According to the latest MYOB Business Monitor - a six-monthly survey of SME owners - cost is the most common barrier to innovation.
"SMEs see that technology can help them do business more efficiently and service their customers better. In the last 12 months, 31 percent had acquired new computer hardware or software and 26 percent had acquired new machinery and equipment," said Simon Raik-Allen, chief technical officer at MYOB.
Other innovation-related investment areas included knowledge acquisition, employee training, and the implementation of new business or management techniques.
But 28 percent of respondents nominated cost as the top barrier to innovation. This was closely followed by government regulation (23 percent).
And other cost-related items were among the top five barriers: lack of R&D funding (14 percent) and access to investment (12 percent), for a total of 54 percent.
Only 40 percent of the businesses surveyed had raised funds for capital investment from outside sources.
"18 percent had used one of the Big 4 banks, with family and friends and credit card companies being the next largest source of finance at 7 percent each. Investors were a source for just five per cent, and home equity helped out 3 percent," said Raik-Allen.