Innovation in Enterprises - Years 2022-2024

Over the three-year period 2022–2024, 62.9% of industrial and services enterprises with 10 or more employed persons carried out innovation activities, an increase of 4.3 percentage points compared with the 2020–2022 period.

The increase in innovation propensity was exclusively among small enterprises (+5.1 percentage points), while medium-sized and large enterprises, respectively with shares exceeding 70% and 80%, showed a slight decrease (-0.6 and -0.7 percentage points).

Manufacturing and other industry activities remain the most innovation-intensive sector, with 69.2% of enterprises undertaking innovation activities, followed by services (60.7%) and construction (53.1%).

Process innovations remained predominant, involving 57.6% of enterprises, an increase of 4.6 percentage points, driven primarily by small enterprises. Product innovation remained broadly stable but less widespread (32.7%); only 15.5% of enterprises introduced products that were new to the market.

A marked recovery in the propensity to innovate among small enterprises

During the 2022-2024 period, 62.9% of industrial and service enterprises with 10 or more persons employed have undertaken innovation activities (hereafter, innovation active enterprises), with an increase of 4.3 percentage points (p.p.) compared with 2020-2022.

The share of innovative enterprises rose from 61.0% among small enterprises to 73.7% among medium-sized enterprises and 84.0% among large enterprises. However, compared with the previous three-year period, the increase was concentrated among small firms (+5.1 p.p.), while the share declined slightly among medium-sized (-0.6 p.p.) and large enterprises (-0.7 p.p.).

Industry remained the most innovation-intensive sector, with 69.2% of firms undertaking innovation activities, followed by Services (60.7%) and Construction (53.1%). Innovation activity increased across all three sectors, by 4.1 p.p. in Industry, 4.6 p.p. in Services and 6.5 p.p. in Construction. Within Industry, pharmaceuticals recorded the highest share, with 90.0% of innovation active enterprises, followed by electronics and chemicals, both above 80%. High levels are also recorded in the machinery and in the automotive industry, where more than 78% of enterprises were innovation active. Among Services, the highest shares were in research and development (86.4%), information technology (85.6%) and insurance (81.0%).

During 2022–2024, 60.8% of enterprises successfully introduced at least one product or process innovation, either onto the market or within the enterprise (hereafter, innovative enterprises). Large enterprises have a substantially higher propensity to introduce product or process innovations (81.1%, compared with 59.0% among small firms), while Industry has the highest sectoral share, at 66.2%.

Process innovation remains the main driver of innovation activities

Process innovation remained the most widespread form of innovation, involving 57.6% of enterprises, an increase of 4.6 p.p. compared with 2020-2022 (Figure 1). The increase was particularly pronounced among small enterprises, where the share rose from 50.2% to 55.8%, while it declined slightly among medium-sized and large enterprises (-0.6 p.p.). Process innovations encompass a broad range of business functions. The most widespread concerned work organization and human resource management (33.0%), followed by production processes and methods (30.7%) and information systems (29.1%). Marketing methods were affected by innovation in 25.7% of enterprises, while more than 20% introduced innovations in accounting and administrative operations and in business practices for organizing procedures or external relations.

The propensity to introduce product innovations remained broadly stable. During 2022-2024, 32.7% of enterprises introduced at least one product innovation. Industrial enterprises have the highest propensity to introduce new products (37.3%) and the share is considerably higher among large industrial enterprises, where approximately two out of three enterprises introduced product innovations. In Services, fewer than one-third of enterprises were product innovators, while the corresponding share in Construction was 23.2%.

Among enterprises, undertaking product innovation, only around half—equivalent to 15.5% of all Italian enterprises—introduced products that were not previously offered by any competitors, that is new to their reference market. This share remained broadly unchanged compared with the previous three-year period. Market novelties were more common in Industry, where they involved 19.4% of enterprises, compared with 14.5% in Services and 8.7% in Construction. Their incidence increased substantially with firm size, reaching 34.7% among large enterprises and peaking at 45.2% among large enterprises in Industry.

In 2024, products that were new either to the firm or to the market accounted for 18.0% of total turnover. Products new to the market alone accounted for 4.5%. Compared with 2022, the overall share increased by 3.2 p.p., while the share from market novelties remained broadly stable (+0.4 p.p.).

Although innovation strategies have increasingly evolved towards integrated and systemic approaches combining product and process innovation, with reference to 2022-2024 period the data point to a growing tendency among enterprises to focus exclusively on process innovation. Small enterprises accounted for most of the growth of process-only innovation, while the adoption of complex innovation strategies increases substantially among larger enterprises, exceeding one-half of large enterprises compared with 27.9% of small enterprises, and reaching 63.5% among large industrial enterprises.

Innovation expenditure rises with R&D accounting for the largest share

In 2024, total expenditure on innovation activities reached 38.5 billion euros, representing a 25.7% increase in current-price terms compared with 2022. Innovation intensity, measured as expenditure per employee, also increased, from 5,400 euros in 2022 to 6,200 euros in 2024. In Industry and Construction, expenditure per employee increased among small and medium-sized enterprises, while in Services it rose across all firm-size classes.

Within Industry, the highest levels of innovation expenditure per employee were in pharmaceuticals (25,100 euros) and the manufacture of other transport equipment (22,700) (Figure 2). Other highly innovation-intensive industries, with expenditure per employee above 10,000 euros, included automotive (15,700) and electronics (13,100). Within Services, research and development recorded by far the highest expenditure per employee (77,300), followed by information technology (8,600) and telecommunications (7,900). Within information technology, expenditure per employee amounted to 8,700 in software production and 8,500 in other IT services.

Research and development (R&D) remained the largest component of innovation expenditure, accounting for 63.6% of total expenditure. Intramural R&D accounted for 53.6%, while extramural R&D represented a further 10.0%. Other significant components included capital expenditure (12.9%), purchases of goods and services (10.0%) and expenditure on internal personnel working on innovation (9.7%). The composition of innovation expenditure differs substantially across sectors. Historically innovation-intensive industries rely heavily on R&D. Automotive and other transport equipment, pharmaceuticals and electronics, together with research and development and information technology, allocated more than three-quarters of their innovation expenditure to R&D. By contrast, sectors characterized by substantial economies of scale – including mining and quarrying, energy and water supply, and paper industry – as well as transport, financial and insurance activities, and retail trade, relied more heavily on other forms of innovation expenditure.

Public support for innovation becomes less widespread

During 2022-2024, 15.1% of innovation active enterprises received public support for innovation, 4.9 p.p. less than in 2020-2022 (Figure 3). The proportion of beneficiaries increased with firm size, from 14.5% among small enterprises to 24.6% among large enterprises, reaching 31.8% among large industrial enterprises. The sharpest declines compared with 2020-2022 were recorded among small enterprises (-5.1 p.p.) and in Industry (-5.7 p.p.), whereas the share of large enterprises receiving public innovation funding remained broadly stable. Public funding for innovation was provided primarily by national government and regional/local authorities. Overall, 9.1% of enterprises with innovation activities reported receiving funding from central government administrations, while 7.2% received funding from regional or local authorities. Only a small proportion received direct support from the EU Programme for Research and Innovation (Horizon) or through other EU financial support (respectively, 1.0% and 1.6%). Firm size and economic sector play an important role in determining access to European public funding: 7.6% of large enterprises benefited from the Horizon programmes, compared with 0.7% of small enterprises. The gap is even wider in Industry, where 9.2% of large enterprises accessed Horizon funding, compared with 0.6% of small enterprises.

Tax incentives and allowances for innovation were more widely used, benefiting 21.6% of innovation active enterprises. Large enterprises were the main beneficiaries (44.1%), followed by medium-sized enterprises (30.5%) and small enterprises (19.4%). Industry recorded the highest use of tax incentives, at 28.9%, compared with 16.9% in Services and 11.9% in Construction. Compared with 2020-2022, the share of enterprises using tax incentives declined by 8.1 p.p. The largest reductions are among SMEs, with declines of 7.7 p.p. among small enterprises and 9.8 p.p. among medium-sized enterprises. At sector level, the largest decreases occurred in Industry (-9.3 p.p.) and Construction (-8.4 p.p.).

Cooperation in innovation activities declines among SMEs

Between 2020-2022 and 2022-2024, the share of innovation active enterprises that co-operate with other organizations for innovation purposes fell from 22.7% to 18.7%. The decline was driven by small and medium-sized enterprises. In particular, the share fell to 16.0% among small enterprises (-3.6 p.p.) and to 28.5% among medium-sized enterprises (-4.8 p.p.). Large enterprises followed a different pattern: approximately one in two co-operated with external partners, a proportion that remained stable compared with the previous period.

Innovative enterprises primarily selected domestic partners. Cooperation with Italian partners involved 18.3% of innovative enterprises, compared with 4.1% cooperating with foreign partners. Foreign partners were more frequently selected by large enterprises (25.9%) and by approximately one in three large industrial enterprises. Cooperation with universities remained relatively limited, involving 4.9% of innovative enterprises. However, this form of cooperation was considerably more common among large enterprises (29.7%), approximately one-third of which also cooperated with suppliers and consultants.

Resource constraints remained a significant barrier to further innovation

Most innovation active enterprises expressed a positive assessment of their innovation choices. Just under half (44.8%) reported that they had not undertaken additional innovation activities because they did not consider them necessary. However, 24.6% reported a lack of financial or human resources, while the remaining 30.6% identified other factors (strategic reasons, not the right time to innovate, other priorities, risks too high, low expected returns, etc.) that had limited their innovation activities. Industry was the sector in which resource constraints represented the most significant barrier to further innovation: 27.2% of enterprises reported such constraints, compared with 22.6% in Construction and 22.5% in Services.

Large enterprises maintain their focus on eco-sustainable innovation

The objective of combining innovation with environmental protection was pursued by 37.2% of innovative enterprises, a decline of 2.9 p.p. compared with the previous three-year period. Large enterprises show the strongest focus on environmental sustainability, with 61.7% adopting eco-sustainable innovations compared with 35.1% of small enterprises. Among large enterprises, the incidence remained broadly stable (-0.4 p.p.), whereas it declined by 2.8 p.p. among small enterprises. At sector level, Industry (43.2%) and Construction (39.8%) continued to show a stronger commitment to environmental innovation than Services (30.1%).

The most widespread measures focused on reducing energy use and CO₂ footprint, both during production (21.0%) and during the consumption of goods and services (18.2%). These were followed by replacing conventional materials with less polluting or hazardous substitutes (15.1%) and by practices for recycling waste, water and materials (14.1%). Slightly lower shares were recorded for measures aimed at replacing fossil fuels with renewable energy sources (13.5%) and reducing pollution, both during production (13.3%) and consumption (12.6%). Similar shares were reported for measures aimed at facilitating the recycling of products after use (11.7%) and extending product lifetimes (10.6%). By contrast, initiatives aimed at protecting biodiversity remained limited, both during production (4.5%) and in post-sale activities (4.8%). Large enterprises show better performances than smaller enterprises especially in measures related to energy efficiency, CO₂ emissions reduction and the replacement of fossil fuels with renewable energy sources.

The improvement of enterprise’s reputation was the most frequently cited factor encouraging the adoption of environmental innovations, identified as relevant by 69.9% of enterprises. Other major drivers included high costs of energy, water and materials (65.3%) and the need to comply with existing environmental regulations (59.4%). More than half of enterprises also considered the availability of government grants, subsidies and other financial incentives, as well as voluntary initiatives promoting good environmental practices, to be important drivers of sustainable innovation. Environmental taxation, by contrast, was considered an important factor positively influencing the eco-innovation choices of just one third of enterprises.