Business Innovation Activity in Northern Ireland

Survey: NI statistics from the UK Innovation Survey (2023), covering the period 2020-2022
Date Published: 3rd September 2024
Geographical Area: Northern Ireland
Theme: Economy
Frequency: Biannual

   

Key Findings


Chart 1: Percentage of businesses engaging in innovation activity, 2010-2012 – 2020-2022

Innovation activity in NI has decreased by 6 percentage points (pps) since 2018-2020; just under one third of businesses engaged in innovation during 2020-2022.

32%

of businesses were innovation active in NI (UK = 36%)

45%

of large businesses (250+ emps) were innovation active in NI (UK = 49%)

32%

of SMEs (10-249 emps) were innovation active in NI (UK = 36%)

27%

of NI businesses were process driven innovators (UK = 29%)

Key Points

This statistical bulletin reports on innovation activity in NI businesses (with 10 or more employees) in 2020-2022 using results from the UK Innovation Survey.

The results show that the percentage of innovation active businesses in NI has decreased during the period 2020-2022 compared to the period 2018-2020, with just under one-third of businesses (32%) engaging in innovation in 2020-2022 compared to just under two-fifths (38%) of businesses in the previous period. The rate of innovation activity was lower in NI than in the UK overall, where 36% of UK businesses were innovation active in 2020-2022.

Across the UK, the percentage of innovation active businesses ranged from 31% in Wales to 40% in the South East of England. There has been a reported decrease in innovation activity across all regions of the UK between 2018-2020 and 2020-2022.

As is the case across the UK, a higher proportion of large businesses (with more than 250 employees) in NI were innovation active (45%) than small and medium businesses (10-249 employees, 32%).

In 2020-2022, 27% of NI businesses reported engaging in process driven innovation activities (see ‘Defining Innovation’ section below), compared with 29% in the UK overall.


Introduction


Defining Innovation

The UK definition of innovation is based on an Organisation for Economic Co-operation and Development (OECD) definition adopted by Eurostat. This definition includes any of the four activities below, if they occurred during the survey period:

Innovation Active
  1. Introduction of a new or significantly improved product (good or service) or process.
  2. Engagement in innovation projects not yet complete, scaled back, or abandoned.
  3. New and significantly improved forms of organisation, business structures or practices and marketing concepts or strategies (Wider Process Driven Innovation).
Broader Innovator
  1. Introduction of a new or significantly improved product (good or service) or process.
  2. Engagement in innovation projects not yet complete, scaled back, or abandoned.
  3. New and significantly improved forms of organisation, business structures or practices and marketing concepts or strategies (Wider Process Driven Innovation).
  4. Investment activities in areas such as internal research and development, training, acquisition of external knowledge or machinery and equipment linked to innovation activities.

For the purpose of the UK innovation survey and in line with the European-wide Community innovation survey, a business that had engaged in any of the activities described in points 1 to 3 is defined as ‘innovation active’. A business that had engaged in any of the activities described in points 1 to 4 above is defined as a ‘broader innovator’. A business that had engaged in the activities described in point 3 were classed as a ‘wider process driven innovators’.


About the UK Innovation Survey (UKIS)

The survey (UKIS 2023) is the UK contribution to the thirteenth Europe-wide Community Innovation Survey (CIS). The survey focusses on business adoption of innovation through new and improved products and services, investments in different types of innovation, and changes in business structures, management, design, and marketing innovations. The survey also asks businesses about the drivers which motivate innovation and barriers to innovation.

The sample selection was conducted by the Office for National Statistics (ONS) and followed the same sampling methodology as the previous surveys. A sample boost of 1,000 businesses was made for NI to bring the NI sample to 2,385 enterprises in NI. Further details of the methodology are available in the ‘Background and Methodology’ section below.

UKIS 2023 (covering innovation activity in the three-year period from 2020 to 2022) sampled 32,273 UK businesses (2,385 NI businesses) with ten or more employees. The survey was voluntary and was conducted primarily through an electronic questionnaire. Businesses that did not complete an electronic response were contacted for a telephone interview. A response was received from 14,570 businesses across the UK, 1,075 of which were NI businesses (which equated to a response rate of 45% in NI).


About this publication

This bulletin focusses on the Northern Ireland responses to UKIS 2023. The period covering 2008-10 was the first survey data collected using a sample based on the Standard Industrial Classification 2007 (SIC 2007). This created a break in the time series, so comparisons to surveys prior to this are not included in this bulletin.

This bulletin presents weighted data, in order to be representative of the business population. The responses were weighted to the total business population, using information from the Inter-Departmental Business Register (IDBR).

The main UK report (and accompanying statistical annex), which includes some regional analysis, is produced by the Department for Business and Trade (DBT) and was published on 9th May 2024. Data are made available to NISRA following the publication of the DBT report to enable the production of this NI bulletin.

The statistics in this bulletin are used by a broad range of users with an interest in assessing and reporting on business activity within the NI economy, such as economists in the public and private sector, academics, media and the general public.

We welcome feedback to help us improve and add value to these statistics.

 

Summary of Innovation Activity


Type of Innovation Activity

Just under one third of NI businesses (32%) were innovation active in 2020-2022. This is lower than was the case in 2018-2020 (38%) and remains lower than in the UK overall during 2020-2022 (36%). In 2020-2022, 35% of NI businesses were broader innovators and 27% were process innovators. Please refer to the ‘Defining Innovation’ section above for the various definitions of innovation.

Chart 2: Percentage of businesses engaging in innovation by activity, NI (2018-2020, 2020-2022) and UK (2020-2022)

Further breakdowns of NI and UK business innovation activities are available in the Statistical Annex.


Type of Innovation Investment

Chart 3 shows that the most commonly reported innovation investments during 2020-2022 was in the acquisition of ‘computer hardware’ and ‘machinery and equipment’, with both representing 16% each of investments (‘computer software’ was the most common type of investment during 2018-2020).

Chart 3: Percentage of all businesses engaging in innovation by type of investment, NI (2018-2020, 2020-2022) and UK (2020-2022)


Innovation Activity by Size of Business

During 2020-2022, large businesses were more innovation active (45%) than small and medium sized enterprises (SMEs; 32%) and Chart 4 shows that this was the case for every type of innovation activity. In the UK overall, 49% of large businesses were innovation active, compared with 36% of SMEs.

Across all activities in the chart below, the level of innovation among both SMEs and large businesses tended to be lower in NI than was the case among SMEs and large businesses in the UK.

Chart 4: Percentage of NI businesses engaging in innovation by activity and company size, NI and UK (2020-2022)

Further breakdowns of NI and UK business innovation activities are available in the Statistical Annex.


Innovation Activity by Sector

Innovation activity was higher among businesses in Production and Construction industries than in Distribution and Service industries in NI in 2020-2022 (42% compared with 28%). In the UK overall during 2020-2022, the rate of innovation activity was 43% among businesses in Production and Construction industries and 34% among those in Distribution and Service industries.

Chart 5: Percentage of NI innovation active businesses in Production & Construction and Distribution & Service Industries, NI (2018-2020, 2020-2022) and UK (2020-2022)


Production and Contstruction Industries
  • Manufacture of food, clothing, wood, paper, publishing & printing
  • Manufacture of fuels, chemicals, plastic, metals & minerals
  • Manufacture of electrical and optical equipment
  • Manufacture of transport equipment
  • Manufacture not elsewhere classified
  • Mining and quarrying
  • Electricity, gas & water supply
  • Construction
Distribution and Services Industries
  • Wholesale trade (including cars & bikes)
  • Retail trade (excluding cars & bikes)
  • Transport, storage & communication
  • Hotels and restaurants
  • Financial intermediation
  • Real estate, renting and business activities
  • Motion picture and video production


Innovation Activity by Region

There has been a reported decrease in the rate of innovation activity across all regions of the UK between 2018-2020 and 2020-2022. The largest percentage point decrease was in the West Midlands. Across the UK, the percentage of innovation active businesses ranged from 31% in Wales to 40% in the South East.

Table 1: Percentage of innovation active businesses by UK region, 2018-2020 to 2020-2022

UK Region Innovation Rate 2018-2020 Innovation Rate 2020-2022 Percentage Point Change
UK 45% 36% -9 pps
North East 40% 39% -1 pps
North West 45% 35% -10 pps
Yorkshire and the Humber 48% 35% -13 pps
East Midlands 47% 35% -12 pps
West Midlands 49% 35% -14 pps
East of England 51% 39% -12 pps
London 42% 37% -5 pps
South East 46% 40% -6 pps
South West 46% 37% -9 pps
Wales 44% 31% -13 pps
Scotland 39% 32% -7 pps
Northern Ireland 38% 32% -6 pps


Factors Driving Innovation


‘High Importance’ Factors Driving Innovation

There are a range of motivations for businesses to engage in broad forms of innovation, which may relate to firms’ strategies of improving quality, reducing environmental impacts or increasing value added. In consideration of this, broader innovator businesses were asked how important each of twelve factors (presented in Chart 6) were in driving their innovation activities. The proportion of broader innovator businesses that rated each factor as ‘high’ in importance is presented below.

Chart 6: Innovation Factors: Percentage of NI broader innovators rating factor as of “high” importance to their decision to innovate, NI (2018-2020, 2020-2022) and UK (2020-2022)

Further breakdowns of NI and UK business innovation activities are available in the Statistical Annex.


Improving quality of goods or services’ remained the top-rated factor, being of ‘high’ importance to 49% of broader innovators in NI during 2020-2022. In contrast, ‘Reducing environmental impacts’ was of ‘high’ importance to their decision to innovate for 25% of broader innovators, with ‘entering new markets’ of ‘high’ importance to 21%.

Similar to NI, at the overall UK level, ‘improving quality of goods or services’ was also the top-rated factor (46% of broader innovators) and ‘entering new markets’ the least commonly reported driver (21%).


Non-Innovators – Reasons for not innovating

Sixty-five percent of NI businesses were categorised as non-innovators1 in 2020-2022. These businesses were asked to indicate why it had not been necessary or possible to innovate. Just over two-fifths of these businesses (44%) indicated that there was no need due to market conditions, while 37% reported that there was no need due to previous innovations. Around one in ten (9%) of non-innovators cited issues arising from the COVID-19 pandemic as a reason for not engaging in innovation.

1 i.e. did not conduct any of the activities which define broader innovation (see ‘Defining Innovation’ section for more information).


Innovation Co-operation and Support


Co-operation Arrangements - Broader Innovators

Developing innovations of any kind can be a complex process and businesses may decide to work jointly with other organisations and seek access to sources of advice and information to help the creative process. The most commonly reported co-operation partner in NI in 2020-2022 was with suppliers of equipment, materials, services or software (96% of broader innovators; UK, 90%), followed by co-operation with other businesses within the enterprise group (93% of broader innovators; UK, 92%).

Co-operation with non-profit organisations was the least reported arrangement in NI during 2020-2022, with 25% of broader innovators reporting this (UK, 31%).

Chart 7: Percentage of NI businesses with each type of cooperation arrangement (of broader innovators with any cooperation arrangements only), NI and UK 2020-2022

Further breakdowns of NI and UK business innovation activities are available in the Statistical Annex.


Information Sources Used - Broader Innovators

Broader innovators were asked to rate the importance of a range of information sources to their innovation activities. Just over two-fifths of broader innovators in NI (42%) felt that information from within their business or enterprise group was highly important to its innovation activities during 2020-2022. This was higher than in the UK overall (39%).

Just under one-third (31%) of broader innovators in both NI and the UK overall reported that information from clients or customers in the private sector was highly important.

Chart 8: Percentage of broader innovator businesses rating the importance of information sources as ‘high’, NI (2018-2020, 2020-2022) and UK (2020-2022)

Further breakdowns of NI and UK business innovation activities are available in the Statistical Annex.


Wider Forms of Innovation


‘Wider Process Driven’ Forms of Innovation

Innovation is not wholly about the development or use of technology or other forms of product change. Enterprises can also change their processes, behaviour or business strategies to make themselves more competitive, often in conjunction with product innovation, but also as an independent means of improving competitiveness. This process of engaging in ‘new and significantly improved forms of organisation, business structures or practices and marketing concepts or strategies’ is considered Wider Process Driven Innovation (see ‘Defining Innovation’ section above).

Enterprises were asked whether they had made major changes to their business processes, structure and practices in the three-year period (2020-2022). Headline results are summarised in Chart 9. Around one-quarter of NI businesses (27%) reported any of the wider process driven innovation activities in 2020-2022 (29% across the UK).

The most reported form of wider process driven innovation in NI during the 2020-2022 period involved ‘New business practices’2 (11% in NI; 12% across the UK). Compared with 2018-2020, the change in the proportion of NI businesses reporting wider process driven innovation was most marked in the area of ‘Information processing and communication’2, (down from 16% of businesses in 2018-2020 to 10% in 2020-2022).

Chart 9: Percentage of businesses engaging in wider process driven innovation by activity, NI (2018-2020, 2020-2022) and UK (2020-2022)

2 Questionnaire text:
‘New business practices for organising procedures or external relations…’
‘Methods for information processing and communication, the maintenance and provision of information and communication systems…’


Background and Methodology


Methodology

This report presents findings from the Northern Ireland element of the UK Innovation Survey (UKIS), which was conducted by the UK Office for National Statistics (ONS). The survey is based on a core questionnaire developed by the European Commission (Eurostat) and Member States. This is the thirteenth iteration of the survey (CIS13), which was conducted in 2023 and covers the period 2020-2022. CIS12, covering the period 2018 to 2020, was carried out in 2021 and the results form part of various EU benchmarking exercises for international comparisons (see Eurostat: Community Innovation Survey, latest results).

The survey was voluntary and conducted primarily through an electronic questionnaire and telephone interview for businesses that had not yet completed an online response.

The majority of the survey questions are concerned with innovation through new and improved products and processes (technological) and with the investments that are used to develop and implement them along with changes in business structures, management and marketing practices (non-technological innovation).

All results are grossed up to the business population, and all figures quoted relate to the UK Innovation Survey 2023 unless stated otherwise. Results presented are rounded to the nearest percentage point.

The methodology, statistical annex, sample details and UK-level findings from CIS13 can be found on the UK Department for Business and Trade (DBT) website.


Coverage and Sampling

The UK Innovation Survey 2023 surveyed 2,385 enterprises in NI. The sample is a stratified design drawn from the Inter-Departmental Business Register (IDBR) with Neyman allocation used to determine the sample size in each stratum. Overall, approximately 15% of the target population is sampled in the UK (36% in NI).

With 1,075 of the 2,385 enterprises selected responding, the NI element of the survey had a response rate of 45% (at the UK level, a response rate of 45% was also achieved).

The 2023 survey sampled enterprises with 10 or more employees in sections B to N of the Standard Industrial Classification (SIC) 2007. This is the seventh survey using a sample based on SIC 2007, which enables a more consistent comparison with the 2011, 2013, 2015, 2017, 2019 and 2021 survey data in the time series.

Stratification was based on three variables:

  1. Region – All regions in the UK (9 Standard Regions in England plus Scotland, Wales and Northern Ireland)
  2. Business Size:
    • Small: 10-49 employees
    • Medium: 50-249 employees
    • Large: 250+ employees (to ensure representativeness, a census for all large firms was taken)
  3. SIC Division - This was the sixth time survey data was collected using a sample based on SIC 2007. The SIC categories included are shown in Table 2 below.

Table 2: Summary of SIC 2007 categories

SIC 2007 Code SIC 2007 Description
05-09 Mining and quarrying
10-18 Manufacture of food, clothing, wood, paper, publishing, printing
19-25 Manufacture of fuels, chemicals, plastic, metals and minerals
26-28 Manufacture of electrical and optical equipment
29-30 Manufacture of transport equipment
31-33 Manufacture: not elsewhere classified
35-39 Electricity, gas and water supply
41-43 Construction
45-46 Wholesale trade (including cars & bikes)
47 Retail trade (excluding cars & bikes)
49-52 Transport
53 Post and courier activities
55-56 Hotels & restaurants
58, 62 & 63 Computer and related activities/ICT
59-60 Motion picture, video and TV programme production/programming & broadcasting
61 Telecommunications
64-66 Financial intermediation
68 Real estate activities
69, 70, 75, 76 & 78-83 Other services not elsewhere classified
71.1 Architectural and engineering activities and related technical consultancy
71.2 Clinical testing and analysis
72 Research and experimental development on social sciences and humanities
73 Advertising and market research
74 Other professional, scientific and technical activities


Response and Weighting

The questionnaires from the survey covered business innovation in the 3-year period, 1 January 2020 to 31 December 2022 (the population and achieved sample are summarised in Table 3 below).

The composition of the 2023 achieved sample comprises a similar percentage of large firms (9% of returned forms) to the last survey (8%).

In order to be representative, the responses have been weighted back to the population and this is reflected in the results shown throughout the publication. The responses were weighted back to the population using the inverse sampling proportion in each stratum, that is, the weight attributed to each enterprise was the number of enterprises in the population divided by the number of responses in that stratum.

Table 3: Summary of sample frame (number of enterprises)

Entire Population Returned Sample
SMEs Large All SMEs Large All
6,430 212 6,642 981 94 1,075

Please note that as with all sample surveys, the estimates provided in this publication are subject to an associated degree of sampling error.


Future Publications

The 2025 UK Community Innovation Survey results for the reporting period 2022-2024 (CIS 14) will be published in spring 2026. The 2025 CIS Northern Ireland results bulletin will be published as soon as possible after the main UK report is published.


Contact Information

If you require further information about the figures contained in this publication or the accompanying tables, please contact the Economic and Labour Market Statistics Branch using the details below:

Telephone: (028) 9052 9436

Email:

Web: Northern Ireland Research and Development Statistics

Twitter (X): ‘@NISRA’


Enquiries by the media should be directed to: Press Office, DfE Press Office.

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