Innovation in Scotland: analysis of the Community Innovation Survey 2011

This paper analyses the 2011 UK Innovation Survey, which covers the period 2008-10, focusing on Scotland’s performance. The 2011 survey is the fourth bi-annual survey, conducted every two years by the Office for National Statistics (ONS) on behalf of the Department for Business, Innovation & Skills (BIS) and its predecessors since 2005. The survey provides a consistent set of results across the UK, enabling analysis of Scotland’s performance to be benchmarked against the UK and the other UK government office regions. The data ultimately feed into the Community Innovation Survey (CIS), which allows Europe’s innovation progress to be monitored and Scotland to be compared to other European countries.

The methodology involved analysis of the published Scottish results and ONS microdata of the 2011 UK Innovation Survey, which covers the period 2008 to 2010.

The results show that Scotland’s innovation activity rate has continued to lag that of the UK as a whole over successive innovation surveys. Scotland ranked in 9th place out of 12 UK regions for the latest survey and has ranked between 9th and 11th place for the three previous surveys. Scotland also lies in the bottom quartile of European countries for the proportion of firms that are innovation active. It is suggested that for Scotland’s innovation activity rate to match that of the UK, in 2011 Scotland would have needed around 500 more innovation active firms with 10 or more employees. Analysis suggests that this is probably due to the size and structure of Scotland’s business base. There is a tendency for Scottish firms to operate in local and national markets. Lower proportions of innovation active companies co-operate on innovation outside their local area and export performance is below the UK average. The tendency to operate in local markets is driven by smaller firms in Scotland, as a higher proportion of large firms operate in international markets than in the UK as a whole (Scotland ranks in 1st place out of 12 UK regions for operating in international markets and exporting). In addition, a higher proportion of large firms co-operate internationally than in the UK as a whole. Analysis also showed differences in Scotland’s innovation activity performance depending on sector. Generally, the proportions of innovation active companies are higher in engineering-based manufacturing and knowledge-based services. Results suggest that small firms’ underperformance is driving Scotland’s overall level of performance and the geography of innovation co-operation suggests that small firms are not exploiting either exporting or international supply chain opportunities. The report contends that it is likely that the characteristics and structure of Scotland’s business base is an important influence on exporting, innovation and competitive performance.

No recommendations were made.