Innovation and firms performance - November 2017 

The Commission has recently completed its research into innovation and firms performance. 

Cut to the Chase: Innovation and firms performance

This is a summary of what we have learnt from our research on innovation. It also describes how research can be used to support innovation policy, particularly firm-level interventions aimed at lifting innovation.

Innovation and the performance of New Zealand firms - Simon Wakeman and Paul Conway

This paper looks at the impact of innovation on the performance of New Zealand firms. Results show that innovating firms grew more quickly than non-innovators but did not experience improved productivity outcomes. However, digging into the relationship between innovation and firm performacne reveals that firms in the manufacturing sector improved their productivity performance as a result of innovation. Firms that were younger or had access to international markets also tended to experience highter productivity growth following some types of innovation.

The impact of R&D grants on the performance of New Zealand firms - Simon Wakeman

This paper evaluates the impact of R&D grants on the firm performance. Given data constraints, the analysis covers the period 2004 to 2012 which precedes the creation of Callaghan Innovation in 2013. Although the paper does not directly evaluate the performance of Callaghan Innovation's R&D grants programme, it does illustrate the insights that can be gained from firm-level analysis of government interventions. Results show that grant recipients tend to increase innovation, and that this flow through to higher employment and higher output per worker. However, grants tend not to increase multi-factor productivity, which is generally taken to represent a firm's technology.

Family and work tax credits and effective marginal tax rates (EMTRs)

In July 2017, the Commission's Patrick Nolan gave a presentation about modelling family and work tax credits and effective marginal tax rates (EMTRs) at the New Zealand Association of Economists conference.

You can view the presentation as well as look at the data behind some of the graphs.


EMTR spreadsheet

Tax credit spreadsheet

Recent papers on state sector productivity

Public sector productivity: Quality adjusting sector-level data on New Zealand schools

This working paper looks at a range of quality adjusted productivity measures and discusses the benefits and risk of different approaches. It includes one series that benchmarks the results in the study with similar work in the UK (by the Office for National Statistics). The focus on the education sector is consistent with the Better Public Services programme and the overall intent to upskill the economy.

Social sector productivity: a task perspective

This research note explores how the scope for productivity measures in the public sector can vary depending on the nature of the task. While the paper focuses on the social sector, the idea of distinguishing between different types of tasks could potentially be useful for other sectors. It was prepared by a MPP student for the internship component of her degree over summer 2016-17.

Both papers will be useful information for the Commission's inquiry into State sector productivity.

Explaining ethnic disparties in bachelor's qualifications: participation, retention and completion

The Productivity Commission and Auckland University of Technology (AUT) have published joint research that looks at the factors associated with undertaking bachelor’s degree study in New Zealand.

The research is a detailed, comparative analysis of the factors that contribute to ethnic disparities in bachelor’s qualifications in New Zealand. 

Achieving New Zealand's productivity potential

The Productivity Commission has just released a paper about why New Zealand has generally struggled to lift productivity over the last four decades and the broad areas of policy reform that would help in turning that around.

Written by Paul Conway, Achieving New Zealand's productivity potential presents a detailed analysis of the issues.

Other recent publications

One of our core roles is to undertake research on, and promote understanding of, productivity-related matters.

16/12/2016  Geographic proximity and productivity convergence within New Zealand
16/12/2016  Servicification of trade
09/05/2016  Subjective wellbeing in New Zealand: Some recent evidence 
27/04/2016  What can complexity theory tell us about urban planning? 
18/04/2016  Productivity Symposium transcript   
12/01/2016  History of tertiary education reforms in New Zealand 


09/05/2016 NZAE Interview with Murray Sherwin
18/04/2016 Blog: Benefiting from innovation - what’s the secret sauce?

Productivity Hub

We work with other government agencies through the Productivity Hub, which we convene and chair. The Hub plays a coordination role which helps inform the research choices of each participating agency, and advance collaborative research projects. The Hub also engages with a wider research community outside government.


The Commission has requested independent evaluations of our research function.