www.uis.unesco.org measuring innovation sub-regional hands-on training on science, technology and...
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Measuring innovation
SUB-REGIONAL HANDS-ON TRAINING ON SCIENCE, TECHNOLOGY AND INNOVATION INDICATORSDamascus, 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
• 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• 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
• 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• 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• Reduce environmental impacts or
improve health and safety• Meet regulatory requirements
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Factors hampering innovation activities
Knowledge factors:• 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:• Lack of infrastructure• Weakness of property rights• Legislation, regulations, standards, taxation
Cost factors:• 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:• 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
Open information
sources
Sources for purchases of knowledge
& technology
Co-operation partners
Internal sources within the enterprise: R&D Production Marketing Distribution
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Other enterprises within the enterprise group * * *
External market and commercial sources:Competitors Other enterprises in the industry Clients or customersConsultants/consultancy firms SuppliersCommercial laboratories
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Public sector sources:Universities and other higher education institutionsGovernment/public research institutesPrivate non profit research institutesSpecialised public innovation support svcs
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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. environment, security)
*
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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
10-49
50-249
250 and above
Detailed
0
1 - 9
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 quasi-
corporations 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?
