Business engagement in innovation

The UK Innovation Survey (UKIS) provides the main source of information on business innovation in the UK. The survey consists of a nationally representative sample of businesses with 10 or more employees. It does not survey businesses in agriculture, public sector administration, education or health. Businesses in the arts, entertainment, recreation and personal service sectors are also excluded. It includes data at a regional level, with the North East region including the North East and Tees Valley LEP areas.

The UK definition of innovation is based on an Organisation for Economic Co-operation and Development (OECD) definition. According to this, innovation includes any of the following activities:

1. The 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;
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 purposes of the survey:

• ‘innovation active’ businesses have engaged in any of the activities described in points 1 to 3 
• ‘broader innovators’ are businesses that have engaged in any of the activities in points 1 to 4 
• 'product innovators' and/or 'process innovators' are businesses that have engaged in an activity in point 1 
• ‘wider innovators’ are businesses that have engaged in the activity described in point 3.

The latest UKIS data was released in 2020 and covers 2016-18. In that period:

• About 34 per cent of businesses in the North East region reported that they were innovation active
• almost 36 per cent reported that they were broader innovators
• just over 22 percent reported that they were wider innovators
• respectively, 16 and 12 per cent were product and process innovators, with 7 per cent being both
• all North East region percentages were lower than the UK equivalents
• the North East had the lowest percentage of innovation active businesses among the nine English regions

between 2012-14 and 2016-18: 

• the percentages of innovation active businesses, broader and wider innovators have all decreased in the North East region
• the percentages of product and process innovators have also both decreased slightly, although the percentage of the latter increased between 2014-16 and 2016-18