How innovation performance varies by industries’ physics intensity
Profiling firms in high-, medium- and low-intensity physics sectors in relation to innovation, growth, productivity and skills use.
This report was compiled by the Enterprise Research Centre and commissioned by IOP as part of the Innovation Survey project, which looks at innovation in physics-based businesses.
The report compares firms in high-, medium- and low-intensity physics industries, assessing their position in relation to innovation, growth, productivity and skills, using analysis of UK government datasets.
The physics intensity of industries was based on a categorisation developed by the IOP that classifies each four-digit standard industrial classification (SIC) code as either “high”, “medium” or “low” based on the intensity of engagement with physics in its innovation activity.
The report finds that there are some key differences between high-intensity physics industries, and medium- and low-intensity ones, when looking at their innovation and R&D activities. Firms in high-intensity physics industries are more likely to innovate than firms in low-intensity physics industries.
Most notably, firms in high-intensity physics industries were:
- three times more likely than firms in low-intensity physics industries to invest in internal R&D;
- three times more likely than firms in low-intensity physics industries to undertake new-to-the-market product/service innovation;
- two and a half times more likely than firms in low-intensity physics industries to have ongoing innovation activities;
- more likely to face medium- or high-level innovation barriers than firms in low-intensity physics industries. Divergence was largest in relation to three barriers in particular: direct costs being too high, the lack of qualified personnel, and an uncertain demand for goods and services;
- five and a half times more likely to receive public support from UK central government than firms in low-intensity physics industries (when looking at high- and medium-intensity ones combined);
- six times more likely to have employees with skills in engineering/applied sciences;
- more likely to have patent engagement than firms in low-intensity physics industries;
- most likely to have firms facing medium or high barriers to innovation in the East Midlands, the East of England, Wales and the West Midlands;
- found to have consistently higher levels of productivity across regions and size bands, compared to low-intensity firms;
- two and a half times more likely to have hard-to-fill vacancies for professional staff – including scientific staff – relative to low-intensity firms; and
- found to be reporting a significantly greater effect of skill shortages on their operations. The primary effects were on firms’ ability to take on board new technologies, and an increase in outsourcing.
Similar activity is being scoped for Ireland.