Analysis | Adoption and diffusion of advanced ICTs in South Africa’s agricultural sector

“For policymakers to develop, implement and improve policies that facilitate adoption and diffusion while mitigating the potential associated risks, they need to understand the implications involved,” write Buchana, Sithole, and Majokweni (2022) in a new HSRC Policy Brief. “The main policy issue at hand is the absence of evidence-based policy instruments intended for facilitating the diffusion and use of these advanced ICTs in the agricultural sector.”

Download HSRC Policy Brief Adoption and diffusion of advanced ICTs in South Africa’s agricultural sector: Policy issues and implications

Policy Brief Authors

Yasser Buchana (PhD), Senior Research Specialist, Centre for Science, Technology and Innovation Indicators, Human Sciences Research Council | ybuchana[at]hsrc.ac.za

Moses M. Sithole (PhD), Research Director, Centre for Science, Technology and Innovation Indicators, Human Sciences Research Council | msithole[at]hsrc.ac.za

Pilela Majokweni, Senior Researcher, Centre for Science, Technology and Innovation Indicators, Human Sciences Research Council | pmajokweni[at]hsrc.ac.za

Analysis | Policy levers to boost innovation and productivity in South African manufacturing firms

“Current policy instruments to promote innovation do not consider all of the drivers of innovation investment and success, and there is a need for a mix of tools – known as policy levers – that explicitly consider the differential impact of these drivers on product versus process innovation,” argues Kahn (2022) in a new HSRC Policy Brief.

Download HSRC Policy Brief (March 2022) ‘Policy levers to boost innovation and productivity in South African manufacturing firms’

Policy Brief Author

Amy Kahn (PhD), Research Specialist, Centre for Science, Technology and Innovation Indicators, Human Sciences Research Council | akahn[at]hsrc.ac.za

Media release | Nation-wide survey of South African business innovation gets underway

Thursday, 24 February 2022 – On 14 March 2022 South Africa’s official Business Innovation Survey gets underway with fieldworkers reaching out to 5 500 businesses over the next six months.

This will be the seventh time the survey takes place in South Africa, which is performed by the HSRC’s Centre for Science, Technology and Innovation Indicators for the Department of Science and Innovation.

Innovation is internationally recognised as a key driver of economic growth. It takes place in many businesses – big, small, micro and informal. Countries are best placed to solve wide-ranging social and economic challenges when innovative products and processes are adopted, and technological capacity is built.

Covering a three-year period, 2019 – 2021, the business innovation survey method uses international measurement tools to compare South Africa with other countries.

The survey collects information about a business’s innovations. This may include new products, new processes, as well as improvements to existing products or ways of working.

“South Africa faces considerable economic challenges, worsened by COVID-19. Measuring our capacity to innovate and thus grow our economy and increase employment is now especially relevant” says Dr Glenda Kruss, head of the CeSTII.

Business leaders will be contacted by fieldworkers from GeoScope, the HSRC’s fieldwork partner for the survey. The survey can be self-completed online or via telephonic interview.

Covering the period 2019 to 2021 the survey will collect data from the sample of enterprises drawn from the business register held by Statistics South Africa. It will include enterprises in:
• mining
• manufacturing
• electricity, gas and water supply
• services, including wholesale and retail trade
• transport, storage and communication
• financial intermediation
• computer and related activities.
• research and development
• architectural and engineering activities
• technical testing and analysis

“Societies that innovate, and create the conditions to nurture innovative practices, prosper and grow. South Africa has long recognised the importance of innovation and several public programmes support innovation,” says Senior Policy Analyst of the Department of Science Innovation, Kgomotso Matjila-Matlapeng.

“We thank the business sector for supporting this important research by contributing their time and insight when approached to participate. We will be guided by the results of the survey and look forward to sharing the findings.”

HSRC and partners would like to send their gratitude to the business sector for supporting this important research by contributing their time and insight when approached to participate.

The survey results will be analysed in 2022/23 and published in 2023.

FOR MORE INFORMATION

END

For media enquiries
Adziliwi Nematandani, HSRC
Email: anematandani@hsrc.ac.za
Join the conversation: #BusinessInnovationSurvey #SAInnovationData

Seminar | Strengthening innovation measurement practice in firm-level surveys

Join survey practitioners, scholars of innovation indicators, and users of innovation data for policy making or programming to learn more about current methodological imperatives shaping innovation measurement. 

Why this seminar, now

Business innovation surveys are commonly used by both state and non-state actors to understand firm dynamics and to generate evidence in support of economic and innovation policy mixes. Where business innovation surveys follow the subject-based approach (OECD, 2018), as is predominantly the case, representative information on both the scale and types of innovation at firm-level as well as the drivers of and barriers to innovation, can be produced and analysed. Recent analysis, however, points to substantial measurement error risks in firm-level innovation surveys (Cirera & Muzi, 2020; Arundel et al, 2013). With a focus on recent empirical work using World Bank (WB) Enterprise Survey data, as well as a recent WB technology adoption survey, this seminar will delve into the issue of innovation measurement error, as well as key methodological imperatives that performers of firm-level innovation surveys can consider in improving survey performance. Discussant reflections will incorporate the experiences from South African Business Innovation Surveys, performed by the Centre for Science, Technology and Innovation Indicators (CeSTII), since the early 2000s.

Download invitation and agenda
Zoom link for registration

Agenda

15h00 | Welcome remarks

  • Kgomotso Matjila-Matlapeng, Senior Policy Analyst, Department of Science and Innovation
  • Michael Ehst, Senior Private Sector Specialist, World Bank

15h10 | Introduction by seminar moderator

  • Dr Glenda Kruss, Executive Head: Centre for Science, Technology and Innovation Indicators, Human Sciences Research Council

15h20 | Measuring innovation using firm-level surveys:
Presentation of new evidence from developing countries

  • Dr Xavier Cirera, Firms, Innovation and Entrepreneurship Unit, World Bank
  • Dr Silvia Muzi, Enterprise Analysis Unit, World Bank

15h50 | Experiences from two decades of South African Business Innovation Surveys, 2002-present: Reflections from practice

  • Dr Moses Sithole, Centre for Science, Technology and Innovation Indicators, Human Sciences Research Council
  • Dr Amy Kahn, Centre for Science, Technology and Innovation Indicators, Human Sciences Research Council

16h20 | Open dialogue

16h50 | Concluding remarks

  • Prof. Fred Gault, UNU-MERIT/Tshwane University of Technology & Chair: CeSTII Advisory Committee

We are pleased to invite you join this HSRC Seminar Series event, which is arranged with support from the South African Department of Science and Innovation and in collaboration with the World Bank.

For more information or to contact the organisers please write to gralphs[at]hsrc.ac.za.

References: 

Xavier Cirera, Silvia Muzi, Measuring innovation using firm-level surveys: Evidence from developing countries, Research Policy, Volume 49, Issue 3,
2020, https://doi.org/10.1016/j.respol.2019.103912

Anthony Arundel, Kieran O’Brien and Ann Torugsa, How firm managers understand innovation: Implications for the design of innovation surveys, in Fred Gault (ed.), Handbook of Innovation Indicators and Measurement, Edward Elgar Publishing, 2013

Organisation for Economic Co-operation and Development, Oslo Manual 2018
Guidelines for Collecting, Reporting and Using Data on Innovation, 4th Edition 

Acknowledgement and disclaimer: This seminar is funded by the Department of Science and Innovation (DSI). The views and opinions expressed therein as well as findings and statements of the seminar series do not necessarily represent the views of the DSI. Please also note that this seminar may be recorded and published on the HSRC podcast channel.

Seminar | The impact of innovation on productivity in South African manufacturing and services businesses*

The South African manufacturing and services sectors remain squarely in the crosshairs of economic and industrial policy makers and, equally, business leaders and sector analysts. Whether to stimulate much-needed growth, as in the case of the manufacturing sector, or to adapt to widespread technological change, as in the case of services firms, the argument for a reimagined industrial strategy could not be more compelling or urgent.

In this context, innovation is centrally positioned as both a key engine of development and a catalyst for growth. However, little is known about the impacts of innovation on productivity in manufacturing and services businesses in South Africa, with studies focussing mainly on the role of R&D.

Showcasing new econometric modelling, using data from the South African Business Innovation Survey, 2014-2016, the seminar will delve into relationships between different types of technological and non-technological innovation and business productivity. Policy issues and questions for discussion with national and sector stakeholders include: what factors or firm characteristics influence the decision to innovate? What support mechanisms incentivise innovation? Is the relationship between innovation and productivity always positive?

Date: 23 June 2021 | Time: 12h30 – 14h00 | Hosted on: Zoom

RSVP required by 21 June 2021

Moderator: Godfrey Mashamba, Deputy Director-General: Evaluation, Evidence and Knowledge Systems, Department of Performance Monitoring and Evaluation (DPME)

Discussant: Saul Levin, Director: Trade and Industrial Policy Strategies (TIPS)

Presenters:

Dr Amy Kahn project manages the Business Innovation Survey at CeSTII. Her research at CeSTII has focused primarily on R&D, innovation and productivity in South African firms. She graduated with a PhD in Economics at the University of Cape Town in 2020 and has several years of experience running large scale socio-economic surveys in South Africa and East Africa.

Dr Atoko Kasongo is a statistician in CeSTII providing statistical support to all Centre projects. She has a research interest in R&D and innovation, as well as financial sector economics. She graduated with a PhD in Economics at the University of the Western Cape Town in April 2020, and has many years of experience in the academic arena working as a lecturer.

This seminar is funded by the Department of Science and Innovation (DSI). The views and opinions expressed therein as well as findings and statements of the seminar series do not necessarily represent the views of the DSI.  Please also note that this seminar may be recorded and published on the HSRC podcast channel.

*Image credit: GCIS

Analysis | The pace and direction of innovation is critical to South Africa’s economic recovery*

South African businesses may need to change how they innovate in order to survive the ‘new normal’, say the writers. (Illustration: Adobestock)

*First published on Daily Maverick, 28 July 2020.

Are South African businesses innovating quickly – and strategically – enough to improve their performance in the short to medium term? The results of the South African Business Innovation Survey, 2014-2016, released earlier in July 2020 by the Department of Science and Innovation, can help to answer this question.

Public policy debate about South Africa’s economy right now has tended to focus overwhelmingly on big picture explanations and recovery plans. Missing from this debate is a micro perspective, which places the emphasis on firm-level decisions and how these decisions ultimately drive or constrain business growth.

This is a harder discussion to enter into because of the evidence barrier in firms that are not publicly traded. Usefully, South Africa’s national business innovation surveys, which have been carried out since the 1990s, collect data retrospectively from businesses across the industrial and services sectors, through surveying a random sample of formal businesses, stratified by sector and size-class. 

This method ensures that survey results can be extrapolated statistically to the national population of businesses, resulting in unique and vital data for business leaders, industry lobbyists and government policy-makers, as well as for international comparison.

Most South African businesses do actually innovate

At the aggregate level, the 2014-2016 survey results paint a promising picture of an innovative formal business sector. That is, 69.9% of businesses were trying to innovate through, for example, performing research and development (R&D), training their staff, or purchasing new tech and equipment. And nearly all (96%) of these “innovation-active” businesses actually ended up with an innovation. 

An innovation, as measured by the survey, refers to the introduction to market of a new or significantly improved product (good or service), or the use of new or significantly improved process (methods for the production or supply of goods and services). 

From this definition, which comes to us from the Organisation for Economic Co-operation and Development’s (OECD) statistical handbook for innovation surveys, the Oslo Manual, the focus is both on novelty (new or improved) and implementation (introduction to market or firm). 

Looking back at the 2014-2016 period, businesses spent 1.97 % of the total turnover on innovation activities. Product innovations were found in 48.2% of South African businesses and process innovations in 34.6% of businesses. Marketing and organisational innovation was also reported for 41.7% and 42.0% of businesses, respectively. 

Encouragingly, businesses that were trying to implement products and/or processes during the period 2014-2016 reported positive product, process and market outcomes of innovation. 

For instance, improved quality of goods and services was considered by most (38.0%) of these businesses as a highly successful outcome of innovation, followed by increased revenue (31.8%), and improved profit margins (30.9%). 

Improved health and safety (27.0%) and reduction in environmental impacts (23.3%) were also rated by these businesses as highly important, compared to financial and quality outcomes.  

By contrast, entering new export markets or increased export market share was reported as a highly important outcome by only 7.5% of these product and/or process innovators.

Execution of innovation could be faster

A deeper dive into the data, however, points to some issues that should concern leaders from business, industry associations and government. 

Key among these issues is that 80.5% of business turnover in 2016 (down from 85% in the 2005-2007 results), was generated from products that were marginally modified or unchanged, with the balance of turnover generated from products new to the market (10.8%), new to the business (7.0%), or new to the world (1.8%). 

Put differently, at the end of a three-year period, only about 20% of total sales were brought about by new or improved goods or services (innovations), and less than 2.0% were accounted for by products considered by respondents as first-of-its-kind in the world.

Commentators may argue that businesses may just have been benefiting from innovations carried out prior to the survey reference period, or that innovation – especially R&D-led innovation – takes time to “bear fruit”. 

These are both legitimate explanations, though would bring little comfort to businesses facing down uncertainty brought about by global dynamics and “exogenous shocks”, like the Covid-19 pandemic.  

Indeed, in the current era of rapid change, driven to a large extent by technological advancement, the pace of innovation in some sectors can result in dramatic consequences for businesses and entire industries. There are countless examples of disruptive or radical innovations that demonstrate this. 

For example, it took Uber’s founders just five years from 2009 to launch ride-hailing services in all the major global capitals, including the South African service in 2013, resulting in what, by 2019, was a business with assets in excess of $30-billion. 

In this context, the company innovated relentlessly, introducing Uber Eats in 2014 and a plethora of market-specific services, like auto rickshaw rides on UberAuto in India, Sri Lanka and Pakistan. 

Equally, the Covid-19 pandemic has forced massive layoffs by Uber, about 14% of its workforce, and closed 45 offices, in a bid to keep the company afloat. 

And yet, in this extremely challenging business context, the launch of Uber Cash in South Africa in June 2020, represents just one example of how the company is using innovation to pivot towards new business growth opportunities. 

Strategy is key

In the context of the current global Covid-19 pandemic, which is fundamentally changing how businesses operate, South African businesses may need to change how they innovate in order to survive this “new normal”.

Working more collaboratively, for example, could be one strategy. The 2014-2016 survey results show that less than 10% of innovative businesses partnered with government research institutes (8%), universities (6.8%), or private research institutions (4.9%) to develop their innovations during 2014-2016. Indeed, leveraging synergies between formal knowledge producers, such as universities, and businesses through co-creation of innovations is an area of focus for the South African SME fund.

Additionally, reflection on the type of innovation activities in which to invest, against the survey’s data disaggregated by sector could inform firm-level strategy development processes.

It’s worth pointing out that innovation surveys also assess the constraints faced by businesses in deciding whether or not to innovate. 

In 2014-2016, for example, financial barriers such as a lack of funds, or a lack of credit, coupled with market barriers, such as markets dominated by established businesses, impacted on innovation decision-making. 

Much less significant, in this regard, were institutional factors such as legislation, regulation, standards and taxation, or lack of skills. 

It is knowledge of these barriers, and other indicators delivered by a national innovation survey, that provides a critical starting point for businesses and government to consider how to support innovation within the formal business sector. 

Within the context of the country’s economic recovery, leaders across the political, corporate and small business landscape would do well to consider this data, as well as the analysis thereof, as part of their decision-making toolboxes. DM/BM

Dr Moses Sithole, a mathematician and statistician, is Research Director at the Centre for Science, Technology and Innovation Indicators at South Africa’s Human Sciences Research Council. Dr Yasser Buchana is a Post-Doctoral Research Fellow at the Centre for Science, Technology and Innovation Indicators at the Human Sciences Research Council. Gerard Ralphs is Policy Analyst and Programme Manager at the Centre for Science, Technology and Innovation Indicators at the Human Sciences Research Council. 

Analysis | Survey shows South African firms in some sectors are highly innovative

Mining and utilities businesses have low levels of innovation. Getty Images

Glenda Kruss, Human Sciences Research Council and Moses Sithole, Human Sciences Research Council

The ‘one good thing’ caused by COVID-19, according to a recent Harvard Business School publication by Hong Luo and Alberto Galasso, is that it has catalysed innovation. This is apparent in South Africa too, where businesses are introducing changes to mitigate the risks of the pandemic. They are adjusting their practices and strategies, introducing new technologies, products and designs, and determining how they can use digital and automated technologies.

But will they last?

The country’s Centre for Science, Technology and Innovation Indicators, with the Department of Science and Technology and Statistics South Africa, has released the latest national business innovation survey. The survey helps to answer critical questions facing business leaders, industry groups and government policy-makers. The data can help the country’s understanding of the innovation taking place in businesses, so that more firms can be encouraged to innovate. The survey covered the period 2014 -2016.

How innovative are South African firms and what types of innovation have they implemented?

The survey found that innovation was pervasive across all sectors, but particularly in engineering and technology, manufacturing and trade. A high percentage – nearly 70% – of South African businesses were innovation-active. This meant that they had taken some scientific, technological, organisational, financial or commercial steps towards implementing an innovation. The proportion of innovation-active businesses compares favourably with trends in OECD countries.

But, to respond to current challenges, it is critical to understand what kinds of innovation firms are able to implement, and whether the kinds of benefits that result from them can contribute to business strategies and to inclusive and sustainable growth.

What types of innovation have firms implemented?

Innovation surveys typically measure four types of innovation. These are product, process, organisational and marketing.

The survey found that there were distinct patterns of these types of innovation in different economic sectors.

For example, mining and utilities businesses reflected low levels of innovation. For its part, manufacturing had the largest proportion of businesses with product innovation (59.8%) and marketing innovation (43.4%).

Process innovation was most prominent in logistics businesses (61.7%). More finance (52.0%) and manufacturing (49.1%) businesses reported organisational innovations than businesses in any other sector.

Each type of innovation requires specific forms of support.

Businesses most typically invested in innovation activities that helped them to prepare for technological and organisational change. They did this by training their workforces and investing in new information technology capabilities (Figure 1).

For both the industrial and services sectors, the biggest-ticket item of innovation spend was the acquisition of machinery and equipment.

Figure 1.

A substantial number of innovation-active businesses reported the use or development of advanced new technologies. These included computerised design and engineering, material handling, supply chain and logistics technologies, business intelligence technologies, and green technologies (Figure 2).

Figure 2.

These innovation capabilities suggest that there is a foundation for promoting more innovation that can lead to more positive economic outcomes.

The benefits

Innovation was less likely to have an immediate impact on turnover, and was far more likely to be incremental than radical.

Innovations with high degrees of novelty, such as new to the market or to the world products, did not have a strong effect on the turnover of the businesses that reported product innovations. So, just over 80% of their turnover was generated by goods and services that were unchanged or marginally modified. This was in contrast to a product that was new to the market (10.8%), new to the business (7.0%), or new to the world (1.8%).

Quality improvement was the top-rated innovation outcome for innovation-active businesses. Improved quality of goods and services was considered by 38.0% of product and process innovators as a highly successful outcome of innovation. This was followed by increased revenue (31.8%) and improved profit margins (30.9%).

Similarly, for nearly 50% of organisational innovators, improved quality was the main innovation outcome.

Entering new export markets – or increased export market share – as a highly successful innovation outcome was reported by only 7.5% of product and process innovators.

Innovation-active businesses also accessed national and global markets more than their counterparts with no activity. This included markets in the rest of Africa, Europe and Asia. Businesses with innovation activity were more likely to have sold their goods and services on national markets (58.1%), when compared to non-innovation-active businesses (37.7%).

Firms that were not innovation active were more restricted in their reach. They accessed selected provincial markets (57.4%) more than any other market.

The challenge is to grow the scale and range of types of innovation, to ensure that such outcomes and benefits are more widespread across more sectors and businesses.

Solutions

Businesses’ perceptions of the barriers to innovation were grouped into four sets of factors. (See Figure 3.) These provide critical insights into potential spaces for intervention.

The most significant barriers relate to market factors. These include market dominance of established firms, too much competition, and uncertain demand. For non-innovation-active businesses, the most widely reported barrier was a lack of demand for innovation.

To address these barriers requires stimulation of new and expanded markets. In the South African case this requires structural economic reforms. There are a number of steps government can take. It can, for example, ensure that regulatory conditions are more conducive for creating new businesses. It can also improve the transport and communication infrastructure.

Government also has an important role in stimulating demand in the context of the economic, social and health challenges of COVID 19.

Cost factors were also significant. These ranged from the costs of innovation being too high, to lack of funds for innovation within the business or from external sources such as government or private equity.

The vast majority of innovation-active businesses relied on their own funds to innovate (77.0%). Only 1.7% relied on government as a source of funds.

This points to the fact that public sector funding can be targeted more effectively to stimulate innovation. Examples include the new Sovereign Innovation Fund proposed in the 2020 budget or the R&D tax incentive.

But it’s equally important to create conditions that make private equity funding more attractive.

Knowledge factors were not as significant. Nevertheless, strengthening the link between innovation and skills development strategies would be valuable.

Institutional factors, such as legislation, regulatory and intellectual property rights frameworks, and infrastructure were not perceived as significant barriers.

Figure 3.

Way forward

In local, national and global contexts, rapidly advancing digital technologies and their applications have opened up the space for innovations as yet unimagined in products, processes, marketing and organisation.

The evidence from the business innovation survey is an invaluable opportunity to reflect on where South Africa’s innovation strengths and challenges lie. It also opens the door to interrogate how existing policies and funding mechanisms can be used more effectively to facilitate business innovation in the country.

Glenda Kruss, Executive Head of the Centre for Science, Technology and Innovation Indicators, Human Sciences Research Council and Moses Sithole, Research Director, Centre for Science, Technology and Innovation Indicators, Human Sciences Research Council

This article is republished from The Conversation under a Creative Commons license. Read the original article.

Analysis | How South Africa’s services sector can help tackle poverty and inequality

About two thirds of South Africa’s GDP now consists of contributions from the services sector, which ranges from banks and insurance companies to tourism, hospitality and personal services. This means that policymakers, industry leaders, lobbyists and small business owners should all be concerned about the sector’s potential to fix the biggest challenges facing the South African economy – poverty and inequality.

File 20180529 80640 zcnx9n.jpg?ixlib=rb 1.1
[Image credit: Shutterstock]

Glenda Kruss, Human Sciences Research Council and Dr Moses Sithole, Human Sciences Research Council

About two thirds of South Africa’s GDP now consists of contributions from the services sector, which ranges from banks and insurance companies to tourism, hospitality and personal services. This means that policymakers, industry leaders, lobbyists and small business owners should all be concerned about the sector’s potential to fix the biggest challenges facing the South African economy – poverty and inequality.

For a long time commentators believed that an economy can only diversify and grow through following a model of industrialisation. But there’s a growing consensus that the services sector can contribute to economic transformation in emerging economies.

The South African services sector has traditionally involved low-tech activities. Examples include food, personal or legal services. These are limited to domestic markets which means that, for the most part, they can’t be traded or exported.

But recent technology developments have led to a raft of a modern and tradable set of service industries that are delivered digitally. These have popped up in different areas, like finance, transport, hospitality and information, communication and technology.

On top of this, technology has disrupted traditionally non-tradable service industries. Examples include Takealot.com, GetSmarter, and of course, Uber and Airbnb. All of them are models that show how technology and big data can lead to sectors being completely disrupted and overhauled, creating new types of enterprises and jobs.

Unfortunately, debates about changing South Africa’s economy usually ignore these developments and the role that innovation and technology can play in transforming the services sector.

Innovation in South Africa

Innovation refers to the introduction of a new good or service (product), a process, or a new organisational or marketing method. It can be new to the firm, the market or the world. Innovation in services has a strong human dimension, selling, marketing and delivery are critical, as well as close customer integration.

Using data collected by the Centre for Science, Technology and Innovation Indicators, which does surveys on behalf of the Department of Science and Technology, we pieced together an understanding of the innovation dynamics in the finance and the wholesale and retail sectors. These are the service sectors that contribute most to GDP.

We discovered trends that show there’s huge potential for innovation across the services sector.

Data from 2010-2012 suggests a healthy scale of innovation in South African services sector firms. This is particularly true, but isn’t confined to, financial services where one of the most prevalent innovations was in marketing.

We also found significant innovation trends in wholesale and retail, where a higher proportion of firms produced products that were new to the market.

The finance firms spent almost seven times more on innovation activities. Their innovation expenditure as a proportion of their turnover was likewise seven times greater.

Both sub-sectors received almost the same turnover from sales of new to the market products– around 17%. This suggests that there may be a greater return on innovation investment for the wholesale and retail firms, which spend less.

Comparing the two services sub-sectors also suggests that there are a variety of ways that innovations can be implemented.

Incremental innovation, through small improvements that build on one another, was more prevalent in the wholesale and retail firms. This took the form of training and investment in new machinery. Finance firms also spent on incremental innovation. But they were more likely to conduct R&D in-house.

All of these firms experience barriers to innovating on a large scale. The main ones were market uncertainty, competition and lack of qualified people. Firms that innovate in the two sub-sectors experience these barriers in different combinations and scales.

Potential impact

There is significant potential for globally competitive and local job-creating services firms that could help South Africa’s economy grow in different ways.

Haroon Bhorat, director of the Development Policy Unit at the University of Cape Town, and other academics argue that South Africa’s services sector needs to become more export orientated so that it can access larger global markets. This in turn, they argue, will drive structural transformation so that our economy does not over-rely on the traditional mining or agriculture sectors, and will grow local employment.

Currently, South Africa lags behind other emerging economies when it comes to expenditure on R&D and innovation. But a shift will require businesses to get involved in more innovation and knowledge intensive activities. These, in turn, need support from public funds.

The Department of Science and Technology is developing a new policy framework on science, technology and innovation. Current policy tends mostly to support R&D driven innovation, for example, through a tax incentive for expenditure on R&D. But there’s room for more interventions through incentives to support improvements in production systems, branding and marketing activities, as well as export promotion.

*Cheryl Moses, Hlamulo Makelane, Precious Mudavanhu and Gerard Ralphs contributed research and writing.

Glenda Kruss, Doctor, Human Sciences Research Council and Dr Moses Sithole, Chief Research Specialist: HSRC’s Centre for Science, Technology and Innovation Indicators, Human Sciences Research Council

This article was originally published on The Conversation. Read the original article.

 

Event | Tweets and slides from Industry Associations Innovation Day 2018

On 25 May 2018, about 60 industry association leaders, government officials, researchers and entrepreneurs gathered at Gauteng’s Riversands Incubation Hub. On the agenda? Innovation, government and Industry 4.0. This post shares the final programme and speaker list, presentations and Tweets from @HSRC_CeSTII.

IAID
Image credit: Department of Science and Technology

Programme and speakers

Did you attend? Rate your experience

Slides

How much R&D and innovation goes on in South Africa, and how we know this – Dr Glenda Kruss & Dr Moses Sithole, Centre for Science, Technology and Innovation Indicators, Human Sciences Research Council

How industry/businesses can leverage CSIR platforms for innovation – Kobus Roux, Council for Scientific and Industrial Research

Tweets

 

Analysis | Innovation in services: The potential to contribute to structural economic transformation

Contrary to the view that diversification and structural change only result from industrialisation, there is growing consensus that the services sector can contribute to economic transformation in emerging economies. This is potentially good news for South Africa given the growth of the services sector to 65% of GDP by 2014, and the proliferation of Industry 4.0. This Research Brief uses data from the Business Innovation Survey 2010-2012 to illuminate the character of innovation activities* in two key services sub-sectors: wholesale and retail trade (WRT), and finance, real estate and business services (FI). These sub-sectors are now central to the South African economy in terms of their contribution to GDP growth, and their advancement is therefore a key consideration for economists, lobbyists, business leaders, and policy makers alike.

The Centre for Science, Technology and Innovation Indicators (CeSTII) is a statistical and policy research institute based at South Africa’s Human Sciences Research Council (HSRC).

CeSTII performs national surveys that underpin benchmarking, planning and reporting on R&D, innovation and technology transfer in South Africa, including the South African Business Innovation Survey 2014-2016.

Our Research Briefs are concise papers based our ongoing work. Their goal? To provide empirical evidence and informed opinion that policy- and decision-makers can use to strengthen the quality of their thinking and action.

Research Brief No. 3*

‘INNOVATION IN SERVICES: THE POTENTIAL TO CONTRIBUTE TO STRUCTURAL ECONOMIC TRANSFORMATION?’

Authors: Glenda Kruss, Moses Sithole, Cheryl Moses, Hlamulo Makelane and Precious Mudavanhu

*Data presented in this paper is drawn from the South African Business Innovation Survey 2010-2012. Research Brief No. 3 was first published in May 2018.

How South Africa’s services sector can help tackle poverty and inequality

Full Report: Innovation in the South African Manufacturing Sector, 2010-2012

Full Report: Innovation in Selected South African Services Sectors, 2010-2012

Some government mechanisms in support of innovation in South Africa

There is growing consensus that the services sector can contribute to economic transformation in emerging economies, contrary to the long-held orthodoxy that diversification and structural change only result from industrialisation. This is potentially good news for South Africa, given the growth of the services sector to 65% of GDP by 2014—growth that has occurred at the expense of the manufacturing and mining sectors. The risk is that growth in services may reflect new ways of increasing asset values through new types of speculative financial products that have a high GDP effect, but little effect on positive structural economic change. Bhorat et al (2016) therefore ask the core developmental question: Can South African exploit this shift to build globally competitive, employment-creating firms that can drive structural economic transformation? – Kruss, et al (2018)

Analysis | Barriers to innovation: Evidence from South African manufacturing companies 2010–2012

“Studies on barriers to innovation typically focus on the impact of obstacles on the propensity to innovate as well as the factors affecting perceptions of the importance of these barriers,” Moses et al (2018) argue in a new HSRC Policy Brief. Drawing from the South African Business Innovation Survey 2010–2012 dataset, the brief documents factors affecting how companies perceive the importance of a range of barriers to innovation.

The Business Innovation Survey 2010–2012 data allows for an evaluation of various factors that influence a company’s perceptions of different barriers to innovation.

The results presented in this brief do not represent the population of all the business enterprises in South Africa, but only a sample of 128 manufacturing enterprises.

Download HSRC Policy Brief (March 2018) ‘Barriers to innovation: Evidence from South African manufacturing companies 2010–2012’

Policy Brief Authors

  • C Moses (BSc, BSc Honours, MSc), Chief Researcher, Centre for Science, Technology and Innovation Indicators, Human Sciences Research Council | cmoses@hsrc.ac.za
  • Dr MM Sithole (BSc, CDE, PGD, MSc, PhD), Chief Research Specialist; Centre for Science, Technology and Innovation Indicators, Human Sciences Research Council | msithole@hsrc.ac.za
  • P Mudavanhu (BSc, BCom Honours, MCom), Senior Researcher, Centre for Science, Technology and Innovation Indicators, Human Sciences Research Council
  • N Nkobole-Mhlongo (BSc, BSc Honours, MSc), Junior Lecturer, University of South Africa
  • T Kupamupindi (BSc, BSc Honours, MPhil), Senior Demographer, International Centre for Aids Care and Treatment Programs, Columbia University

 

Analysis | Can government stimulate innovation through public funding and procurement in manufacturing and services?

In two brand new briefing papers, researchers from the Centre for Science, Technology and Innovation Indicators at the Human Sciences Research Council investigate firm-level awareness of public funding for innovation in the manufacturing and services sectors.

The Centre for Science, Technology and Innovation Indicators (CeSTII) is a statistical and policy research institute based at South Africa’s Human Sciences Research Council (HSRC).

CeSTII performs national surveys that underpin benchmarking, planning and reporting on R&D, innovation and technology transfer in South Africa, including the South African Business Innovation Survey 2014-2016.

Our Research Briefs are concise papers based our ongoing work. Their goal? To provide empirical evidence and informed opinion that policy- and decision-makers can use to strengthen the quality of their thinking and action.

ResearchBrief1_V7.indd

Research Brief No. 1*

‘CAN GOVERNMENT STIMULATE INNOVATION THROUGH PUBLIC FUNDING AND PROCUREMENT? WHAT SOUTH AFRICAN MANUFACTURING FIRMS SAY’

Authors: Glenda Kruss, Moses Sithole, Cheryl Moses and Hlamulo Makelane

ResearchBrief2_V3.indd

Research Brief No. 2*

‘CAN GOVERNMENT STIMULATE INNOVATION THROUGH PUBLIC FUNDING AND PROCUREMENT? WHAT SOUTH AFRICAN SERVICES FIRMS SAY’

Authors: Glenda Kruss, Moses Sithole and Cheryl Moses

*Data presented in these papers is drawn from the South African Business Innovation Survey 2010-2012. Research Briefs No. 1 and No. 2 were first published in April 2018.

Full Report: Innovation in the South African Manufacturing Sector, 2010-2012

Full Report: Innovation in Selected South African Services Sectors, 2010-2012

Some government mechanisms in support of innovation in South Africa

The South African government invests a significant amount of effort into supporting innovation in the South African business sector. This support can either be financial in nature or through support programmes that make access to other resources easier. Given the right support from government, we should expect business to be better positioned to take their innovations further. We report on the extent to which firms access this funding, if they benefit in other ways, and detail the reasons why they do not access public funding.  – Kruss, et al (2018)