Portugal's innovation boom wasn't built to last

Between 2022 and 2024, 42.5% of Portuguese companies with 10 or more employees said they had done something innovative — a new product, a new process, an in-house R&D project, even an idea tried and abandoned. Taken alone, that sounds like a healthy, innovative economy. Look closer, and the number tells a different story: a pandemic-era spike that is still working its way back to earth.

Innovation surged as companies scrambled to survive lockdowns and disrupted supply chains, then began sliding back. Large companies — 250 employees or more — innovate at nearly double the national rate, and two industries, information & communication and financial & insurance services, pull the average up. Total spending reached €4,865 million in 2024, up from €3,382 million in 2022, even as the share of companies willing to take part keeps shrinking.

Innovation didn't rise in a straight line. It surged during the pandemic years, driven almost entirely by process innovation — companies scrambling to change how they operated — then began giving that gain back.

The 42.5% headline hides how unevenly innovation is spread — across company size and industry.

Company size isn't just correlated with innovation — it likely enables it. Bigger companies can absorb the cost of a failed R&D project or a product that never ships; smaller ones often can't. Education tells a similar story: in 2024, 9.8% of all Portuguese companies were both innovative and staffed mostly by university graduates. Among companies with no university-educated staff at all, that figure was 4.5% — less than half.

Compared with the previous survey round, innovation activity fell in nearly every sector of the Portuguese economy. Industry was the lone exception — the only sector to post an increase.

Here's the paradox: even as fewer companies innovate, the country as a whole is spending more on it — and that money is concentrated in two regions.

Some of that spending is environmental: 25.4% of companies introduced an innovation with some environmental benefit, and the money behind it — €1,448.3 million — made up 29.8% of everything Portugal spent on innovation in 2024. That split matters because of what non-innovators say about themselves: among companies that already innovate, 16% say they simply don't feel the need to do more; among companies that don't innovate at all, that share more than doubles, to 34.5%. For a large slice of Portuguese businesses, sitting still isn't a resource problem — it's a choice.

When Portuguese companies do protect what they've built, they overwhelmingly reach for a trademark rather than a patent. Registering a brand name is quick and inexpensive; patenting an invention is neither.

This is an economy of mostly small companies, innovating in short, practical bursts, protecting what little they build with the fastest and cheapest tool available — rather than making the slower, riskier bet a patent requires. Portugal's innovation story isn't a straight upward line; it's a crisis-driven spike still working its way back to earth. The pandemic proved Portuguese businesses could change fast when they had no other choice. Whether they keep changing now that they have one is the question this survey can't yet answer.