2011 German Innovation Survey - Innovation Has Helped to Successfully Lead the German Economy Successfully Out of the Crisis

Companies in Germany intensified their innovation efforts during the economic crisis of 2009. These efforts turned out to be rewarding. In 2010, companies were able to increase their revenues by introducing new products. Fundamentally new innovations - "market novelties" - have sold particularly well and export-oriented sectors have been most successful in selling new products. The strong position of German companies in international markets is thus a result not only of cost advantages, but also of a competitive edge in terms of innovation. These are the findings of the recently published 2011 German Innovation Survey. The survey was commissioned by the Federal Ministry for Education and Research and carried out by the Centre for European Economic Research (ZEW) in Mannheim in cooperation with the Fraunhofer Institute for Systems and Innovations Research as well as the

Institute for Applied Social Sciences (infas).

Expenditures on innovation are higher than ever

While budgets for innovation were already considerably increased in 2010, business planning figures indicate that companies again invested heavily in the development and introduction of new products and systems in 2011. Expenditure on innovation in the German economy is projected to have reached 130 billion euros in 2011. This is an increase of seven per cent over the previous year (121.3 billion euros) and a good three per cent above the previous peak reached in 2008 (125.9 billion euros). Planning figures for 2012 indicate no further rise in expenditures on innovation by firms. This spending restraint is a reflection of uncertainty among firms concerning the outlook for the economy during the time frame of the survey (spring and summer 2011). 

Increasing success in product innovation

After falling during the crisis year of 2009, the revenue share attributable to new products again rose considerably in 2010, reaching 15.1 per cent. This revenue share was three percentage points higher than in the previous year (12.1 per cent), but still almost a percentage point lower than the figure from 2008 (15.9 per cent). A good two per cent of the increase in revenues from new products is accounted for by ‘imitation innovations’. Just under one per cent of increased revenues can be attributed to wholly new products (‘market novelties’). The revenue share of market novelties increased with particular strength in research- and knowledge-intensive sectors of the German economy. Reaching 9.2 per cent in 2010, this share returned to the high levels of 2005 and 2006 in the research-intensive branches of industry, including vehicle manufacturing and mechanical engineering, the electronics industry, and the chemical and pharmaceutical industries. With a 4.4 per cent rise in revenues attributable to market novelties, the revenue share in the knowledge-intensive service sector reached its highest level since 2005. The knowledge-intensive service sector includes the IT and telecommunications sectors, engineering and R&D service providers, as well as media, management consulting, and advertising firms.

Investment in innovation remains steady

In 2010, the share of ‘innovating firms’, i.e. companies that introduced successful product or process innovations, remained unchanged from the previous year at 42.1 per cent. However, the proportion of actively innovating firms rose considerably in 2010 to 47.7 per cent, up from 42.9 per cent in 2009. This figure also includes companies which did not introduce any innovations in 2010, but which were working on innovation projects. No further increase in the share of innovating firms is anticipated in 2011, however. In the service sector, there could even be a decline in the proportion of actively innovating firms in 2011. Planning figures from companies for 2012 indicate that there will be a slight decrease in this share both in the industrial and service sectors.

Share of firms conducting R&D on a continuous basis reaches an all-time high

In 2010 more German firms than ever undertook research and development (R&D) activities on an ongoing basis in Germany. The number of firms with five or more employees conducting ongoing R&D activities in the branches covered by the innovation survey totalled almost 34,000 in 2010. This represents 12.6 per cent of all German firms with over five employees. The previous peak of 12.2 per cent in 2008 was thus surpassed.

Wide variation between branches

The focus placed on innovation varies widely between branches of the German economy. The highest expenditures on innovation as a share of branch revenue in 2010 were in vehicle manufacturing (8.8 per cent); the IT and telecommunication sectors and engineering and R&D service providers (7.2 per cent in each case); the electronics industry (7.0 per cent), and the chemical and pharmaceutical industries (6.3 per cent). In terms of industries with the greatest share of innovating firms, the chemical and pharmaceutical industries (81per cent) scored highest, followed by the electronics industry (79 per cent), the IT sector (77 per cent), vehicle manufacturing (71 per cent), and mechanical engineering (70 per cent).

For further information please contact

Dr. Christian Rammer, Phone +49 621/1235-184, E-mail rammer@zew.de