Measuring sectoral innovation capability in nine areas of the UK economy

This report sets out a framework for measuring innovation, providing insights at the level of individual firms and among sectors.

Key findings

  • Innovating firms grow significantly faster than those not undertaking innovation in each of the nine sectors surveyed.
  • There are significant levels of hidden innovation in several sectors where levels of traditional R&D investment are low.
  • Innovation capability also varies strongly between firms within sectors. The differences are most pronounced in energy production, software and IT services, and specialist design.
  • Across the sectors studied, firms’ most common weakness lies in translating the knowledge gained from contacts or research into products or services. More investment on improved processes could benefit these firms and make a real difference to the wider economy.

Our understanding of innovation has changed: where once it was understood to be largely the result of scientific research and development, it is now seen more widely to include changes to services, ways of working and delivery, customer insight and many other forms. This has been described by Nesta and others as 'hidden innovation'.

This part of the Index sets out a framework for measuring innovation at a firm and sector level - insights can be provided at the level of individual firms and among sectors.