during the past few years, according to a recent IBM study.

The research, the 2013 IBM Innovation Index of New Zealand, says the country's overall innovation rate increased 3% in the four years to 2011, bolstered by increased spending on Research & Development (R&D) during the global financial crisis.

This investment balanced static Business Innovation results and a fall in Intellectual Property registrations according to results.

“Increasing investment in R&D during the global recession buoyed our overall innovation rate, but we are yet to catch up to comparable nations’ innovation intensity," says Dougal Watt, CTO, IBM New Zealand.

"Seeing business spend more on R&D is a positive sign, and extra collaboration across New Zealand’s domestic and international innovation ecosystems is required to take this research to market,”

The Index shows that local R&D expenditure grew strongly - at an average rate of 7.6% per annum - between 2007 and 2011, largely driven by the public sector.

The equivalent of 4,600 full-time R&D jobs were created during this period, however, when the economy started to recover during 2011-12, the growth in R&D expenditure slowed to an average of 3.7% per annum.

As a result, IBM says New Zealand’s R&D intensity remains low compared to other Organisation for Economic Co-operation and Development (OECD) economies.

And although private sector R&D spending increased after 2010, the overall rate of Business Innovation reported by companies remains flat.

“Overall Business Innovation remained consistent, however it would be preferable for this to also increase as transforming areas like supply chain processes, or creating new goods and services are necessary to commercialise the results of R&D,” Watt says.

By using the IBM Innovation Index data visualisation tool available at www.ibm.com/nz, organisations can ‘drill down’ into 18 industries to see what is driving changes in innovation over time.

"The 2013 IBM Innovation Index data visualisation tool lets you clearly see how much and in what areas New Zealanders are innovating," says Shaun Hendy, professor, Callaghan Innovation.

"And as innovation is a key driver of long term economic growth, the Index gives us a glimpse into our economic future."

Key findings from the 2013 IBM Innovation Index of New Zealand include:

R&D employs 50,000 New Zealanders

• R&D created the equivalent of 4,600 full-time jobs between 2007-10, when the equivalent of 12,600 full-time jobs were lost across the economy as a whole

• By 2012, nearly 50,000 New Zealanders were employed to conduct R&D, 35,000 in research roles and the remainder in support roles

Private sector R&D on the increase

• Public sector investment drove R&D growth during the global financial crisis (GFC) but since 2010 most of the growth is due to private sector spending, especially from manufacturing companies

• Nearly a third of Private Sector R&D expenditure is directed towards improving Manufacturing, followed by ICT second and Primary Industries third

• R&D expenditure for improving Primary Industries grew by $60 million from 2010-12, which is almost on par with Information, Communications and Technology (ICT)

Business Innovation remained steady

• 46% of businesses reporting new or improved goods and services, or improved methods for marketing, organisational or operational processes

Overall, Intellectual Property registrations fell

• Intellectual Property registrations per business in each industry fell 5% between 2007 and 2011