Corporate innovation has gained momentum again – especially in the field of digital developments

Digital innovation reaches record high

The biggest change was seen in the digital innovation sub-index, which rose by 7 points to 37—its highest level to date. This reflects companies’ growing openness to artificial intelligence, IoT, and data-driven operations. One in five companies already uses AI-based solutions, mainly for text generation, translation, data processing, and marketing.

Strategic thinking also strengthened (the strategic innovation sub-index increased by 4 points), indicating a growing number of companies are approaching innovation more consciously. 67% of companies consider themselves innovative, and 8% have a written innovation strategy—a figure that has now stabilized after previous declines.

19% of companies plan to launch new products or services within the next year (planned innovation: +1 point), while the proportion of companies that actually introduced innovations remained unchanged (implemented innovation sub-index stays at 27 points). One in four companies has introduced a new product or service in the past two years.

Who is driving innovation?

The biggest progress was seen among companies with revenues under HUF 2 billion (+4 points for both micro and HUF 1–2 billion companies). In contrast, the innovation index of the largest companies (over HUF 4 billion) declined, partly due to a drop in written innovation strategies (13%) and a decrease in planned innovations (14 points).

By sector, the most significant increases occurred in agriculture (+7 points) and services (+5 points), marking a return to levels seen a year ago, while trade and industry stagnated. Regionally, the index increased in Eastern and Western Hungary, but remained unchanged in the Central Region.

Customer experience and quality are the main drivers

“The most common motivation for innovation is improving customer service and the quality of products and services. These are followed by boosting efficiency and aligning with sustainability goals.

The biggest obstacles continue to be lack of resources (financial, time, human) and a ‘what we have is enough’ mindset—many companies feel that past innovations are still meeting current needs,” commented Balázs Németh, Head of Innovation at K&H.

New insight: how companies foster internal innovation

The K&H Innovation Index survey also asked how companies encourage internal innovation. 60% of respondents use at least one method, including:

– organizing internal idea sessions, workshops, or developer days (the most common approach, seen at nearly one-third of companies),
– collecting employee suggestions systematically,
– monitoring industry trends and research (at one in five companies),
– and drawing inspiration from customer feedback (reported by one in six companies).

Financing: mostly self-funded

Innovation projects are still mostly financed from companies’ own resources, though the share of those using grant funding—at least in part—rose from 26% to 34% over six months. Interest in long-term loans is declining, which may be interpreted as a cautious response to the current economic climate.

More companies now consider themselves innovators, and innovation spending is on the rise
Companies’ self-perception has improved: two out of three firms (67%) see themselves as innovative to some degree, and 8% identify as sector-leading innovators—a return to last year’s level.

On average, companies spent 8% of their revenue on innovation over the past two years—up from the previous half-year and back in line with 2023 levels. However, spending on software, automation, and IT development remains relatively low, comprising just 4% of operational costs.

More businesses plan to innovate

Companies are increasingly optimistic: 22% plan more innovation over the next two years than in the previous two—a return to last year’s figure. 64% expect to maintain similar levels of development, while only 14% foresee a decrease. These numbers suggest that despite the challenging economic environment, the majority of Hungarian companies are not giving up on the pursuit of renewal.