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Survey of Innovation and Business Strategy, 2020-2022

Released: 2024-02-20

Innovation, the introduction of new products and processes to market or to business operations, is a key determinant for economic growth and sustainability.

Innovation rate drops during the COVID-19 pandemic years

The 2020-to-2022 period was marked by the pandemic, which introduced major challenges and disruptions to the global economy.

According to findings from the 2022 Survey of Innovation and Business Strategy (SIBS), covering the pandemic period (2020 to 2022), the innovation rate (71.9%), which is the proportion of businesses that introduced product or business process innovations, declined compared with the previous reference period (79.8% in 2017-to-2019).

The innovation rate dropped for both product and process innovations. From the 2017-to-2019 period to the 2020-to-2022 period, the product innovation rate declined just over 6 percentage to 46.6%, and the business process innovation rate decreased almost 10 percentage points to 63.0%.

The impact of the pandemic was apparent in the extent to which it influenced the nature of innovation. For product innovators, 5.1% brought new or improved products to market exclusively in response to the pandemic, while 38.8% reported that at least some of their product innovations were in response to the pandemic.

Likewise for business process innovation, 4.8% of businesses reported process innovations as a direct response to the pandemic and 41.4% of businesses declared that some of their business process innovations were related to the pandemic.

The ranking of innovation rates across enterprise size groups and regions remains unchanged during the pandemic

The ranking of the propensity to innovate across enterprise size groups and regions did not change with the pandemic. Large businesses (78.4%) were more likely to innovate than medium businesses (75.1%) and small businesses (71.0%).

Regionally, from 2020 to 2022, businesses in Ontario (75.1%) still reported the highest proportion of innovators. Ontario was followed by the "rest of Canada" category (Manitoba, Saskatchewan, British Columbia, Yukon, the Northwest Territories and Nunavut) (72.2%), Alberta (71.5%), Quebec (70.0%) and Atlantic Canada (58.0%).

The top four sectors with the highest innovation rates continued to be concentrated in the services-producing sector in the 2020-to-2022 period. These included the information and cultural industries (79.5%), finance and insurance (excluding monetary authorities) (79.0%), professional, scientific, and technical services (78.2%) and wholesale trade (77.4%). Conversely, the agriculture, forestry, fishing and hunting (50.9%) sector had the lowest innovation rate.

Chart 1  Chart 1: Innovation rate by sector, 2020 to 2022
Innovation rate by sector, 2020 to 2022

Innovation with environmental benefits decreases during the pandemic period

Environmental benefits from innovations include (i) benefits from production through efficient use of resources, (ii) benefits related to increased environmental protection activities, (iii) benefits related to consumers or end users and (iv) other benefits.

Over the pandemic period (2020-to-2022), the rate of innovation with environmental benefits followed the overall trend of the innovation rate, down from the 2017-to-2019 period. Over the 2020-to-2022 period, 46.5% of businesses introduced an innovation with at least one environmental benefit, down from 56.9% in the 2017-to-2019 period.

COVID-19, lack of skills, and uncertainty and risk are the top three reported obstacles to innovation in 2022 

Just over one-half of Canadian businesses (50.6%) encountered obstacles to innovation in 2022. COVID-19 (29.4%) was listed as one of the major obstacles to innovation, as were lack of skills (28.5%) and uncertainty and risk related to innovation (28.1%), which were previously reported as the top major obstacles in 2019.

The impact of the pandemic showed regional variation in 2022. COVID-19 was reported as an obstacle to innovation by a higher proportion of businesses in Ontario (32.8%) and Alberta (32.6%) compared with the "rest of Canada" category (29.0%), Quebec (24.4%) and Atlantic Canada (23.1%). Lack of skills was the most prominent obstacle to innovation in Quebec (28.4%).

Chart 2  Chart 2: Obstacles to innovation faced by Canadian businesses, 2022
Obstacles to innovation faced by Canadian businesses, 2022

Over two in five businesses that implemented business process innovations in 2020 to 2022 report savings

Of the 63.0% of businesses that implemented business process innovations in the 2020-to-2022 period, over two in five (41.1%) businesses reported realizing savings in 2022 related to the overall cost of production of products or overall expenditures on support business functions (see the note to readers), down from 48.8% in 2019.

At the national level, the proportion of businesses that realized savings from business process innovations (41.1%) hid underlying differences across businesses of different sizes, with large businesses (50.1%) having the highest proportion, followed by medium-sized businesses (44.5%) and small businesses (39.8%).

Nearly two in five businesses introducing product innovation register to protect their intellectual property

Among the businesses that introduced new or improved products into the market over the 2020-to-2022 period, 65.0% developed the products themselves. In turn, nearly two in five (38.4%) of these businesses filed or registered the product innovations they developed in Canada to protect their intellectual property (IP).

Among businesses that developed their product innovation in Canada, large businesses were the most likely to protect their IP. From 2020 to 2022, almost half of large businesses (48.8%) did so, compared with 39.0% of medium-sized businesses and 37.3% of the small businesses.

Businesses followed diverse strategies to protect their IP, with non-disclosure agreements (45.0%), trademarks (43.7%) and patents (33.0%) emerging as the primary protective measures.

Businesses collaborate more with other businesses than with post-secondary and research institutions for their innovation activities

The collaborative synergy between diverse partners is instrumental in fostering innovation, as it leverages collective insights, expertise, and resources to enhance the development of novel and groundbreaking ideas and solutions.

Over the 2020-to-2022 period, 14.0% of businesses reported cooperating with partners for innovation activities, a slight decrease of 3.8 percentage points from the 2017-to-2019 period.

In their pursuit of product innovation development through collaboration, businesses engaged more with other businesses or organizations (79.0%) than with post-secondary institutions (13.7%) and research institutions (3.4%).

Government support boosts innovation

From 2020 to 2022, a considerable proportion of businesses (34.1%) reported using at least one government support program for innovation-related activities, up from 30.5% during the 2017-to-2019 period. Over the 2020-to-2022 period, businesses that leveraged government support for innovation-related activities (83.3%) had a higher innovation rate than those that did not depend on such support (66.0%).

From 2020 to 2022, large businesses (42.0%) were more likely to avail themselves of government support programs for innovation-related activities than medium businesses (34.0%) or small businesses (33.6%), but the likelihood of innovation was virtually the same for large businesses (88.5%) or medium-sized businesses (87.2%) using at least one government support service for innovation-related activities.

Government training and hiring programs (17.6%), government tax incentive or tax credit programs (17.2%), and government grants and contributions programs (15.6%) were the top three government support program types used by businesses from 2020 to 2022.

From 2020 to 2022, nearly one-third (32.7%) of businesses considered government tax incentive or tax credit programs as the most critical programs. They were followed by government grants and contribution programs (30.6%) and government training and hiring programs (28.9%).

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  Note to readers

The 2022 Survey of Innovation and Business Strategy (SIBS) is a joint initiative of Statistics Canada; Innovation, Science and Economic Development Canada; the Atlantic Canada Opportunities Agency; the Institut de la statistique du Québec; the Ontario Ministry of Economic Development, Job Creation and Trade; and the Alberta Ministry of Jobs, Economy and Northern Development.

Because of changes in terminology and content between the 2022 SIBS and previous iterations, caution is recommended in making comparisons at more detailed levels of aggregation.

Support business functions include distribution and logistics, marketing and sales services, and information and communication technology services.

Contact information

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