SCIENCE:Companies are told to innovate or die. Build a better mouse trap or you can expect to go out of business. Keep changing or your customers will abandon you.writes Dick Ahlstrom.

Some might scoff at this doom and gloom portrayal but if you won't innovate to keep your company healthy, then innovate to make more money. Government policy guru Forfás's fourth innovation survey shows that innovation makes a direct and significant contribution to turnover.

Completed in September 2006, but apparently not in wide circulation, the survey, which is now completed every two years, provides an overview of our corporate propensity for innovation and defines the type of innovation being pursued.

It is part of the EU community innovation set of surveys that adopt similar definitions and procedures so country to country comparisons can be made. This survey, which includes data for 2002-2004, provides only a few comparisons, and says that more comprehensive comparative data will be provided at a later date.

The survey sampled an initial 2,324 firms employing 10 or more staff, with the selected group attempting to model the general Irish economy. Full responses were received from 976 firms of a core sample of 1,894 firms, giving about a 50 per cent response rate.

Forfás was looking for companies that are "innovation active".

This means firms that have developed and sold a new good or service new to that company, made improvements to a production process or brought an entirely new good or service to market.

Being innovation active also included companies that were spending money on research and development, on engineering or the acquisition of new equipment, were buying software or seeking licences, were purchasing external knowledge or training or were spending money on design and marketing.

The key finding was that more than 52 per cent of firms surveyed were classed as innovation active. About 47 per cent of small companies with 10-50 staff were active, while 75.1 per cent of larger firms of more than 250 employees were active. This latter group includes many of the multinationals which tend to be high tech and "high-innovation" as a result.

What the data showed was that we are relatively active in the innovation stakes, suggests the manager of Forfás's science and technology indicators unit Andy Stockman. "We are in the top ranking contenders for innovation," he says.

This can be seen in particular with industrial firms, where about 61 per cent of these companies were innovation active. This is well above the EU average of 42 per cent and second only to Germany which has a 73 per cent innovation level.

In services, 58 per cent of companies here are innovation active, compared with an EU average of 37 per cent and 58 per cent for Germany - which also leads in this category.

The survey shows that innovation boosts turnover, with responding companies indicating that 10.1 per cent of turnover was as a direct result of innovation development, equating to €34.6 billion of turnover over the two study years.

The contribution to turnover from new to market goods was 5.6 per cent which, from 2002-2004, reached €19.3 billion.

Stockman indicated, however, that our figures only place us in a middle ranking for turnover. He also indicated that our expenditure on innovation, which across the Irish economy is estimated to have been €5.72 billion in 2004, is low compared to the EU generally.

More recent unpublished comparative figures from a source suggest that turnover from new products across all enterprises is 8.1 per cent for Ireland, placing us under the EU average of 8.6 per cent. The corresponding figure for Sweden is 11.1 per cent and in Germany it is 8.5 per cent.

The message seems to be that while many firms are innovation active, they don't seem to spend as much money on the effort as our EU colleagues. Perhaps this is the reason that firms only seem to get a moderate payback for the innovating that they do.

Money clearly is an issue when it comes to innovation, given survey findings. Companies who were active innovators listed lack of funds, high cost and a lack of qualified personnel as the top three difficulties when it came to innovation.

Almost a quarter of active firms cited lack of funds as the key issue hampering innovation, while 19.1 per cent cited costs. And 18.3 per cent of firms said lack of skills was the problem.

Perhaps it was a response to these findings that the Department of Enterprise, Trade and Employment launched a research voucher scheme earlier this year whereby qualifying companies are given €5,000 to buy research expertise to boost innovation. Would it be wise to make that €50,000 and expect the company to match the State euro for euro given the likelihood that the bigger bucks will produce a bigger innovative bang?