Measuring innovation
SUB-REGIONAL HANDS-ON TRAINING ON SCIENCE, TECHNOLOGY AND INNOVATION INDICATORS
Damascus, Syria
18-20 September 2010
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Measuring Innovation
Oslo Manual – 2005
(Guidelines for collecting
and interpreting innovation
data)
UIS - Annex to the Oslo
Manual on Measuring
Innovation in Developing
countries
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Why measure innovation?
 Innovation – key to the growth of output and
productivity.
 The relationship between innovation and
economic development is widely acknowledged.
 Innovation policy should be evidence-based.
 Innovation data
• to better understand innovation and its relation to
economic growth;
• to provide indicators for benchmarking national
performance.
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The innovation measurement framework
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Innovation: definition (Oslo Manual 2005)
The implementation of:
Technological innovation
 New or significantly improved product (good or
service); or
 New process; or
Non-technological innovation
 New marketing method; or
 New organisational method.
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Types of innovations
 Product innovation
 Process innovation
 Marketing innovation
 Organisational innovation
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Diffusion and degree of novelty
 Diffusion
• How innovations spread
• Without diffusion no economic impact
 New to the firm
 New to the market
 New to the world
 Disruptive innovations
• innovation with significant impact on a market
• focuses on the impact of innovations as opposed to their novelty
• May become apparent only long after the innovation has been
introduced.
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Innovation activities
Innovation activities
 All scientific, technological, organisational,
financial and commercial steps which actually, or
are intended to, lead to the implementation of
innovations.
 Some innovation activities are themselves
innovative, others are not novel activities but are
necessary for the implementation of innovations.
 Innovation activities also include R&D that is not
directly related to the development of a specific
innovation.
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Innovation activities for product and
process innovations
 Intramural (in-house) R&D
 Acquisition of R&D (extramural R&D)
 Acquisition of other external knowledge
 Acquisition of machinery, equipment and other
capital goods
 Other preparations for product and process
innovations
 Market preparations for product innovations
 Training
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Innovation activities for marketing
and organisational innovations
 Preparations for marketing innovations:
activities related to the development and
implementation of new marketing methods.
• Includes acquisitions of other external knowledge and
other capital goods that are specifically related to
marketing innovations.
 Preparations for organisational innovations:
activities undertaken for the planning and
implementation of new organisation methods.
• Includes acquisitions of other external knowledge and
other capital goods that are specifically related to
organisational innovations.
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Kinds of innovation activities
 Successful in having resulted in the
implementation of a new innovation (though they
need not have been commercially successful).
 Ongoing, work in progress, which has not yet
resulted in the implementation of an innovation.
 Abandoned before the implementation of an
innovation.
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Classifying firms by degree of
innovativeness
 Innovative firm
• The innovations need not have been a commercial
success – many innovations fail
 Innovation active firm
• Regardless of whether the activity resulted in the
implementation of an innovation
 Potentially innovative firm
• Innovation efforts but no achieved results.
• Key element for innovation policy
• Annex for developing countries.
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Factors influencing innovation
 Objectives
• Identifying enterprises’ motives for innovating and
measuring their importance.
 Hampering factors
• Reasons for not starting innovation activities at all, or
factors that slow innovation activity or have a negative
effect on expected results.
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Objectives and effects of
innovation
 Competition, demand and
markets
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•
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•
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Replace products being phased out
Increase range of goods and services
Develop environment-friendly products
Increase or maintain market share
Enter new markets
Increase visibility or exposure for
products
Reduced time to respond to customer
needs
 Production and delivery
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Improve quality of goods and services
Improve flexibility of production or
service provision
Increase capacity of production or
service provision
Reduce unit labour costs
Reduce consumption of materials and
energy
Reduce product design costs
Achieve industry technical standards
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Reduce production lead times
Reduce operating costs for service
provision
Increase efficiency or speed of
supplying and/or delivering goods or
services
Improve IT capabilities
 Workplace organisation
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Improve communication and interaction
among different business activities
Increase sharing or transferring of
knowledge with other organisations
Increase the ability to adapt to different
client demands
Develop stronger relationships with
customers
Improve working conditions
 Other
•
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Reduce environmental impacts or
improve health and safety
Meet regulatory requirements
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Factors hampering innovation
activities
 Knowledge factors:
•
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Innovation potential (R&D, design, etc.)
insufficient
Lack of qualified personnel: Within the
enterprise / In the labour market
Lack of information on technology / markets
Deficiencies in the availability of external
services
Difficulty in finding co-operation partners
for: Product or process development /
Marketing partnerships
Organisational rigidities within the
enterprise: Attitude of personnel/ managers
towards change, Managerial structure of
enterprise
Inability to devote staff to innovation activity
due to production requirements
 Institutional factors:
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Lack of infrastructure
Weakness of property rights
Legislation, regulations, standards, taxation
 Cost factors:
•
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Excessive perceived risks
Cost too high
Lack of funds within the enterprise
Lack of finance from sources outside the
enterprise: Venture capital / Public sources
of funding
 Market factors:
•
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Uncertain demand for innovative goods or
services
Potential market dominated by established
enterprises
 Other reasons for not
innovating:
•
•
No need to innovate due to earlier
innovations
No need because of lack of demand for
innovations
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Impacts and outcomes
 Impacts of innovations
• effects on sales and market share
• changes in productivity and efficiency
• changes in international competitiveness and in total
factor productivity,
• knowledge spillovers
• increase in the amount of knowledge flowing through
networks.
 Outcomes of product innovations
• % of sales derived from new or improved products.
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Linkages are crucial
 Linkages between the firm and government
laboratories, universities, policy departments,
regulators, competitors, suppliers, and customers.
 Links to sources of information, knowledge,
technologies, practices, and human and financial
resources.
 Types of external linkages:
• Open information sources
• Acquisition of knowledge and technology.
• Innovation co-operation
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Sources for transfers of
knowledge and technology
Internal sources within the enterprise:
R&D
Production
Marketing
Distribution
Other enterprises within the enterprise group
Open
information
sources
Sources for
purchases of
knowledge
& technology
Cooperation
partners
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External market and commercial sources:
Competitors
Other enterprises in the industry
Clients or customers
Consultants/consultancy firms
Suppliers
Commercial laboratories
Public sector sources:
Universities and other higher education institutions
Government/public research institutes
Private non profit research institutes
Specialised public innovation support svcs
General information sources:
Patent disclosures / Professional conferences, meetings,
literature and journals / Fairs and exhibitions /
Professional associations, trade unions / Other local
associations / Informal contacts or networks / Standards
or standardisation agencies / Public regulations (i.e.
*
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Data collection: survey approach
 The “subject” based approach
• innovative behaviour and activities of the firm as a
whole
 The “object” approach
• collection of data about specific innovations
The subject approach is the one chosen for
innovation surveys.
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Combining innovation & R&D surveys
 Pro
• Reduce overall response burden
• Analysing relation between R&D and innovation at the unit level
• Increases the frequency of innovation surveys
 Against
• Length of questionnaire
• Confusion between the concepts of R&D and innovation
• Different survey frames
 Possibility of merging with other business surveys (e.g.
ICT, knowledge management practices)
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Expenditures
 Current innovation expenditures
• labour costs
• other current costs
 Capital expenditures
• land and buildings
• instruments and equipment
• computer software
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Classification by main economic
activity
 Data broken down by Principal economic
activity of the statistical unit (“industry”),
according to the International Standard Industrial
Classification (ISIC Rev. 3.1)
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Classification by size
Number of employees
Detailed
 10-49
 0
 50-249
 1-9
 250 and above
 10 - 49
 50 - 99
 100 - 249
 250 - 499
 500 - 999
 1 000 - 4 999
 5 000 and above.
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Classification by type of institution
 Private enterprise:
• National (no Controlled Affiliates (CA) abroad)
• Multinational
 Public enterprise:
• Resident non-financial corporations and quasicorporations that are subject to control by government
units.
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Annex to the Oslo Manual
 Developing countries conduct innovation surveys
as well.
 Following Oslo Manual standards, but with
adaptations for capturing the particular
characteristics of innovation processes.
 Latin American adaptations captured in the Bogotá
Manual, published by RICYT.
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Annex to OM (continued)
 Annex to Oslo Manual 3rd edition: Innovation
surveys in developing countries.
 UIS circulated a base document prepared by
RICYT to a vast network of experts in the
developing world covering China, Thailand,
Singapore, Malaysia, Hungary, India, Lebanon,
South Africa, and Tanzania.
 UIS drafted the final annex based on this input.
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Characteristics of innovation in
developing countries
 Size and structure of markets and firms
 Instability
 Informality
 Particular economic and innovation environments
 Reduced innovation decision-making powers
 Weak innovation systems
 Characteristics of innovation
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Innovation measurement in
developing countries
 Definitions unchanged
 But incorporating the concept of potentially innovative firm
 Measurement priorities:
• Innovation capabilities
» Human resources
» Linkages
» Quality assurance systems
» ICTs
• Expenditure on innovation activities
• Organizational innovation
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Principal adaptations
 ICTs in innovation surveys
• strategic use of new technologies (Front office vs Back office)
 Linkages
• matrix of ‘linkage agents’ and ‘types of linkage’
• geographical location of linkages; local, regional, national
 Innovation Activities
• Hardware purchase, and Software purchase
• Industrial design, and Engineering activities
• Lease or rental of machinery, equipment and other capital goods
• In-house software system development
• Reverse engineering
 Human resources (by qualification, occupation, gender) and training
 Quality and environmental management
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Methodological issues for developing
country contexts
 Weakness of statistical systems
 Running the survey
 Questionnaire design
 Frequency
 Publication
 Difficulties
• lack of appreciation of the importance of innovation
• managers are secretive about finance
• lack of adequate legislative base
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Thinking ahead
 The role of entrepreneurs and their attitudes towards
innovation.
 The intention to capture innovations driven by factors other
than market forces, in particular public sector innovations.
 Innovation in the primary sector (particularly in agriculture).
 Better measuring minor or incremental changes, including
innovative applications of existing products or processes,
and the so-called 'backwards integration' of technological
capability.
 The development of indicators reflecting sub-national
(regional) innovation systems.
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Issues arising in the follow-up to the
Annex
 Innovation in informal sector?
 Innovation from traditional knowledge?
 Surveying innovation, rather than R&D, in
business (and informal) sector?
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Thank you!
http://www.uis.unesco.org
m.schaaper@uis.unesco.org
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