The Business Operations Survey
The Business Operations Survey (BOS) is an annual survey designed to collect data on the performance and business practices of New Zealand firms. The survey began in 2005 and two years' results are now available.
BOS collects data on businesses with six or more employees that have been in operation for more than one year. It has broad industry coverage (including agriculture).
Although it does not cover the full range of business sizes covered by Structure & Dynamics, it is a rich source of information on business practices and behaviours.1 The composition of the survey varies from year to year. In addition to the questions related to business operations that are included in each survey, the 2005 survey had modules on innovation and business practices, and the 2006 survey included modules on information and communication technology and on employment practices.
Table 10 illustrates some key results from both the 2005 & 2006 surveys.
Table 10. Selected Business Activities and Practices: Percentage of Firms Engaged
|
Total number of firms – August 2006 |
Exporting |
R&D |
Innovation |
International Presence |
Broadband |
Management & Supervisory Training |
| Firm Size |
| 6-19 |
25,974 |
12 |
6 |
50 |
2 |
73 |
57 |
| 20-49 |
6,228 |
21 |
7 |
57 |
3 |
86 |
68 |
| 50-99 |
1,731 |
28 |
13 |
65 |
7 |
91 |
82 |
| 100+ |
1,440 |
32 |
15 |
68 |
11 |
94 |
89 |
| Sector |
| Manufacturing |
5,523 |
37 |
14 |
65 |
5 |
81 |
42 |
| Agriculture, Forestry & Fishing |
3,123 |
29 |
6 |
42 |
2 |
48 |
41 |
| Wholesale Trade |
3,198 |
34 |
6 |
61 |
4 |
89 |
57 |
| Property & Business Services |
5,055 |
13 |
9 |
50 |
5 |
91 |
61 |
| Mining & Quarrying |
90 |
13 |
7 |
44 |
3 |
67 |
78 |
| All Firms |
35,436 |
16 |
7 |
52 |
3 |
77 |
62 |
Exporting
Fifty-five percent of exporters had between 6 and 19 employees.
The 2006 survey found that 16 percent of firms generated income from exporting, similar to the 17 percent in 2005. Most of these firms were small. Fifty-five percent of exporters had between 6 and 19 employees. Further, most export sales were distributed toward the lower end, with 56 percent of exporters generating less than $5 million in export sales. Fifteen percent had more than $25 million of export sales, up from 12 percent in 2005. Four percent of firms had entered new export markets during the previous financial year.
The industry with the greatest proportion of exporting businesses was manufacturing (37 percent). The transport and storage industry had the greatest increase: 50 percent of its exporters had export sales of $25 million or more compared to 28 percent in 2005.
Table 11 provides data from BOS 2006 for those sectors with the highest proportion of exporters.
Table 11. Percentage exporting by firm size in top exporting sectors, last financial year at August 2005
|
Manu-
facturing |
Agri-
culture etc |
Wholesale Trade |
Property & Business services |
Mining & Quarrying |
All other industries |
% of exporting firms by size |
| 6-19 |
20 |
27 |
19 |
11 |
7 |
3 |
10 |
| 20-49 |
6 |
2 |
4 |
2 |
0 |
0.5 |
2 |
| 50-99 |
5 |
1 |
3 |
2 |
4 |
0.4 |
2 |
| 100+ |
10 |
2 |
4 |
2 |
2 |
0.6 |
3 |
| All firms in sector |
41 |
32 |
30 |
17 |
13 |
4 |
17 |
Another perspective on New Zealand's exports can be gained from Statistics New Zealand's official merchandise trade data as published by New Zealand Trade and Enterprise.2 These are collected on a different basis to the BOS data and so the two are not directly comparable.
Table 12. Merchandise Exports – Number of Exporters by Value Range & Total for 12 Months, ending June 2006
| Value Range |
No. of Exporters |
Percentage of total exporters |
FOB $NZ |
Percentage of total value |
| under $10,000 |
4,756 |
37.51% |
18,186,508 |
0.10% |
| $10,000 - $49,999 |
2,999 |
23.66% |
72,967,541 |
0.20% |
| $50,000 - $99,999 |
1,042 |
8.22% |
74,022,119 |
0.20% |
| $100,000 - $499,999 |
1,916 |
15.11% |
435,811,558 |
1.40% |
| $500,000 - $999,999 |
507 |
4.00% |
360,564,480 |
1.20% |
| $1,000,000 - $1,999,999 |
431 |
3.40% |
618,672,164 |
2.00% |
| $2,000,000 - $4,999,999 |
435 |
3.43% |
1,386,987,063 |
4.50% |
| $5,000,000 - $9,999,999 |
230 |
1.81% |
1,625,472,815 |
5.30% |
| $10,000,000 - $24,999,999 |
205 |
1.62% |
3,177,349,418 |
10.30% |
| $25,000,000 - $74,999,999 |
100 |
0.79% |
4,206,064,395 |
13.70% |
| $75,000,000 and over |
57 |
0.45% |
18,823,318,169 |
61.10% |
| Total for year |
12,678 |
|
30,799,416,230 |
100% |
These data indicate that of those businesses which exported goods, 88 percent had less than $1 million worth of exports and altogether they accounted for only 3.1 percent of total goods exports by value. On the other hand, the 362 firms with exports exceeding $10 million each account for 85.1 percent of the total value of goods exports.
Research and Development Activity
Seven percent of businesses undertook or funded R&D in the previous financial year.
Seven percent of businesses had undertaken or funded research and development (R&D) in the previous financial year. Larger businesses tended to engage more: 15 percent of businesses with 100 or more employees reported R&D activity compared to six percent of business with 6-19 employees. The manufacturing industry had the highest proportion of businesses engaged in R&D activity (14 percent).
Innovation
The survey found that 52 percent of businesses had engaged in innovation over the last two financial years. The different types of innovation surveyed include:
Table 13. Engagement in Innovation Practices
| Types of Innovation |
% of All Businesses |
| Innovation in goods and services |
30% |
| Innovation in operational processes |
29% |
| Innovation in organisational or managerial processes |
31% |
| Innovation in marketing methods |
29% |
| Overall Innovation Rate |
52% |
Larger businesses were more likely to engage in innovation than smaller businesses.
Overall, larger businesses were more likely to engage in innovation than smaller businesses. Sixty-eight percent of businesses with 100 or more employees engaged in innovation compared to 50 percent of businesses with 6-19 employees. The finance and insurance industry had the highest innovation rate of any industry group (68 percent) followed by the manufacturing industry (65 percent). Sixty-two percent of businesses rated a lack of management resources (e.g time) as the biggest impediment to innovation.
International Presence
Seven percent of businesses had some degree of foreign ownership and three percent had shares in overseas businesses. These figures were unchanged from 2005. The electricity, gas and water supply industry had the highest percentage (33 percent) of businesses with part-foreign ownership. This industry also had the highest percentage (17 percent) of businesses with shares in overseas businesses. The mining and quarrying industry exhibited the biggest change between 2005 and 2006, with the proportion of firms reporting foreign ownership falling from 25 percent to 17 percent.
These data are consistent with the overseas equity data reported in the previous section of this report. Both sets of data report virtually the same proportion of firms with some degree of foreign ownership for enterprises with six or more employees.
Information and Communication Technology (ICT)
ICT penetration is seen to be high.
The 2006 survey indicated that ICT penetration is high, with 93 percent of businesses using computers (100 percent of businesses with 100+ employees and 92 percent of those with 6-19 employees) and 91 percent using the internet (99 percent of those with 100+ employees and 89 percent of those with 6-19 employees). The proportion of businesses using the internet has increased by 12 percentage points since 2001. Most businesses use broadband (57 percent) rather than dial-up (11 percent).
Thirty-four percent of businesses use the internet to receive orders for goods or services, although internet sales generally form a small percentage of businesses' total sales. The domestic market accounts for most internet sales: 22 percent of businesses indicated that none of their internet sales were to customers outside New Zealand, while 10 percent indicated that some of their internet sales were exports.
Businesses were asked to report how ICT helped in achieving business outcomes. The most common outcomes were improved responsiveness to customers (53 percent of businesses) and improved efficiency of work flow processes (52 percent of businesses). Only 7 percent of businesses considered that ICT was important in reducing the costs of entering new markets and shifting activities to other businesses.
Operating Environment
Firms generally rated the business environment positively.
In 2006, firms were asked to rate aspects of their operating environment as being good or poor (Figure 35). Information and communications technology (ICT) infrastructure, water and waste infrastructure and business networks were considered good, with water and waste just shading ICT on a net basis. The skilled labour market and local body planning and regulatory processes fared less well. Thirty-two percent of businesses considered the skilled labour market to be poor. This was considered particularly acute by the construction industry, which had the largest percentage (52 percent) of businesses to rate the skilled labour market as poor.
Figure 35. Business Operating Environment, August 2006
→ Full size version of Figure 35 [15 kB GIF]
Employment Practices
In the 2005 survey, the majority of businesses said their employees had participated in formal or informal training (or both). However, 16 percent of businesses with 6-19 employees said that none of their staff had participated in training compared to just one percent of businesses with 100 or more employees. Overall, 27 percent of businesses had three-quarters or more of their employees participating in training, and 44 percent had assessed the skills gap and training needs of individual employees.
Training is provided by a higher proportion of businesses as firm size increases.
In the most recent survey, the most commonly reported type of training was in health and safety (77 percent of businesses). Sixty-two percent trained their staff in management and supervisory related training. Management training is provided by a higher proportion of businesses as firm size increases. This is the case with all other types of training also.
The most common employee practices offered by businesses were flexible break times (78 percent) and employee participation in health and safety (74 percent) (Figure 36). Information sharing and flexible start and finishing times to deal with non-work issues were also popular. Childcare allowances or facilities was the least offered employment practice (5 percent).
Figure 36. Employment Practices, August 2006
→ Full size version of Figure 36 [16 kB GIF]
Businesses were asked to indicate their single most important employment practice change over the last two financial years. For the 47 percent of businesses who reported changes, the most commonly cited was training (32 percent), followed by occupational health and safety (28 percent). Common reasons for the changes were to improve business performance
(55 percent) and to improve internal staff relations (43 percent).
Business Practices
New Zealand businesses are now planning further ahead.
The 2005 survey found that most businesses engaged in business planning, with only 11 percent saying they had no goals set for their business. However, when looking at comparable data from the 2001 Business Practices & Performance Survey, the 2005 results suggest New Zealand businesses are now planning further ahead. Over 40 percent of businesses planned for more than one year ahead in 2005 compared to 18 percent
in 2001.
Over half of businesses engaged in some form of benchmarking. Forty-three percent said they had compared their performance or processes with another New Zealand business in the same industry over the last two financial years. Ten percent said they had compared themselves with an overseas business in the same industry.
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