Innovation survey: consistency is good for the economy

International innovation rankings of various countries invariably show Switzerland near, or even at, the top of the list. The ability to innovate has a positive impact on a country’s prosperity. In addition, firms in Switzerland are constantly able to bring new or better products to market and to remain competitive. This often happens in collaboration with the research institutions in this country. Companies require the right conditions to encourage them to invest in research and development (R&D).

But how do we know whether a policy measure is effective or not? This is where KOF is involved. It systematically surveys Swiss firms’ innovation activities on a two-year cycle. This monitoring enables KOF to track long-term structural changes in the innovation landscape as well as economic shocks such as the financial crisis of 2009 and international political events such as exclusion from the EU’s Horizon 2020 funding programme. It also provides facts in order to introduce policy measures, measure their impact and identify where firms are experiencing problems. Such monitoring reveals, for example, why companies invest less in R&D.

More firms investing in R&D now

That is exactly what has happened since the beginning of this century. The proportion of firms conducting R&D in Switzerland fell continuously right up until the latest survey, which covered the period from 2018 to 2020 and heralded a turnaround. More firms are now investing in R&D again, and their increase from 12.6 per cent to 16.3 per cent is considerable on a historical comparison (chart 3).

At the same time, however, we can see that there has been a rise in revenue as a share of R&D spending over the entire period (chart 4). This means that although R&D activity has grown significantly, it is concentrated among fewer firms.

An international comparison reveals a similar picture for Germany but a different one for the Netherlands. Has this had an impact on the average innovation performance of innovative Swiss companies? Clearly not. Average revenue from innovative products as a share of total revenue has remained fairly constant over time (chart 4). This means that innovations ‘made in Switzerland’ continue to be commercially quite successful and Swiss firms remain internationally competitive.

Even its surveys are innovative

All of these observations and conclusions are only possible because KOF has been monitoring firms’ innovation activities for some time now – since 1990, to be precise. Switzerland is therefore innovative not only in terms of its products and services but also in the ways in which it surveys them. KOF conducted its first ever innovation survey in the autumn of 1990 – even before the European Union. Firms were initially surveyed every three years and then, from 2011, every two years.

And the surveys themselves were continually refined: KOF added new sectors and new technologies as well as questions on R&D collaborations and funding. New blocks of questions were also often introduced to examine recent landmark events. The survey conducted in 2013 asked firms about the fallout from the global financial crisis, while in 2020 and 2021 it investigated the economic impact of the COVID-19 pandemic. The initial impetus for the survey came from a project financed by the Swiss National Fund (SNF)

Subsequently the survey was always conducted on behalf of federal institutions: first for the Federal Office for Economic Affairs, then for the Federal Office for Economic Development and Labour and, subsequently, for the State Secretariat for Economic Affairs (SECO). KOF currently conducts its innovation survey on behalf of the State Secretariat for Education, Research and Innovation (SERI). This collaboration enables the innovation survey to form the basis for the official statistics of the Swiss private sector’s innovation activities. As this data gathering is internationally harmonised, i.e. identical and aligned, KOF supplies its Swiss data to international organisations such as Eurostat, the OECD and UN organisations.

Continuity is essential

The next innovation survey is being conducted in the spring of 2023. Temporal comparisons and international comparability are crucial here too. Continuity of the questions asked is therefore a major priority. Nonetheless, there is scope for additional questions on currently relevant topics. The difficulties arising from the EU framework agreement also affect Switzerland’s innovation and research landscape. A special block of questions will ask what the consequences of Switzerland’s Horizon Europe status will be.

This situation poses new challenges for Switzerland’s system of innovation funding. We therefore ask what funding options Swiss firms are utilising. In addition, companies’ current digital transformation is taking place against the backdrop of artificial intelligence. This is impacting on their innovation activities. The next innovation survey will also examine the extent to which Swiss firms exploit this potential and what type of company will play a pivotal role here.