Innovation in Irish Enterprises 2024

Reduced energy use and CO₂ footprint for enterprises was the leading environmental innovation introduced by enterprises in 2022-2024

An innovation with environmental benefits is a new or improved product or process of an enterprise that generates lower environmental impacts, compared to the enterprise’s previous products or processes. The innovation must have been made available to potential users or brought into use. 

Environmental innovations may generate benefits either within the enterprise or for the end user. An environmental innovation for enterprise is an innovation with environmental benefit introduced during the production of a good or service, whereas an environmental innovation for the end user is an environmental benefit introduced during its consumption or use. 

• The leading environmental innovation introduced by enterprises in 2022-2024 were innovations which reduced energy use or CO₂ footprint for enterprise, at 9.0%, followed by recycled waste, water or materials for own use or sale, at 7.9%.
• Among environmental innovations benefiting end users, facilitating recycling of product after use (7.8%) was the leading environmental innovation introduced in 2022-2024.
• Around a fifth (18.3%) of enterprises in 2022-2024 engaged in at least one environmental innovation with significant benefits, a small bit down on 2020-2022 levels (19.8%).

Innovation activity rates declined in 2022-2024 when compared to 2020-2022

Enterprises were asked a range of questions in relation to their innovation activity during the 2022-2024 period. Innovation activity refers to one of the following activities: product innovation, process innovation, in-house R&D, external R&D, and innovation activities that did not result in a product or process innovation (ongoing, abandoned or completed).

Innovation activity was down overall when comparing the 2022-2024 period against the previous survey period of 2020-2022. Innovation activity decreased from 47.3% in 2020-2022 to 44.9% in the 2022-2024 period. Looking at some of the detail, we can see that:

• In 2022-2024, large enterprises (73.8%) were more likely than small (40.9%) to engage in innovation activity, with small enterprises reporting a larger decrease (-2.6%) in innovation when compared to 2020-2022 than large enterprises (-1.1%). See Figure 1.
• Rates declined when compared with the previous period, for product innovation (-4.4%), process innovation (-3.5%), as well as innovation activities that did not result in a product or process innovation (ongoing -2.3%, abandoned -1.2%, completed -1.9%). See Figure 2.
• In the 2022-2024 period, 14.8% of enterprises introduced a process innovation as well as a product innovation (product and process innovation). See Figure 2, Figure 3 and Table 1.
• Almost two-fifths of enterprises (39.1%) introduced at least one product innovation or one process innovation during this period (product or process innovation). See Figure 3 and Table 1.
• Product and process innovation rates were higher among enterprises in the Industry sector than the Services sector (“Selected” services refers to NACE Rev. 2 sections 46, 49-53, 58-63, 64-66, 71-73. Refer to Background Notes for more detail) as well as among foreign owned enterprises. See Figure 3 and Table 1.
• Across all types of enterprises, process innovation was more common (33.6%) compared to product innovation (20.2%). See Figure 3 and Table 1.

In 2022-2024, one fifth of enterprises introduced a product innovation

A product innovation is a new or improved good or service that differs significantly from the firm’s previous goods or services and that has been introduced on the market. The data gathered from the CIS highlights the following:

• In 2022-2024, 20.2% of enterprises introduced a product innovation (services or goods), down from 24.6% in 2020-2022. See Figure 4 and Table 2.
• The decline in product innovation was observed for both goods (down 2.5 percentage points) and services (down 2.5 percentage points) for the period 2022-2024. See Figure 4.

Process innovation rates declined from 37.1% in 2020-2022 to 33.6% in 2022-2024

A business process innovation is a new or improved business process for one or more business functions that differs significantly from the firm’s previous business processes and that has been brought into use by the firm. Breaking down the results of the survey on process innovation we can see that:

• In 2022-2024, 33.6% of enterprises introduced at least one process innovation, down from 37.1% in 2020-2022. See Figure 5 and Table 3.
• Of the process innovations introduced, methods for information processing or communication were the most common process innovation that enterprises engaged in, at 15.2% during 2022-2024. See Figure 5 and Table 3.
• There was a decline in all process innovation categories that enterprises engaged in during 2022-2024 compared to 2020-2022, with the exception of business practices for organising procedures that remained at 13.4% for both periods. See Figure 5 and Table 3.
• The largest decline for a process innovation was observed for logistics delivery or distribution, declining from 8.1% in 2020-2022 to 5.7% in 2022-2024. See Figure 5 and Table 3.

One third of enterprises developed innovations in-house

Enterprises were asked about their method of development for any product innovations or process innovations introduced during the survey period. Methods of development range from innovations through others, collaboration, adaption or entirely in-house. An in-house innovator is defined as an enterprise that either developed their innovations themselves or together with other enterprises or organisations.

• During 2022-2024, 33.7% of enterprises in Ireland were in-house innovators. This is down from 37.2% in 2020-2022 and 46.9% in 2018-2020. See Table 4.

Of the enterprises that had a product innovation:

• More than two thirds (67.4%) developed a product by themselves.
• Collaboration with other enterprises or organisations on product development was reported by 29.9% of enterprises.
• Adaption or modifying goods originally developed by other enterprises or organisation was undertaken by 15.3% of enterprises.
• External development was less common, with 7.1% relying on other enterprises or organisations to develop a product innovation. See Figure 6 and Table 4.

Of the enterprises that had a process innovation:

• Most process innovators (58.5%) developed their processes themselves
• Collaboration with other enterprises or organisations on process development was reported by 36.8% of enterprises.
• Adaption or modifying goods originally developed by other enterprises or organisation was undertaken by 9.2% of enterprises.
• External development of process innovations was reported by 11.1% of enterprises. See Figure 7 and Table 4.

Spend on innovation in 2024 matches that for 2022, at around €8 billion

The CIS asks respondents about their innovation activity spending for the last year of the survey period only (2024). The data provides an insight into how enterprises spent on innovation activities.

• The total spend on innovation (in-house R&D and other innovation activity) in Ireland was €8.1 billion in 2024, a small increase from the 2022 figure of €8.0 billion. See Figure 8 and Table 5.
• There was a decrease in in-house innovation expenditure (€77.1 million) and an increase in innovation expenditure on acquisition of machinery, equipment and software (€92.1 million) for 2024 compared to 2022. See Figure 8 and Table 5.

Non-Irish enterprises accounted for over 75% of innovation expenditure

Breaking down the innovation activity spending data gathered in the CIS we can see that:

• In 2024, Irish-owned enterprises accounted for 24.5% of innovation expenditure while foreign-owned enterprises accounted for 75.5%. See Figure 9 and Table 6.
• At a sectoral level, Industry accounted for 48.4% of the innovation spend, while Services accounted for 51.6% in 2024. See Table 6.
• A higher percentage of enterprises in Industry (28.6%) engaged in in-house R&D expenditure compared to enterprises in Selected Services (18.0%) in 2024. See Figure 10 and Table 7.
• A higher percentage of foreign owned enterprises engaged in innovation spending across all categories when compared to Irish owned enterprises. In 2024, 26.8% of foreign owned enterprises engaged in in-house R&D expenditure compared to 18.9% of Irish owned enterprises. See Figure 11 and Table 7.

Large enterprises had the highest co-operation rates across private and non private enterprises and organisations

Enterprises were asked the extent to which they co-operated with partners in both the private and non-private sector for the innovations that they introduced.

• Large enterprises (250+ persons engaged) recorded the highest co-operation rates across both private and non-private co-operation partners. See Table 8.
• Among enterprises involved in innovative activities 46.6% co-operated with other enterprises or organisations on R&D, innovation or other business activities. See Figure 12 and Table 8.
• A higher proportion of foreign owned enterprises engaged in co-operation with enterprises and/or organisations at 50.7%, compared with 44.8% of Irish owned enterprises. See Table 8.
• Suppliers of equipment, materials, components or software (13.3%), followed by consultants and/or commercial laboratories (12.6%) were the most common private co-operation partners for innovation activities. See Figure 12 and Table 8.
• Universities, or higher education institutions (7.3%) were the favoured non-private co-operation partners for innovation activities. See Figure 12 and Table 8.

Environmental innovation increases with enterprises size

Enterprises were asked over the three years from 2022-2024 if they had introduced environmental benefits for their enterprise or for end users. From the data collected we can see that:

• Larger enterprises were more likely to have introduced at least one innovation with environmental benefits (42.2%), compared to 23.7% of medium sized enterprises and 15.3% of small enterprises. See Table 9.
• Environmental innovations with significant benefits were more common in Industry, at 27.3%, than in Selected Services, at 14.0%. See Table 9.
• The two leading environmental innovations introduced benefiting enterprises related to energy efficiency and recycling: reducing energy use or CO₂ footprint (9.0%) and recycling waste, water, or materials for own use or sale (7.9%). See Figure 13 and Table 9.
• A similar pattern was evident with environmental innovations introduced for end users, where the leading innovations were reducing energy use or CO₂ footprint (7.5%) and facilitating product recycling after use (7.8%). See Figure 13 and Table 9.