Abu Dhabi Department of Economic Development reveals results of first Abu Dhabi Innovation Index

ABU DHABI: Ms. Shorooq added, “These surveys select a representative sample of businesses in any country, according to sector and size: pursuant to the innovation community survey methodology. Companies with a staff of at least 10 employees were not included in the Abu Dhabi innovation survey.

Moreover, a typical random graded design with systemic probabilities by size was adopted.” She pointed out that during the design of the sample; the surveyed companies were divided and classified into non-overlapping “sectors”; as 580 companies in total were selected to represent ten economic activities in the emirate.

Ms. Shorooq said that three categories were adopted from the size of the sample; small companies with (10-49 employees), medium companies with (50-249 employees) and large companies with (250 or more employees). As the construction sector is characterised as highly labor-intensive, a special classification for this sector was adopted, with the following categories; small companies with (10-199 employees), medium companies with (200-2399 employees), and large companies with (2,400 employees and more).

She noted that the results of the survey revealed that 38.5% of companies offered new or significantly improved products, 21% of companies provided new products or goods, while 33% offered new services.

“16% of the product innovations, offered by Abu Dhabi companies, were developed up to the international level, while 41% of the products offered were new to U.A.E. market and the remaining 43% were not new except for innovating companies which provided them.

Ms. Shorooq reported that 59.4% of the surveyed companies in Abu Dhabi conducted innovations for new or significantly improved processes during the period 2008 to 2011; and indicated that half of these innovations were in the form of maintenance, purchasing, accounting or new computing systems.”

“The manufacturing and production processes came in the second place, followed by innovation operations related to logistics. The results indicated that the largest share of innovation operations in Abu Dhabi, were in the form of information technology systems, especially that a large share of innovations processes (42%) were developed by or in cooperation with other parties.

This trend is in fact a positive indicator of the level of knowledge transfer, and cooperation in the innovation system.” According to Ms. Shorooq, the sources for operation innovations are similar to those specified for product innovations; however, customers and suppliers are the primary channel for Abu Dhabi companies to learn innovation, followed by the activities of exposure to the international market and exhibitions.

The results of the survey show that 60% of the surveyed companies in Abu Dhabi, reported that they did not allocate any funds to directly support activities related to innovation, noting that only 2.6% of surveyed companies had received general financial support for their innovations activities during the period 2008-2011.

Ms. Shorooq said that the innovative activities of companies could be measured against the amount of money spent by these companies for innovation, indicating that there could be a difference in the distribution of these funds among the various categories of innovative activities. Abu Dhabi clearly occupies a place among those economies which, on average, allocate considerable funds for innovation, as a percentage of sales.

The percentage spent on innovation reaches 3.2% – if non-innovative companies are excluded. This percentage is nearly the same as that of Northern European countries, such as Denmark, Finland, and Sweden. Abu Dhabi comes close to the most advanced European countries such as Austria, Belgium, France and Germany.

She said that the results of the Abu Dhabi Innovation Survey revealed that Abu Dhabi government entities have been the main propeller of demand for innovation in U.A.E. The same applies to the construction sector, which enjoys high demand driven mainly by the government, despite that the construction sector is classified as a market private sector.

“The Abu Dhabi Innovation Survey revealed that during the four year period 2008-2011, about 12% of the surveyed companies gave up some of their innovation activities or projects at the initial idea stage; 15% of companies experienced considerable delays, while 9% of the companies dropped their innovative activities at some point after the startup of the activity / project. ” Ms. Shorooq said.

A list of external and internal factors, which sited obstacles to innovation activities facing the Abu Dhabi surveyed companies, was provided. Surveyed companies were asked to classify these factors in terms of importance (high – medium and low). The most common and recurring obstacles were found to be, the high cost of innovation; and the control and dominance of well-established companies in the market.

Ms. Shorooq said that it was interesting, that a relatively small number of companies felt the presence of obstacles due to lack of information available on the market, in line with the results of the index which indicated that Abu Dhabi enjoys great ability to access knowledge.

Regarding the requirements of policy innovation in the Emirate of Abu Dhabi, it was found that, according to the results of the index, access to knowledge lies in facilitating the process of creating a greater number of providers of advanced services, as well as promoting innovation programs similar to those applied in Europe.

As for consolidation of knowledge, the results of the index pointed out that Abu Dhabi had simplified the procedures for the establishment of business for foreign companies, and that it provided distinct incentives to companies; which encouraged companies to take the emirate as their regional headquarters; in addition to the continuous reviewing of foreign ownership laws to ensure competing with other similar economies.

Referring to the dissemination of knowledge, it was revealed that the Emirate of Abu Dhabi is able to further promote the quality of education and training at all levels, provide secondment programs to increase opportunities for students and researchers to move between the academic / educational and industrial systems, provide opportunities for industrial apprenticeships and draw solid plans to pave the way for talents and new innovations to move from the academic world into the industry.

Regarding creation of knowledge, Abu Dhabi invests to build strong capabilities to create knowledge as part of a long-term strategy, which will need some time before they could have a significant impact. So, it is important to continue these investments, to develop knowledge and cognitive abilities.

Concerning the use of knowledge, the results of the index showed the extent of the attention paid by Abu Dhabi to its SMEs and entrepreneurs, as they represent new sources of knowledge; with aim to horizontally expand innovative activities, and enter into new markets.

The survey indicated that the cost of innovation pose a big challenge, especially for SMEs in their attempt to innovate in the local market, which is dominated by big companies. These are the structural issues, which require government intervention to change the terms of the framework, under which SMEs operate.

The Khalifa Fund for Enterprise Development offers different funding programs, aimed to create a generation of entrepreneurs citizens, promote, support and develop SMEs as well as start-up of companies based on innovation. ADDED says this requires the provision of core funding, and venture capital for special activities, to commercially benefit from innovative ideas, through technology transfer, promoting activities and supporting of foreign trade.

Some countries have established specialised public entities to provide all of these services through one instrument (such as “Innovation Norway”), while others used a combination of partners to provide assistance to certain types of companies.