We agree that many micro businesses may not demonstrate innovation but this conclusion poorly articulates (ie misses!) the significant efficiency gains and improved customer service levels that can come from innovation in business processes. This applies to many thousands of non-tech SMEs across Australia.
Extract from draft report:
"As noted in chapter 1, businesses are set-up for a range of reasons — including to provide employment for the owner and their family or to satisfy a lifestyle choice. Because of these differences in purpose and the owners’ aspirations, the level of innovation within a new business can be characterised as either:
Replicative — these new businesses operate in the same manner as other businesses already actively trading. Generally, replicative businesses operate with few employees. In recent years, over 60 per cent of all businesses and an even greater share of newly set-up businesses had no employees, while a little under half of all business owners were operating as independent contractors (ABS 2013b, 2015c).
Innovative — these businesses change the current operations of existing markets or establish completely new markets by introducing new products, processes, marketing methods or organisational approaches. Although it is difficult to determine the degree of innovation within a business, evidence suggests that very few businesses are innovative in Australia. The Commission estimates that around 1.6 per cent of all businesses (new and existing) introduced a product that was ‘new’ to the world."
Have a look overseas at what can be done: here's an example.