Professional Project Research Project 2022

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Professional Project: Innovation Process and Employment Growth in Australian Manufacturing
Industries
Student’s Name
Institutional Affiliation

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Executive Summary
This research paper investigate the correlation between innovative process and employment
growth in the Australian manufacturing industry. The contribution of the literature are fourfold.
It begins with an introduction about innovation process and its related economic growth. Second,
discuss innovation and manufacturing performance. Thirdly it discuss product innovation and
employment growth and conditions for technical process to contribute to job creation. In
methodology the research use qualitative research method to collect and analyze data, provide
discussion of the findings, give a conclusion and then provide recommendations and limitation
that face the study.
Table of Contents

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Introduction.................................................................................................................................................4
Problem Statement...................................................................................................................................5
Research aim and research questions...........................................................................................................5
Literature Review........................................................................................................................................6
Introduction.............................................................................................................................................6
Product innovation and employment growth...........................................................................................7
Innovation and manufacturing economic performance............................................................................8
Process innovation and employment growth...........................................................................................9
Conditions for technical process to contribute to job creation...............................................................10
Methodology.............................................................................................................................................11
Introduction...........................................................................................................................................11
Data Collection......................................................................................................................................12
Findings and analysis.............................................................................................................................12
Discussion of findings...........................................................................................................................14
Conclusion.................................................................................................................................................14
Recommendations.....................................................................................................................................15
Limitations................................................................................................................................................15
References.................................................................................................................................................16
Innovation Process and Employment Growth in Australian Manufacturing Industries

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Introduction
Innovation in the manufacturing sector is regarded as a critical strategy to ensuring
productivity growth. Innovation at its simplest is all about new ideas put into practice, which
drives long lasting productivity growth ad underpins human advancement. Recent research has
shown that nearly 50% of businesses in Australia are proactively innovative, with the innovation
broadly distributed across all industries (Hajkowicz et al., 2016). Indeed, Australian companies
tend to be specialized in transforming novelty introduced by other domestic corporations.
However, innovations new to market are not nearly as common. According to Janger, Schubert,
Andries, Rammer, and Hoskens (2017) several collaborations metrics for innovation, Australia is
ranked in the bottom half of the Organization for Economic Co-operation and Development
(OECD). Even though Australia has been experiencing a decline in some of its businesses its
entrepreneurial attitude remain competitive. International reports indicate that sales growth and
employment is concentrated in relatively small portion of high-growth firms (HGFs).
Transformation in technology drives lasting productivity, economic growth as well as improving
the living standards of people. On the same note, the emergence as well as diffusion of novel
concepts production techniques and products throughout the economy involves an “ingenuity
destruction” process. Indeed, novel technologies destroy jobs in certain sectors particularly
amongst the low-skilled whereas creating jobs that in most cases in diverse industries, but they
calls for high skills.
Generally, the process of innovation has resulted in net job creation since new industries
are substituting the old ones and employees adapt the skills to the increasing and changing
demand. Presently, the fast change in technology coupled with the intense restructuring
underway in OECD markets which has resulted in some associate technology with social distress

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as well as unemployment. Nevertheless, technology per se is not culprit, the economy-wide
employment effect has a possibility to become positive given that the mechanisms that will be
used to translate technology into jobs does not get impaired by scarcities in terms of innovation
systems and training as well as rigidity in labor and products financial markets. In order to
realize the full potential of technological transformation towards enhancing economy-wide
growth, productivity as well as job creation, the Australian government should make technology
and innovation diffusion policies an essential part of the entire economic policy.
Problem Statement
With the advancement in innovation in the manufacturing industry it has led to new
products linked to information technology such as 3D printing machines, self-driving automated
vehicles and robots. All these inventions have changes the production process, with most of them
increasing fear of imminent pervasive technological unemployment. Furthermore, it is not only
employment in the manufacturing industry that seem to be at risk but also occupations in
services such as those that need cognitive skills (Mitra, & Jha, 2016). As a result, multinational
organizations such as OECD, and European Commission are currently rising concern regarding
the issue to avoid jobless growth. Particularly, at OECD level the matter is relevant. Therefore,
policy-makers are supposed to update evidence about the correlation between innovation and
employment by tailoring policies which will help to support labor-friendly innovation.
Research aim and research questions
Despite the future being uncertain, the core issues when it comes to analyzing the effect
of new as well as emerging technologies on jobs in the future, there is need to understand the
correlation between innovations, new technologies and jobs. The aim of this research paper is to
find out the mechanisms and forces which destroy jobs and those that create jobs and the

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connection and communication between them. The research question that will be used to
undertake this research with the intent to achieving the stated above research aim.
Research questions
1. To find out which type of jobs that are at risk of being replaced by innovation systems in
the manufacturing industry?
2. To investigate which mechanism and forces destroy jobs and opportunities in the
manufacturing industry in Australia?
Hypothesis
H0: Low-skills jobs are at high risk of being replaced by innovation systems in the
manufacturing industry in Australia.
H1: Low-skills jobs are not at high risk of being replaced by innovation systems in the
manufacturing industry in Australia.
H0: The use of robotics mechanism in the manufacturing industries in Australia is destroying
jobs.
H1: The use of robotics mechanism in the manufacturing industries in Australia is not destroying
job opportunities.
Literature Review
Introduction
Innovation is a crucial tool to delivering substantive benefits to the well-being of
societies, hence it is vital in resolving some of its most pressing challenges (Li, & Rama, 2015).
Indeed, the benefits associated with innovation often goes beyond economic paybacks to touch to

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individuals’ quality of their daily lives. The living standards of many people across the world as
well as those of Australians have improved because of innovations such as those happening in
communication, infrastructure, healthcare and environmental sustainability among others. As a
result, innovation is one of the most significant driver of lasting productivity growth as well as
material living standards. What is most important in regard to the economic perspective is the
commercial application as well as diffusion of ideologies, which underwrites long-terms growth
and competitiveness. A report by European association note that innovation in its different forms
accounts for a large portion of economic growth across its members. Currently, it has become
necessary to explore all factors accepted statistically significant to foster organizational growth
and job creation. Calvino and Virgillito (2018) argue that employment growth is an important
indicator of economic performance. In this sense, identifying and investigating their key drivers
has become a major objective of policy makers and researchers.
Product invention and employment growth
Research has found that employment development is positively correlation with manufactured
goods novelty both in industrialized and developing economies. For instance, Tavassoli (2015)
used a multi-product prototype in a study that involved 2000 Chinse corporations using the
period 2000-2004 found that employment evolution is connected to product novelty with a
greater impact amongst large manufacturing corporations. Similar to Tavassoli (2015) using two-
good as well as two-period production model, Rüßmann et al. (2015) in a research involving
20,000 companies from Span, Germany, the UK, and France over a period 2000-2002 reveals
that service growth is positively linked with merchandise innovation. In addition, by means of a
longitudinal record of 600 European industrial and service corporations, Goos, Konings,
Vandeweyer (2015) test the effect of research and development (R&D) on employment. The

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scholars found that employment evolution is passively related with organization spending in
R&D inclined towards merchandise invention amongst technology and services manufacturing
companies. On the same note, Soto-Acosta, Popa, and Palacios-Marqués (2016) find similar
outcomes with microdata from Basic Survey of Chinese Business structure and Activities with
R&D expenditure as a substitute for product novelty.
Innovation and manufacturing economic performance
The correlation between invention productivity and economic organization performance
has attracted much interest from diverse sectors such as academicians, researchers as well as
policy makers. According to Ciriaci, Moncada-Paternò-Castello, and Voigt (2016) in a survey
carried out on Japanese manufacturing firms found that R&D rises the possibility which a
company will embrace product innovation to enhance economic performance. Moreover,
Vivarelli (2015) in a different study established that those better economic performances are
achieved through searching for highly refined processes, product as well as high-tech
competiveness that is defined by variables such as R&D efforts and patents in the manufacturing
industry. Correspondingly, in an issue almost similar to the previous, innovation is regarded as
the core driver of productivity growth. As a result, this is the reason as to why most
manufacturing companies pursue export trade to market their surplus products. Thus, Goos,
Konings, and Vandeweyer (2015) argue that companies improves their productivity prior to
seeking for export markets. On the same note, corporate level research also indicate that
innovation is the recipe for economic performance of almost all manufacturing companies,
which is also prompting intentions of export. A recent study has shown that there is a solid
positive correlation between innovation activity and exporting. Calvino and Virgillito (2018)
studied the effect of innovation on the decisions of a majority of manufacturing companies to

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expert their merchandise to Germany. After an in-depth investigation on innovation the research
found that the probability of manufacturing corporations becoming exporters was more than
20%. Moreover, a study on OECD countries paid much attention on the role played by
innovation on bilateral OECD trade and found that there was a positive relationship between
innovation and the trade performance. Therefore, embracing innovative strategies not only rise
the probability of manufacturing forms to export their goods but it also results in developing of
novel products and services that gives rise to new marketplaces. This facilitates the growth of
enterprises and also create customer value. As such, innovation enhances prevailing processes
and products hence donating to increased growth rates, higher productivity, reduces costs and
enhanced international market share.
Process novelty and employment growth
The correlation in between development novelty and employment progress is wide-
ranging. In this regard, Salomons (2018) claim that employment evolution is positively
connected to novelty process, whereas commends that employment growth is deleteriously
linked with innovation process. In particular, in a research undertaken in Spain reveal that
employment growth is directly connected to process innovation in industries with low and
medium use of technologies. In line with the same, using data from 15,180 Japanese
manufacturing firms over a period 2006-2014, Kunapatarawong and Martínez-Ros (2016) reveal
that employment growth is positively related to innovative companies. Indeed, the innovation
process helps in creating more jobs unlike product novelty. In addition to that, in a study using a
systems generalized methods of methods (GMM) methodology performed on Italian
manufacturing companies dataset over a period of 2o years indicate that employment growth is
positively linked with both product and process innovation. However, innovation has more

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impact on employment growth as compared to product innovation. Similarly, using data set from
Community Innovation Survey involving more than 60,000 firm from Spain, Slovenia, China,
Japan and France composed over the period 2008-2010, the results reveals a positive relationship
between employment growth and innovation for companies which integrate organizational,
process and product innovation.
Conditions for technical process to contribute to job creation
Bogliacino and Pianta (2016) suggest that there is need for technological policies, but it
should not directly aim at employment objectives at the cost of competitiveness and productivity.
Most countries including OECD countries need to adjust their policy to strengthen job outcomes.
The most urgently needed reforms include reducing the potential mismatch that is there between
the supply of skills and those in demand by ensuring complementarity between human capital
policies and technology. According to Tavassoli (2015) technology policies can aid to improve
the conditions required to creation and development of new technology-based firms that directly
donate to creating jobs. Nevertheless, these policies should create and diffuse new services and
goods to instill a culture of invention, encourage investing in skills besides improving economy-
wide dynamic allocative efficiency (Whittaker, Fath, & Fiedler, 2016). Therefore, policy
measures in this light help at fostering innovation and managerial abilities, removing
information, and financing barriers regulation, and promoting high-tech entrepreneurship.
Salomons (2018) argue that the most significant role of policy is to aid create a setting that is
conducive to the articulation of jobs and demand. The policy measures help to overcome
misunderstanding between supply for skills, demand and improve the structure for adopting new
organizational activities.

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Contemporary research has revealed that both job and productivity benefits are connected
to novel technologies that are best attained when companies make complementary investments in
upskilling and organizational change (Zehavi, & Breznitz, 2017). For example, New Zealand, the
United States, Canada and The United Kingdom have their performance unevenly improved in
the past due to embracing this approach. However, as a result of the changing extends they still
need to broaden and enhance their technical and vocational education and training. Moreover,
countries such as Japan, Sweden, Denmark, Norway, and Iceland among many other continental
European countries have conventionally performed well in these respects. Nonetheless, some of
these countries should incorporate firm-level flexibility as well as improvements in their
technical education training and strengthen their connectivity with business (Whittaker, Fath, &
Fiedler, 2016). Indeed, expansion and enhancement of vocational training remains a major
problem facing countries such as Germany, Netherlands, Austria and Switzerland ton mention a
few, improving connection with business is a key feature to realizing technical advancement that
contribute to job creation.
Methodology
Introduction
Methodology is a philosophical structure through which the research is undertaken or a
basis upon which the research is built (Glaser, & Strauss, 2017). The research methodology part
is used to comprehensively highlight and describe the research methods, designs as well as
approaches that will be used throughout the study, justifying the researcher’s choice through the
advantages and drawbacks of the selected approach and design. During data gathering the
researcher will use a qualitative data collection approach. The researcher picked on qualitative
approach because it involves a systematic empirical investigative design which use secondary

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data collected in the past by researchers on a similar study. The research opted for qualitative
data gathering method because it provides a rich and well-organized picture which illustrates the
correlation between innovation process and job creation in manufacturing industries within
Australia. Furthermore, qualitative research method allows the researcher the capacity to analyze
the data using regression method.
Data Collection
The target of this study is to relationship between process innovation and employment
growth in Australian manufacturing industries. In order to collect data in regard to the above
research aim the data will be collected from secondary sources such as from the Australian
Bureau of Statistics (ABS), and manufactural and industrial records by Australian government.
Findings and analysis
The data was collected from the Australian Bureau of Statistics (innovation in Australian
business 2016-17).
Figure 1: Summary of IT use and innovation among Australian Business

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In regard to the above figure 1, it shows that between 2012-13 business that introduced
new goods and services, operational processes, organizational and managerial process and
marketing methods 770, and in 2014-15 was 776 and in 2016-17 was 831. This is an indication
that business that adopted IT and embraced innovation kept on increasing from 770 in 2012 to
831 in 2017. The percentage of business with innovative activity in 2012-13 was 42.2%, in 2014-
15 was 45% and in 2016-17 was 44.5. In regard to this data it means that between 2012 and 2016
business with any innovative activities was increasing but come 2017 they decreased by 0.5%.
Figure 2: Innovation activities in Australian business and jobs created
With regard to the figure 2 above, it reveals that the business with innovative
activity that has the highest number of people has only 200 people while those with least people
range is 0-4. In total businesses with innovative activities stand at 38.3%.

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Figure 3: Factors that limits collaboration among Australian business for purposes of
innovation
According to the figure 3, above, it is evident that Australian business have numerous
factors that restrict them from incorporating innovative process in their business. Some of the
limiting factors include lack of access to knowledge, lack of skills in business, lack of funds and
time, and poor government regulation and compliance policies.
Discussion of findings
Accordingly, the results above it shows that Australian industries do not expect any
benefits from process innovation, hence they have less appreciated innovation in their
businesses. On the Same note, most of the business do not have skills and knowledge about
innovation process. The lack of knowledge and skills on innovation process agree with Tavassoli
(2015) in the literature part whereby the scholar notes that there is need to have technological
policy to help establish conditions required to creation and development of new technology-
based firms that directly donate to creating jobs. In addition to that, it was found that Australian

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manufacturing industries do not have the necessary knowledge and skills to effectively introduce
innovative process that would create jobs.
Conclusion
In respect to the literature review and findings from the ABS dataset, this paper set out to
determine if there is a positive, neutral or negative correlation between innovation processes and
employment growth amongst Australian industries. Based on the results and literature review,
innovation process and employment growth calls for firms to have sufficient knowledge and
skills about the technology and how to use the technology to create jobs and improve product
novelty.
Recommendations
In regard to the results finds it was found that the process of innovation and employment
growth among Australian industries is declining because of lack of technology policies and
knowledge regarding innovative process. The following part give several recommendation on
how innovation process can help Australian industry to foster employment growth.
The Australian government should encourage the development of vocational, technical
and education trainings to equip its citizens with skills and knowledge on innovative process that
will help to create jobs.
There need to introduce technology policy and reforms in the labor, financial and product
markets in addition to training and education. With the progressively integrated world economy,
market and product reforms will allow for prompt diffusion of technology as well as information
which will strengthen incentives for companies to innovate and adapt services and products to
transforming consumer needs. Reforms in the financial markets, labor markets allow technology-

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driven entrepreneurial initiatives. Therefore by integrating lifelong learning and upskilling leads
to further novelty, which contributes to new technologies that enable high-tech changes that
translate to creation of additional jobs.
Limitations
 The researcher use of qualitative research makes the quality of the research to be highly
dependent upon the individual skills of the researcher, hence it can be easily influenced
by their personal idiosyncrasies and biases (Taylor, Bogdan, & DeVault, 2015).
 The volume qualitative data is gigantic which take a lot of time to analyze and interpret.
Gantt chart for the project

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References
Bogliacino, F., & Pianta, M. (2016). The Pavitt Taxonomy, revisited: patterns of innovation in
manufacturing and services. Economia Politica, 33(2), 153-180.
https://link.springer.com/article/10.1007/s40888-016-0035-1
Calvino, F., & Virgillito, M. E. (2018). The innovation‐employment nexus: a critical survey of
theory and empirics. Journal of Economic Surveys, 32(1), 83-117.
Calvino, F., & Virgillito, M. E. (2018). The innovation‐employment nexus: a critical survey of
theory and empirics. Journal of Economic Surveys, 32(1), 83-117.
Ciriaci, D., Moncada-Paternò-Castello, P., & Voigt, P. (2016). Innovation and job creation: a
sustainable relation? Eurasian Business Review, 6(2), 189-213.
Glaser, B. G., & Strauss, A. L. (2017). Discovery of grounded theory: Strategies for qualitative
research. Routledge: London.

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Goos, M., Konings, J., & Vandeweyer, M. (2015). Employment growth in Europe: The roles of
innovation, local job multipliers and institutions. Local Job Multipliers and Institutions
(October 1, 2015). https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2671765
Hajkowicz, S. A., Reeson, A., Rudd, L., Bratanova, A., Hodgers, L., Mason, C., & Boughen, N.
(2016). Tomorrow’s digitally enabled workforce: Megatrends and scenarios for jobs and
employment in Australia over the coming twenty years. Australian Policy Online.
Janger, J., Schubert, T., Andries, P., Rammer, C., & Hoskens, M. (2017). The EU 2020
innovation indicator: A step forward in measuring innovation outputs and
outcomes? Research Policy, 46(1), 30-42.
Kunapatarawong, R., & Martínez-Ros, E. (2016). Towards green growth: How does green
innovation affect employment? Research Policy, 45(6), 1218-1232.
https://www.sciencedirect.com/science/article/pii/S0048733316300361
Li, Y., & Rama, M. (2015). Firm dynamics, productivity growth, and job creation in developing
countries: The role of micro-and small enterprises. The World Bank Research
Observer, 30(1), 3-38.
Mitra, A., & Jha, A. K. (2016). Innovation and employment: A firm level study of Indian
industries. In Technology (pp. 113-140). Springer, Singapore.
Rüßmann, M., Lorenz, M., Gerbert, P., Waldner, M., Justus, J., Engel, P., & Harnisch, M.
(2015). Industry 4.0: The future of productivity and growth in manufacturing
industries. Boston Consulting Group, 9(1), 54-89.

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Salomons, A. (2018). Is automation labor-displacing? Productivity growth, employment, and the
labor share (No. w24871). National Bureau of Economic Research.
https://www.nber.org/papers/w24871
Soto-Acosta, P., Popa, S., & Palacios-Marqués, D. (2016). E-business, organizational innovation
and firm performance in manufacturing SMEs: an empirical study in
Spain. Technological and Economic Development of Economy, 22(6), 885-904.
Tavassoli, S. (2015). Innovation determinants over industry life cycle. Technological
Forecasting and Social Change, 91, 18-32.
https://www.sciencedirect.com/science/article/pii/S0040162514000080
Taylor, S. J., Bogdan, R., & DeVault, M. (2015). Introduction to qualitative research methods:
A guidebook and resource. John Wiley & Sons.
Vivarelli, M. (2015). Innovation and employment. IZA World of Labor.
https://wol.iza.org/articles/innovation-and-employment/long
Whittaker, D. H., Fath, B. P., & Fiedler, A. (2016). Assembling capabilities for innovation:
Evidence from New Zealand SMEs. International small business journal, 34(1), 123-143.
Zehavi, A., & Breznitz, D. (2017). Distribution sensitive innovation policies: Conceptualization
and empirical examples. Research Policy, 46(1), 327-336.

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