innovation behavious of spanish fashion manufacturing industry

1

INNOVATION BEHAVIOUR OF SPANISH FASHION

MANUFACTURING INDUSTRY: SIZE DIFFERENCES.

José L. Calvo Professor of the Department of Economic Analysis I

Senda del Rey 11, dpcho 2.4,

28040 Madrid, Spain

034913987820

034913988768

[email protected]

Abstract

The Spanish fashion manufacturing industry has been involved in a severe adjustment, with more than

40.000 employments lost in the period 1998-2003. Those are the results of the new competitive situation

European countries are coping with. The relevance of the sector in new European members, the candidate

countries and the countries affected by ATC, based on low wages competitiveness, has increased the

harshness of competition. Innovation has emerged as one of the most important ways to increase productivity

and maintain employment. But a significant share of Spanish fashion industry is not prepared to confront the

situation. Its small, not innovating, not cooperative, independent firms are not the best equipped to deal with

the new competitive environment. On the contrary, big firms innovation strategy looks like the right

approach. An additional problem to Spanish fashion industry is its geographical concentration in two regions,

Catalonia and Comunidad Valenciana. Spanish policy makers should find ways to increase firm’s innovation

expenditures, if they want to preserve a fashion manufacturing industry in the future.

KEYWORDS

Fashion industry, ATC, innovation, firm size.

2

Introduction

The Spanish fashion manufacturing industry −textiles and clothing, but also fur, leather, and shoes− is

involved in a very difficult restructuring process: it lost more than 40.000 employments in the period

1998−2003; its industrial production markedly decreased; and its chronic commercial deficit almost

quadrupled in those years.

This disturbing situation is the consequence of the new trends followed by fashion business not only in

Spain but all over the world. The changes affecting EU-15 are mainly related to the

globalization/delocalization process; the size and cost competitiveness of the textile and clothing sector in the

new EU members and candidates countries; and the implementation of the Agreement on Textiles and

Clothing (ATC), meaning the end of quota system and the opening of European fashion markets to tough

foreign competitors, specially China1.

Innovation has emerged as one of the ways to increase productivity and competitiveness. This conclusion,

usual in academic grounds after Acs & Audrestch (1990) and Porter (1990) −supporters of a specific

literature about this topic− has also arrived to policy makers, who emphasize the relevance of technological

and non-technological innovation on the survival of fashion industry, specially those innovations associated

to products and to the relationships with customers2.

Dimension and innovation are, probably, the two most important challenges for Spanish fashion industry.

Dimension related to the size of the sector, since this industry is very important to Spanish manufacturing

structure, specially in some regions (Catalonia and Comunidad Valenciana), where employment reductions

would have important political and economic effects; but also dimension related to firms, because of the

small size of Spanish industrial fashion firms. And innovation since the indicators of R&D+i 3 leave Spain at

the end of EU-15, and this position does not improve if we take only into account fashion industry.

Therefore, the analysis of the innovation activity of Spanish fashion manufacturing firms, and its

distribution by size, would be a good opportunity to study the possibilities of Spain to surpass an almost sure

difficult future, and, at the same time, pointing to measures to improve competitiveness and maintain

employment.

That is what we do in this study, analysing the innovation activities of Spanish fashion industry using data

from a 2003 survey. Firms are discriminated by size −less than 250 employees, and over that number of

workers−, since previous studies have shown the relevance of this variable in order to explain differences in

firm innovation attitude in Spain4.

1 Institut Français de la Mode (2004); CEPS (2005). 2 Some examples of academic and political analysis of the role of innovation can be mentioned: Montes (2003); Xunta de Galicia (2004); Fundación UNED (2005) or Calvo (2005) for the Spanish case; EMAP (1997), Le Pechoux, Little and Istook (2000), Stengg(2001), or Institut Français de la Mode & partners (2004) for the European Union. 3 research, development and innovation 4 Calvo (2000)

3

The results of the analysis prove that innovation strategy extremely depends on size, since many of the

characteristics of Spanish fashion manufacturing innovating firms are different for firms with more than 250

workers and SMEs: the share of innovating firms doubles in big firms as does the percentage of goods

associated to innovation sold in the market; their strategy is based on R&D, and they usually belong to

groups and cooperate. On the contrary, SMEs innovation expenses are concentrated in equipment −many of

them do not consider R&D as part of their innovation activities− and they do not cooperate; only one third of

their production is new or improved goods, and merely a quarter of them introduce non-technological

innovations. Finally, most of SMEs are independent firms.

The conclusion of the study seems clear: The size of the Spanish fashion manufacturing industry,

basically composed by SMEs −98% of firms have less than 250 employees−, and the innovation attitude of

those firms are not the best equipment to cope with the challenges posed by new EU members and Asian

economies. Spanish policy makers should find ways to increase firm’s innovation expenditures if we want to

preserve a fashion manufacturing industry in the future.

The article is organized as follows: in the first section information of the European textile and clothing

industry is included, reflecting the relevance of this industrial sector to the European economy as well as the

challenges it has to cope with; the second section is dedicated to the evolution of the Spanish fashion industry

in the last years; the third one shows the innovation attitude of Spanish fashion firms; finally, the last section

is dedicated to the main conclusions of the study.

1. European Union analysis: challenges to the fashion industry (Textiles and

Clothing)

Textile and clothing (T/C) sector is very relevant in the EU-155: its is composed by 177.000 enterprises,

with a business turnover close to € 200 billion, and more than 2 million employed people. The share in total

European manufacturing value added amounts to 4% and the portion of total manufacturing employment

around 7%.

The sector is concentrated in the most populated countries of the Union: Italy, UK, France, Germany and

Spain. Some countries, such as Portugal, Greece, Italy, Spain and Belgium can be considered as relatively

more specialised in T/C.

Textile and clothing labour productivity is only around 50% of the average manufacturing productivity

in EU-15. This low productivity can be explained to some extent by the fact that the sector is predominantly a

SME-based industry: enterprises of less than 50 employees employ 60% of the workforce in clothing sub-

sector, and produce almost 50% of valued added.

Finally, more than 20% production in value is sold on external markets, but, at the same time, average

5 Commission of the European Communities (2003). Data from 2002.

4

import penetration is higher than in manufacturing as a whole, especially in clothing (41% in value).

The members of EU-15 have seen how their T/C industry foundations have been shaken from three

different sources: the new members of the enlarged European Union; the Candidate Countries; and the

Agreement on Textile of Clothing (ATC).

Textile and clothing industry of the new EU members was composed, in 2002, by more than 50.000

enterprises, employing 624.000 people. Its bigger producer, Poland, was comparable in size to Spain and

Portugal together. In fact, employment in Poland was 253.000 persons on the payroll, ranking second only to

Italy in that year. The competitiveness of T/C sector in those countries is based on relatively low wage levels,

especially relevant for clothing, the labour intensive segment of the industry: new members ranked from 14%

to 42% of the EU-15 average wage in 20016. The average salary in Poland was 22% of the EU-15.

The situation in the Candidate Countries is even worse for EU-15 T/C sector interests: Romania had

393.000 employed people in 2002; and salaries were 5% in Bulgaria and 7% in Romania of the EU-15

average wage.

The third big defy for EU-15 T/C sector is related to the World Trade Organization agreement on

Textiles and Clothing. As IFrM7 points out: “…the end of quota system is going to be the beginning of a new

phase in T/C world competition: for every new product with severe quota constraints, many more firms and

factories will come onto the battlefield, and more competition, especially on price, fiercer and more ruthless”.

This means that European countries will have to increase their competitiveness in order to preserve their

market position against competitors which benefit from much lower labour costs and much less constraining

regulatory environments. The most special case is China, with oversupply of labour −employment in T/C

Chinese sector ranks from 7.5 million, governmental data, to 15 million, consultant’s estimate−8 and an

integrated textile and apparel supply chain, allowing price competition to be extremely severe.

Innovation has been emphasized as one of the main ways to deal with the new competitive situation. In

fact, the IFrM has proposed to “foster innovative business models”, since “companies…need a clear signal

that there are successful strategies for the industry based on innovation, creativity and quality, efficient

consumer response…”.”…This reinforces the need to create a real European space for training and

research”9.

2. The evolution of Spanish fashion industry.

The Spanish fashion industry has been going through difficult times in the last years. The attached

graphs show this evolution.

6 Social Security costs discounted. 7 Institut Français de la Mode & partners (2004). 8 Institut Français de la Mode & partners (2004). 9 Institut Français de la Mode & partners (2004).

5

Fashion employment was reduced by 44,124 workers in the period 1998-2003. Very bad times

where those years for clothing and fur sub-sector, where the number of employees decreased by more than

30,000 , and for leather and shoes, with 14,307 lost jobs. In both sub-sectors more than 20% of 1998 workers

were unemployed in 2003. Textile, on the contrary, maintained its employment.

The situation even worsens if we take a look to Industrial Production Index evolution in those years.

No one of fashion sub-sectors maintained its 1998 production in 2003. Fashion industry as a whole10 reduced

its production by 21%, with a maximum decrease in clothing and fur, almost 35%. Only leather and shoes

suffered a “small” reduction on its production, 6%.

Graph 1.- Employment evolution (Index)

50

60

70

80

90

100

110

120

1998 1999 2000 2001 2002 2003

Textiles Clothing & Fur Leather & Shoes Fashion Industry

10 Fashion industry index was built using weighted annual sub-sectors index. The weights come from the share of every sub-sector on fashion business turnover.

6

Graph 2.- Industrial Production Index evolution

50

60

70

80

90

100

110

120

1998 1999 2000 2001 2002 2003


The Commercial Balance of Payments also deteriorated in the five years period: fashion industry

deficit increased by almost €2,000 millions, reaching the amount of €2,606 millions, 3.9 times the

commercial deficit in 1998. By sub-sectors, clothing and fur, again, had the worst behaviour, since its

commercial deficit more than duplicate. And, as always, only textile maintained a stable situation, only

increasing its commercial deficit by €50 millions (1.1%).

Graph 3.- Commercial Balance of Payments evolution (million of euros)

-3000

-2500

-2000

-1500

-1000

-500

0

500

1000

1500

1998 1999 2000 2001 2002 2003


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To end this general analysis of Spanish fashion industry I have considered interesting to include the

regional distribution of fashion business turnover. As it can be seen, Spanish fashion industry is concentrated

in two regions: Catalonia, with 38% of business turnover, and Comunidad Valenciana, with more than 26%.

Graph 4.- Regional Distribution of Fashion Industry. 2003(Business turnover)

Other regions; 12,3

Madrid ; 6,3

Galicia; 6,6

Comunidad Valenciana; 26,1

Cataluña; 38,0

Andalucía; 5,8 Castilla - La Mancha; 4,9

Two main conclusions can be obtained of the analysis of the Spanish data presented in this section: hard

employment reductions began before new challenges were completely in action. So, added competition

brought by recent European members, candidate countries and ATC can even worsens the situation,

increasing the adjustment process of the sector. At the same time, the effects of this adjustment that fashion

industry is suffering would also be concentrated into specific areas, focusing the problem for regional a

national policy makers.

3. Spanish firms reaction to the challenges: Innovation attitude

As it has been pointed out, one of the best ways to face up to fashion industry defies is innovation. So, it

would be interesting to analyse the innovative behaviour of Spanish fashion firms, in order to know their

reaction capacity. That is what we do in the next graphs11.

Only one in four of Spanish fashion firms innovates. This share is not far away to the percentage

obtained for the whole industry, 29%. But what really makes a difference is the decomposition by size: for

firms with less than 250 employees the share is the same as for the whole sample; but for bigger firms the

fraction of innovators almost reaches 50%. By sub-sectors, the shares are very close to fashion average in

11 Tables related to each graph are included in the Appendix.

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textiles and leather and shoes, but clothing and fur obtains smaller percentages: only 19% of SME (less than

250 workers) innovate, and the share increases to 37% if we take into account firms with more than 250

employees.

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

Less than 250 employees 250 employees and more Total

Graph 5.- Share of Innovating Firms.(Technological Innovations)

Textiles Clothing and fur Leather and Shoes Fashion Industry Manufacturing

Non-technological innovations are implemented in Spanish fashion industry for 25% of its firms. This

share increases to 36% if we consider big firms. This last percentage is two thirds of the portion of Spanish

manufacturing firms that introduce non-technological innovations (56.7%). By sub-sectors, clothing and fur,

again, present the smallest percentages: 16.5% for SMEs and 18.6% for big firms. On the contrary, textiles

have bigger than average shares (35% for SMEs and 52% for big firms).

0,0

10,0

20,0

30,0

40,0

50,0

60,0


Graph 6.- Share of Innovating Firms (Non-Technological Innovations)


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Innovating intensity, measured as the share of innovation expenses on business turnover, is bigger in

Spanish fashion industry than in manufactures: 3.06% against 2.21. By size, innovating intensity in SMEs

(3.54%) is also bigger than the share of business turnover expended for firms with more than 250 employees,

2.03%. And by sub-sectors, textiles, as always, have the biggest shares: 4.9% for SMEs, and 1.79 for big

firms.

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

4,5


Graph 7.- Innovation Intensity (Share of innovation expenditures on business turnover)


One of the main arguments to prove the relevance of innovation is to measure the share of business

turnover that can be attributed to innovating activity. That is included in graph 8, showing the share of new or

improved products as a percentage of business turnover. Only one third of fashion business turnover can be

explained by new products or products with noticeable changes for SMEs. This share increases to almost

50% for big firms.

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0


Graph 8.- Share of New or Improved Products on Business Turnover


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The sub-sectorial classification Spanish fashion industry has followed in the other graphs completely

changes if we take into account the participation of new products on business turnover. The most

“innovative” sub-sector is clothing and fur, with shares ranging from 67% in big firms to 33% in SMEs. The

sub-sector average is close to 50%. On the contrary, the lowest shares are in textiles (25% for big firms and

30% for small ones).

We have included three final graphs in order to show the innovating behaviour of Spanish fashion firms:

the distribution of innovation expenditures; the cooperative attitude; and the ownership.

Innovation is considered by a different point of view depending on size: for SMEs the main innovation

expenditures are concentrated in activities other than R&D, mainly purchase of machinery and design, pre-

production and pre-distribution. On the contrary, big firms dedicate almost the full amount of their

innovation expenditures to R&D. These differences are really important, since they denote a very different

way to proxy competitiveness related to innovation: meanwhile small firms rely on “bought innovation”, big

firms develop their own innovating structure.

The results included in graph 9 can be explained if we take a look to graphs 10 and 11. The “defensive”

attitude of Spanish fashion SMEs could be related to their ownership and their cooperative approach. SMEs

are not integrated in industrial groups and they do not cooperate. On the opposite, firms with more than 250

employees belong to groups of firms, and some of them cooperate with other firms. Nevertheless, the “more

cooperative mood” of big firms is smaller than manufacturing average and depends on textiles.

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

100,0


Graph 9.- Share of R&D expenditures on Innovation expenses


11

0,0

10,0

20,0

30,0

40,0

50,0

60,0

70,0

80,0

90,0

100,0


Graph 10.- Share of Innovating Firms Belonging to a Group of Firms


0,0

10,0

20,0

30,0

40,0

50,0

60,0


Graph 11.- Share of Cooperative Firms on Innovation


4. Main conclusions of the study: what should be done in Spain?

The actual situation of European fashion industry is challenged by three different sources: new EU

members, candidate countries and ATC. The results of this defies have not yet completely affected European

countries, but it is almost sure they are going to intensify the restructuring process fashion sector is going

12

through. This is especially relevant for Spain, where jobs destruction will affect specific regions and an

important share of sector employment.

All the European studies related to fashion industry have emphasized innovation as an essential way to

maintain competitiveness and employment. But innovation strategy of Spanish fashion firms extremely

depends on size since:

Only one in four of SMEs Spanish fashion manufacturing firms are innovators, meanwhile the

percentage doubles for big firms;

SMEs expenses are concentrated in equipment, whereas big firms dedicate their resources mainly to

R&D. In fact, many Spanish fashion SMEs innovators do not consider R&D as part of their innovation

activities;

Cooperation, a theoretical alternative to intrafirm R&D expenditures, is not a real option for most

Spanish SMEs of this industry: only one in eight (12.5%) cooperate with clients, suppliers, public and

private institutions, or other firms. The share of cooperative big firms increases to 37%;

One third of the production of SMEs innovators are new or improved goods, a percentage smaller than

the 48% for big firms;

Only a quarter of SMEs introduce non-technological innovations, against 36% for big firms;

The only positive result for SMEs is the innovation expenditure intensity, bigger for smaller firms,

especially in textile industry.

Finally, less than 6% of Spanish fashion SMEs belong to a group of firms, whereas the percentage rises

10 times, to 64%, if we consider firms of the same industry but with more than 250 workers.

The conclusions that can be obtained from those data seem clear: The size of the Spanish fashion

manufacturing industry, basically composed by not innovative SMEs −98% of firms have less than 250

employees and only 25% of them innovate−, and the characteristics of the small fashion innovating firms,

non-cooperative, without a group to supply technology and protection, with no interest in R&D, buyers of

incorporated technology, and with a low rate of non-technological innovations implementation, are not the

best equipment to confront the new competitive environment. It looks like the severe production and

employment adjustments accomplished during the last years are going to worsen in the future. Moreover, the

geographical concentration of Spanish fashion industry is an additional problem.

Spanish policy makers should find ways to increase firm’s innovation expenditures, if they want to

preserve a fashion manufacturing industry in the future. Strategies such as “Moda de España” proposed in the

past have not worked, since they were not based on industrial grounds. What Spanish fashion industry has to

look at are innovation and competitiveness.

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REFERENCES

ACS, Z. Y AUDRESTCH, D., 1990: Innovation and Small Firms. MIT Press, Cambridge, Massachusetts.

ARCHIBULGI, D.; CESARATTO, S. Y SIRILLI, G., 1991: “Sources of Innovative Activities and Industrial Organization in Italy”, Research Policy, 20, 299-313.

CALVO, J. L., 2000: “Una caracterización de la innovación tecnológica en los sectores manufactureros españoles: Algunos datos”. Economía Industrial n. 331, pp 139-150.

CALVO, J. L., 2005: La Innovación Tecnológica en la Moda: Textil, Confección, Peletería, Calzado y Cuero. (www.universidadymoda.com)

CEPS, 2005 : The textiles and clothing industry in an enlarged Community and the outlook in the candidates states. Final report. FIF nº 20030838.

COMMISSION OF THE EUROPEAN COMMUNITIES, 2003: “The future of the textiles and clothing sector in the enlarged Europe”. Commission Staff Working Paper, sec(2003) 1345. Brussels.

FUNDACIÓN UNED, 2005: El Sector de la Moda en España. Madrid.

INSTITUT FRANÇAIS DE LA MODE & PARTNERS, 2004 : Study on the Implication of the 2005 Trade Liberalisation in the Textile and Clothing Sector. Consolidated report. Paris.

LE PECHOUX, B.; LITTLE, T.J. & C.L. ISTOOK, 2001 : “Innovation Management in creating new fashions”, in T. Hines & M. Bruce, editors, Fashion Marketing, contemporary issues, B.H. London.

MONTES, V., 2003: “Análisis DAFO de la Moda en España”. Presented to “I Ciclo de Jornadas La Moda un Fenómeno Interdisciplinar”. UNED, noviembre 2003.

OETH, 2000: Key Trends in 2000. L’Observatoire European Du Textile et De l’Habillement. Paris.

PETZINGER,JR.,T., 2000 : « There is a new economy out there – and it looks nothing like the old one ». The Wall Street Journal, 1, Enero, sec. R, 31.

PORTER, M., 1990: La Ventaja Competitiva de las Naciones. Plaza y Janés. Barcelona.

STENGG, W., 2001: The Textile and Clothing Industry in Europe: a Survey. Enterprises Papers n. 2; European

Commission.

XUNTA DE GALICIA, EDS., 2004: Estudio de necesidades formativas del Sector Textil y de la Confección en Galicia. Consejería de Asuntos Sociales, Empleo y Relaciones Laborales.

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APPENDIX

Table A1.- Employment evolution. 1998-2003 (number of workers)

1998 1999 2000 2001 2002 2003 1998-2003 NACE 17 Textile 102373 109091 110096 113610 108980 103339 966NACE 18. Clothing & fur 138286 140158 134161 128709 114108 107503 -30783NACE 19. Leather & shoes 74662 70296 68811 64749 63445 60355 -14307Fashion sector 315321 319545 313068 307068 286533 271197 -44124

Source: Industry Survey. Drawn up by the author

Table A2.- Industrial Production Index Evolution. 1998-2003

1998 1999 2000 2001 2002 2003 1998-2003 NACE 17 Textile 100,0 91,5 90,6 88,5 86,4 80,5 -19,47NACE 18. Clothing & fur 100,0 95,1 92,5 88,0 68,2 65,4 -34,63NACE 19. Leather & shoes 100,0 115,6 113,2 110,1 105,6 93,9 -6,07Fashion sector 100,0 98,8 96,9 93,7 85,0 78,9 -21,10


Table A3.- Fashion Commercial Balance of Payments Deficit. 1998-2003. (million of euros)

1998 1999 2000 2001 2002 2003 1998-2003 NACE 17 Textile -451,9322 -519,5035 -583,3578 -392,8652 -373,2848 -502,2617 -50,33NACE 18. Clothing & fur -1077,7471 -1297,4203 -1606,8149 -1866,1792 -1876,0657 -2364,3644 -1286,62NACE 19. Leather & shoes 861,4847 777,7553 709,7808 676,2882 737,3104 260,4857 -601,00Fashion sector -668,1946 -1039,1685 -1480,3919 -1582,7562 -1512,0401 -2606,1404 -1937,95


15

Table A4.- Innovating Firms in the period 2001-2003.

Less than 250

employees 250 employees and more

Total

TEXTILES (NACE 17) Innovating Firms 516 17 533Share of Innovating Firms 24.8 53.3 25.2Non-innovating firms with innovations in course or with no success 108 1 110EIN Firms 624 18 642Share of EIN Firms 30.0 57.0 30.4 CLOTHING & FUR (NACE 18) Innovating Firms 429 8 437Share of Innovating Firms 17.2 37.1 17.4Non-innovating firms with innovations in course or with no success 54 .. 54EIN Firms 482 8 490Share of EIN Firms 19.4 37.1 19.5 LEATHER & SHOES (NACE 19) Innovating Firms 339 3 342Share of Innovating Firms 19.5 37.5 19.6Non-innovating firms with innovations in course or with no success 77 1 78EIN Firms 417 4 421Share of EIN Firms 23.9 50.0 24.1 FASHION INDUSTRY ( NACE 17. 18 &19)

Innovating Firms 1284 28 1312Share of Innovating Firms 20.4 45.6 20.6Non-innovating firms with innovations in course or with no success 239 2 241EIN Firms 1523 30 1553Share of EIN Firms 24.1 49.2 24.4 MANUFACTURES Innovating Firms 10597 707 11303Share of Innovating Firms 23.7 63.0 24.7Non-innovating firms with innovations in course or with no success 1974 122 2096EIN Firms 12570 829 13399Share of EIN Firms 28.1 73.9 29.3

Source: Firms Technological Innovation Survey 2003. Drawn up by the author

16

Table A5.- Firms with Non-Technological Innovations. 2001 – 2003.

Less than 250 employees

250 employees and more

Total

TEXTILES (NACE 17) Firms with Non-Technological Innovations 659 15 674Changes in Corporate strategy (%) 10.7 21.6 10.9Use of Advanced management (%) 14.5 32.3 14.8Changes in organization (%) 21.1 36.5 21.4Changes in marketing (%) 13.5 17.4 13.6Changes in Aesthetic or Design (%) 17.4 24.9 17.5Share of firms with non-technological innovations over the whole sample 34.9 51.8 35.1 CLOTHING & FUR (NACE 18) Firms with Non-Technological Innovations 412 4 416Changes in Corporate strategy (%) 4.9 4.7 4.9Use of Advanced management (%) 6.0 15.7 6.1Changes in organization (%) 8.5 15.7 8.6Changes in marketing (%) 8.2 16.2 8.3Changes in Aesthetic or Design (%) 11.2 9.4 11.2Share of firms with non-technological innovations over the whole sample 16.5 18.6 16.6 LEATHER & SHOES (NACE 19) Firms with Non-Technological Innovations 547 3 550Changes in Corporate strategy (%) 8.1 37.5 8.2Use of Advanced management (%) 10.8 37.5 10.9Changes in organization (%) 13.4 37.5 13.5Changes in marketing (%) 8.4 25.0 8.4Changes in Aesthetic or Design (%) 23.6 25.0 23.6Share of firms with non-technological innovations over the whole sample 31.5 37.5 31.5 FASHION INDUSTRY (NACE 17, 18 & 19) Firms with Non-Technological Innovations 1617 22 1640Changes in Corporate strategy (%) 7.7 17.8 7.79Use of Advanced management (%) 10.2 27.2 10.3Changes in organization (%) 14.0 29.4 14.2Changes in marketing (%) 10 18.0 10.1Changes in Aesthetic or Design (%) 16.7 19.5 16.7Share of firms with non-technological innovations over the whole sample 25.6 35.8 25.8 MANUFACTURES Firms with Non-Technological Innovations 12075 637 12712Changes in Corporate strategy (%) 8.8 30.9 9.4Use of Advanced management (%) 12.4 39.3 13.1Changes in organization (%) 16.1 38.9 16.7Changes in marketing (%) 10.9 23.6 11.2

17

Changes in Aesthetic or Design (%) 14.8 33.3 15.3Share of firms with non-technological innovations over the whole sample 27.0 56.7 27.8


Table A6.- Innovating Intensity (share of innovation expenses on business turnover). 2001- 2003.

Less than 250

employees 250 employees

and more Total

TEXTILES (NACE 17) (*)

Innovation intensity for all firms 1.92 1.49 1.83Innovation intensity. Innovating firms 4.2 1.79 3.42Innovation intensity. Firms with systematic R&D activities 4.77 1.9 3.12 CLOTHING & FUR (NACE 18) Innovation intensity for all firms 0.39 0.68 0.49Innovation intensity. Innovating firms 1.77 1.67 1.72Innovation intensity. Firms with systematic R&D activities 1.62 1.66 1.65 LEATHER & SHOES (NACE 19) Innovation intensity for all firms 0.47 1.10 0.54Innovation intensity. Innovating firms 2.43 1.43 2.10Innovation intensity. Firms with systematic R&D activities 1.96 1.43 1.71 FASHION INDUSTRY (NACE 17. 18 & 19) (*)

Innovation intensity for all firms 1.45 1.51 1.46Innovation intensity. Innovating firms 3.54 2.03 3.06Innovation intensity. Firms with systematic R&D activities 5.21 2.05 3.33 MANUFACTURES Innovation intensity for all firms 1.14 1.62 1.4Innovation intensity. Innovating firms 3.19 1.88 2.21Innovation intensity. Firms with systematic R&D activities 2.5 1.9 2.02

Source: Firms Technological Innovation Survey 2000 and 2003. Drawn up by the author

*2003 data were strongly atypical, specially for small firms (the value for innovating firms was closer to 15%). Therefore, I decided to use data from the 2000 Survey in this sector and in the aggregate Fashion Industry. Data for the other two sectors come from 2003.

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Table A7.- Business Turnover Distribution. 2001 – 2003.

Shares

Less than 250 employees

250 employees and more

Total

TEXTILES (NACE17) New products or products with noticeable changes 29.5 25.4 28.5New products on firm market 5.0 11.6 6.6Products without changes 70.5 74.6 71.5 CLOTHING & FUR (NACE 18) New products or products with noticeable changes 33.3 66.9 48.7New products on firm market 6.3 2.2 4.4Products without changes 66.7 33.1 51.3 LEATHER & SHOES (NACE 19) New products or products with noticeable changes 40.8 54.7 44.4New products on firm market 8.7 14.2 10.1Products without changes 59.2 45.3 55.6 FASHION INDUSTRY (NACE 17, 18 & 19) New products or products with noticeable changes 32.7 48.4 37.6New products on firm market 6.0 7.8 6.6Products without changes 67.3 51.6 62.4 MANUFACTURES New products or products with noticeable changes 21.0 19.1 19.7New products on firm market 5.5 5.5 5.5Products without changes 79.0 80.9 80.3


19

Table A8.- Innovation Expenditures Distribution.

Less than 250


and more Total

TEXTILES (NACE 17) Total expenses on innovation in 2003 (thousands of euros) 392398 16931 409328Shares R&D inside the firm (intra R&D) 7.1 79.4 10.1Purchase of R&D (external R&D) 1.7 10.4 2.1Purchase of machinery and equipment 6.1 6.8 6.2Purchase of other external knowledge 0.2 0.1 0.2Training 0.1 0.2 0.1Introduction of innovations on the market 0.4 .. 0.4Design and other activities preparing production and/or distribution 84.4 3.1 81.0 CLOTHING & FUR (NACE 18) Total expenses on innovation in 2003 (thousands of euros) 18598 16094 34691Shares R&D inside the firm (intra R&D) 28.6 86.9 55.7Purchase of R&D (external R&D) 15.8 6.2 11.3Purchase of machinery and equipment 31.5 1.7 17.7Purchase of other external knowledge 7.5 0.1 4.1Training 2.1 0.4 1.3Introduction of innovations on the market 0.3 2.2 1.2Design and other activities preparing production and/or distribution 14.1 2.6 8.8 LEATHER & SHOES (NACE 19) Total expenses on innovation in 2003 (thousands of euros) 17580 5126 22707Shares R&D inside the firm (intra R&D) 30.6 78.64 41.4Purchase of R&D (external R&D) 13.4 17.13 14.2Purchase of machinery and equipment 49.1 .. 38.0Purchase of other external knowledge 0.4 .. 0.3Training 0.6 1.1 0.7Introduction of innovations on the market 2.8 3.13 2.9Design and other activities preparing production and/or distribution 3.2 .. 2.4 FASHION INDUSTRY (NACE 17, 18 & 19) Total expenses on innovation in 2003 (thousands of euros) 428576 38151 466726Shares R&D inside the firm (intra R&D) 9.0 82.5 15.0Purchase of R&D (external R&D) 2.8 9.5 3.4Purchase of machinery and equipment 9.0 3.7 8.6Purchase of other external knowledge 0.6 0.1 0.5Training 0.2 0.4 0.2Introduction of innovations on the market 0.5 1.3 0.6Design and other activities preparing production and/or 78.0 2.4 71.8

20

distribution

MANUFACTURES Total expenses on innovation in 2003 (thousands of euros) 2252733 3959802 6212536Shares R&D inside the firm (intra R&D) 37.9 40.6 39.6Purchase of R&D (external R&D) 10.2 31.1 23.6Purchase of machinery and equipment 27.1 14.8 19.2Purchase of other external knowledge 1.4 7.2 5.1Training 0.5 0.5 0.5Introduction of innovations on the market 4.7 2.6 3.4Design and other activities preparing production and/or distribution 18.1 3.2 8.6


21

Table A9- Cooperation on Innovation. EIN12 firms. 2001 – 2003.

Less than 250


and more Total

TEXTILES (NACE 17) EIN firms cooperating on innovation 91 8 99Share of cooperating firms over the whole sample of firms 4.4 24.3 4.7Cooperation distribution Other firms of the same group 6.6 12.5 7.1Clients 4.4 .. 4.0Suppliers 39.6 50.0 39.4Competitors and other firms in the same sector 28.6 25.0 28.3Experts and consulting firms 8.8 12.5 9.1R&D firms and commercial laboratories 16.5 12.5 16.2Universities 9.9 .. 9.1Public R&D institutions or Technological Centres 28.6 12.5 37.4 CLOTHING & FUR (NACE 18) EIN firms cooperating on innovation 62 2 65Share of cooperating firms over the whole sample of firms 2.5 11.0 2.6Cooperation distribution Other firms of the same group .. .. ..Clients 8.1 .. 7.7Suppliers 93.5 50.0 90.8Competitors and other firms in the same sector 1.6 .. 1.5Experts and consulting firms 30.6 .. 19R&D firms and commercial laboratories .. .. ..Universities 6.5 50.0 7.7Public R&D institutions or Technological Centres 3.2 50.0 4.6 LEATHER & SHOES (NACE 19) EIN firms cooperating on innovation 37 1 38Share of cooperating firms over the whole sample of firms 2.1 12.5 2.2Cooperation distribution Other firms of the same group .. .. ..Clients 13.5 100.0 15.8Suppliers 56.8 .. 55.3Competitors and other firms in the same sector 5.4 .. 5.3Experts and consulting firms 16.2 100.0 18.4R&D firms and commercial laboratories 5.4 .. 5.3Universities 5.4 100.0 7.9Public R&D institutions or Technological Centres 43.2 .. 42.1 FASHION INDUSTRY (NACE 17, 18 & 19) EIN firms cooperating on innovation 99 3 103Share of cooperating firms over the whole sample of firms 2.3 10.1 2.4Cooperation distribution

12 Includes innovating firms and firms with innovations on course or without success.

22

Other firms of the same group 3.2 9.1 3.5Clients 7.4 9.1 7.5Suppliers 60.5 45.5 59.7Competitors and other firms in the same sector 15.3 18.2 15.4Experts and consulting firms 17.4 18.2 17.4R&D firms and commercial laboratories 9.5 9.1 9.5Universities 7.9 18.2 8.5Public R&D institutions or Technological Centres 24.2 27.3 24.4 MANFUCATURES EIN firms cooperating on innovation 2464 451 2915Share of cooperating firms over the whole sample of firms 5.5 40.2 6.4Cooperation distribution Other firms of the same group 8.9 31.5 12.5Clients 12.9 15.3 13.3Suppliers 35.9 30.6 35.1Competitors and other firms in the same sector 10.1 12.2 10.4Experts and consulting firms 19.0 18.2 18.8R&D firms and commercial laboratories 8.5 17.7 9.9Universities 26.7 48.1 29.9Public R&D institutions or Technological Centres 30.9 60.3 35.4


23

Table A10.- Innovating Firms Belonging to a Group of Firms.

Less than 250


and more Total

TEXTILES (NACE) Innovating Firms belonging to a Group of Firms 51 9 60 Share over Innovating Firms 9.9 52.9 11.3Distribution Head Office 27.5 55.6 31.7Subsidiary firm 37.3 55.6 40.0Joint venture 33.3 .. 28.3Associated firm .. .. .. CLOTHING & FUR (NACE 18) Innovating Firms belonging to a Group of Firms 8 6 14 Share over Innovating Firms 1.9 75.0 3.2Distribution Head Office .. 33.3 14.3Subsidiary firm 87.5 50.0 71.4Joint venture .. .. ..Associated firm 12.5 .. 7.1 LEATHER & SHOES (NACE 19) Innovating Firms belonging to a Group of Firms 14 3 17 Share over Innovating Firms 4.1 100.0 5.0Distribution Head Office 35.7 33.3 35.3 Subsidiary firm 14.3 66.7 23.5 Joint venture 7.1 .. 5.9Associated firm 42.9 .. 35.3 FASHION INDUSTRY (NACE 17, 18 & 19) Innovating Firms belonging to a Group of Firms 72 18 90 Share over Innovating Firms 5.6 64.3 6.9Distribution Head Office 26.4 44.4 31.1 Subsidiary firm 38.9 55.6 42.2 Joint venture 25.0 .. 20.0Associated firm 9.7 .. 7.8 MANUFACTURES Innovating Firms belonging to a Group of Firms 1771 577 2348 Share over Innovating Firms 16.7 81.6 20.8Distribution Head Office 12.4 22.4 14.9 Subsidiary firm 69.6 68.8 69.4 Joint venture 6.2 2.6 5.3

24

Associated firm 11.9 6.1 10.4 Source: Firms Technological Innovation Survey 2003. Drawn up by the author

Table A11.- Firms with R&D Activities in 2003.

Less than 250


and more Total

TEXTILES (NACE 17) Firms with R&D activities 237 16 253Share of Firms with R&D activities over the whole sample 11.4 50.1 12.0 Share of Firms with R&D activities over innovating firms 44.7 87.8 46.2 CLOTHING & FUR (NACE 18) Firms with R&D activities 79 5 83Share of Firms with R&D activities over the whole sample 3.2 21.9 3.3 Share of Firms with R&D activities over innovating firms 25.4 80.7 26.4 LEATHER & SHOES (NACE 19) Firms with R&D activities 96 4 100Share of Firms with R&D activities over the whole sample 5.5 50.0 5.7 Share of Firms with R&D activities over innovating firms 43.1 100.0 44.1 FASHION INDUSTRY (NACE 17, 18 & 19) Firms with R&D activities 411 25 436Share of Firms with R&D activities over the whole sample 6.5 40.3 6.9 Share of Firms with R&D activities over innovating firms 38.7 88.1 40.0 MANUFACTURES Firms with R&D activities 4221 634 4855Share of Firms with R&D activities over the whole sample 9.5 56.5 10.6 Share of Firms with R&D activities over innovating firms 45.4 81.0 48.1


innovation behavious of spanish fashion manufacturing industry

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