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Israeli SMBs Innovate Twice As Expected

Contrary to surveys conducted by the OECD, which indicate that the rate of innovation among small Israeli manufacturers is roughly 45%, a study conducted at Israel shows that more than 95% of businesses have promoted some type of innovation in the last three years.

The prevailing perception that innovation skips small businesses in general is shattered by a research conducted at Ben Gurion University. The study included meetings with more than 200 small business owners in various fields of industry.

In order to examine the level of innovation in small businesses in Israel, the researchers used OECD definitions that determine four types of innovation: a new product, a new manufacturing process, a new marketing method or a new intra-organizational process.

In each of these categories the researchers defined four levels of innovation, with the lowest level being an improvement of what exists in the business, and the highest - a new product, service or process in Israel or the world.

The results were interesting. In contrast to surveys conducted by the Central Bureau of Statistics in Israel or the OECD, which indicate that the rate of innovation among small businesses in the industrial sector is about 45% - according to the new research, the real number is twice as much: more than 95% of businesses have promoted some kind of innovation in the last 3 years.

In contrast to the good news, there is also a bit of bad news: most of the Israeli innovation was done at a low level, i.e. improving an existing product or process within the organization, as well as presenting a new product or process, but one which already exists in the local market.

However, only a minority of small businesses brought a new product that does not exist in Israel (8%) or worldwide (3%). Israeli innovation exists, but usually it's not breakthrough innovation.

Why is it that small businesses do not catch up?

There are different state-based innovation plans, but business owners rarely use them because they are not suited to their needs, time and location. In many cases business owners are not even aware of their existence.

Not surprisingly, though, businesses with higher open innovation with the outside world, have a higher level of innovation, and when they go to conferences or exhibitions, the level of innovation in the product increases. All of these things must be taken into account and build programs that fit the characteristics and needs of these businesses, in order to expand the level of innovation in Israel.

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Tags: innovation

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