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Innovation in Estonian Enterprises 1998 – 2000

EASi ja KredExi ühendasutus
2. June 2022
3 min

This survey treated innovativeness as implemented technologically new products, processes or services and significant technological improvements in products, processes or services. It requires an objective improvement in the performance of a product or in the way in which it is produced or delivered. An innovation has been implemented, if it has been introduced on the market – product innovation, or used within a production process – process innovation. The product, service or process should be new (or significantly improved) to the enterprise, but does not necessarily have to be new to the enterprise’s market. The technological innovation could include, but does not presume the basic or even applied researches; the idea for new product, service or process might be taken over or obtained from practical experiences.

The main sample group of the innovation survey included 3,490 enterprises with more than 10 employees and the small enterprises group 777 enterprises with 2–9 employees. The response percentage was very high – 74% in the main and 65% in the small enterprises survey.

Innovative activity in Estonian enterprises

The results of the survey show that the share of innovative enterprises – firms, which had brought a new or significantly improved product or service to the market during the survey period or had innovated or improved their production processes – of all observed Estonian enterprises in the period 1998–2000 reached 36%, which is a relatively good result as compared to the other European countries (EU-15 45% 1996). We have to take into account here that innovativeness in the Estonian enterprises is generally influenced by the same trends as displayed by the previous EU surveys: the innovative enterprises have a larger number of employees and higher turnover, while the firms with foreign owners/partners and belonging to concerns are more innovative.

Although the share of innovators among the services enterprises was lower than among the manufacturing firms (respectively 32% and 39% of the sector’s enterprises) it seems that the services enterprises are more complex innovators, since their participation in various innovative activities was higher than in the manufacturing enterprises. Regionally the more innovative enterprises in Estonia have concentrated in the Tallinn and Tartu regions, where the entrepreneurial and research activities are the most active and where every third enterprise made expenses on innovation, it was followed by Ida-Virumaa with every fourth enterprise, while in the rest of Estonia, only every firth firm confirmed expenses made on innovation.

However, when studying in greater detail how large expenses the enterprises make on the implementation of innovation projects and on which activities they spend money, the results no longer look as optimistic. In 2000, 29% of the studied enterprises made expenses on innovation. In most cases, the expenditures were associated with the acquisition of machinery and equipment as well as the accompanying training.

Out of the total turnover of innovative enterprises, total expenses on innovation amount approximately to 2.3% in manufacturing and only to 0.8% in services. The corresponding EU indicators in 1996 were 4% and 3%. Unlike the average indicators of the EU countries, in Estonia the SMEs make in manufacturing relatively more expenses on innovation (half of innovation expenditures in manufacturing have been made by SMEs) than the large enterprises. However, in the services sector the largest expenditures are made by the large enterprises. A significantly greater amount on innovation out of net turnover in Estonia is made by the several smaller services firms – computer services (8% of turnover), engineering and testing services provider firms (14% of turnover), and electronic and optical equipment manufacturers (9% of turnover).

Find the research here

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