The Extent of Innovation in Philippine Business and Industry: Results of the 2021 PIDS Survey of Innovation Activities

Following Schumpeter’s ideas, the Oslo Manual defines innovation as “the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organizational method in business practices, workplace organization or external relations”. With the advent of the Fourth Industrial Revolution, governments have become even more cognizant of innovation as a major driver of economic performance, from output to productivity and competitiveness. The Philippine government acknowledges its role in establishing and maintaining a conducive policy environment to encourage innovation and support the country’s innovation ecosystem. Examining innovation and its relation to economic growth, the study involves the conduct and analysis of the 2021 PIDS Survey of Innovation Activities (PSIA). Unlike the first PSIA undertaken in 2015 and a pilot of the survey conducted in 2009, the 2021 PSIA provides a nationally representative reading of the entire Philippine business and industry. The survey suggests that as of 2021, a third (33.6%) of firms are innovation active, with innovation practiced more among medium and large establishments than micro and small ones. Moreover, innovation is much more prevalent in Mindanao, among major islands, and in information and communications technology firms (and least in agriculture). Aside from the information on innovation activities, data on the use of digital platforms by Philippine businesses were also gathered in the 2021 PSIA in recognition of the expanding markets arising from rising digitalization and more rapid use of the internet, even by micro, small and medium enterprises. The survey results of the 2021 PSIA are expected to be inputs on how government can be more successful in mainstreaming innovation in the country. Comments to this paper are welcome within 60 days from the date of posting. Email publications@pids.gov.ph.