MANILA, Philippines — About a third or 33.6 percent of Philippine businesses are investing in innovation activities to boost their competitiveness, but high costs and lack of funds were cited as barriers to engaging in such initiatives, according to a government study.
Results of the 2021 Philippine Institute for Development Studies (PIDS) Survey of Innovation Activities released this week showed that 33.6 percent of Philippine enterprises are innovation active.
An establishment is considered innovation active if it introduced new or significantly improved goods and/or services; used new or improved methods for manufacturing or distribution of products; and engaged in innovation activities for research and development (R&D), training, and acquisition of equipment.
The survey results are based on the responses of 10,489 establishments engaged in the agriculture, industry, and services sectors in the country.
The PIDS said innovation was practiced more by large firms (39.8 percent) than micro, small and medium enterprises (MSMEs) at 32.4 percent.
“As firms get larger, it is more likely to innovate. Average expenditures in innovation also rise with the size of establishments,” the PIDS said.
It said large firms spent an average of P13.2 million on innovation in 2021, around 10.3 times larger than the average spending of all firms at P1.28 million.
There was also a substantial difference in innovation expenditures by small and medium firms with the average annual spending at P1.6 million and P12.4 million, respectively.
The PIDS said the most commonly reported innovation-related activities were training for the development and/or introduction of new products or processes, followed by in-house R&D.
Asked about significant barriers to innovation, businesses cited the prohibitive cost of innovation, followed by lack of funds within the establishment and from outside sources.
The survey showed only 1.1 percent of firms were getting public financial support for innovation.