Measuring Innovation_main Definitions (Part I)

8/13/2019 Measuring Innovation_main Definitions (Part I)

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Measuring innovation:

Main definitions & indicators

Regional Workshop on Science, Technology and Innovat ion (STI) Indicators for Gul f coun tr ies

Doha, Qatar

15 to 17 Octo ber 2012


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Measuring Innovation

Oslo Manual :Guidelines for collecting

and interpreting

innovation data

UIS -Annex (OM, 2005):

Innovation Surveys in

Developing Countries


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Why measure innovation?

Innovationand economic development; Innovation is more than R&D;

Innovationpolicyshould be evidence-based;

Innovationdata

Understanding of innovation and its relation to

economic growth;

Indicatorsfor benchmarking national performance.


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What is innovation?

Innovation is the implementation of: New or significantly improvedproductorprocess;

New marketingor organisationalmethod.

Implementat ion:

A new or improved product is implemented when it is

introduced on the market;

New processes, marketing methods or organisational

methods are implemented when they are brought intoactual use in the firmsoperat ion s.


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The innovation measurement

framework


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Types of innovation - Product (1)

Product Innovation:

Introduction of a good or service that is new or

significantly improved with respect to its

characteristics or intended uses;

New products: different characteristics or intended

uses from previous products;

Significantly improvements: changes in materials,

components, and other characteristics that enhanceperformance.


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Types of innovation - Process(1)

Process Innovation:

Implementation of a new or significantly improved

production or delivery method(changes in techniques,

equipment and/or software);

Intended to: decrease unit costs of production or

delivery, increase quality, or produce or deliver new or

significantly improved products.



Types of innovation - Process(2)

Process Innovation - examples:

Introduction of a bar-coded goods-tracking system;

Introduction of GPS tracking devices for transport services;

Implementation of computer-assisted design for productdevelopment;

Implementation of a new reservation system in a travel

agency.



Types of innovation - Marketing (1)

Marketing Innovation:

Implementation of a new marketing method involving

significant changes in product design or packaging,

product placement, product promotion or pricing;

Better addressing customer needs, opening up new

markets, or newly positioning a firms product on the

market increasing firmssales;

Marketing method NOT previously used - part of anew marketing concept or strategy;

For both new and existing products.




Marketing Innovation: Product design or packaging: changes in form and

appearance that do not alter products functional or

user characteristics +changes in the packaging;

Product placement:new sales channels;

Product promotion: new concepts for promoting a

firmsgoods and services;

Pricing: new pricing strategies to market the firms

goods or services.




Marketing Innovation - examples:

Development and introduction of a fundamentally new brand

symbol;

First use of a significantly different media - product placement

in a television programme;

Introduction for the first time of a franchising system.



Types of innovation - Organisational (1)

Organisational Innovation:

Implementation of a new organisational methodin the

firms business practices, workplace organisation or

external relations;

Increase firms performance by reducing

administrative/transaction costs, improving workplace

satisfaction, accessing non-tradable assets, or

reducing costs of supplies; Organisational method NOT used before - result of

strategic decisions taken by management.



Organisational Innovation:

Business practices: implementation of new methods

for organising routines and procedures for the conduct

of work;

Workplace organisation:new methods for distributing

responsibilities and decision making among

employees for the division of work within and between

firm activities+ new concepts for the structuring ofactivities;

External relations: new ways of organising relations

with other firms or public institutions.




Organisational Innovation - examples:

First implementation of a database of best practices;

Establishment of new types of collaborations with research

organisations;

First implementation of an organisational model that gives the

firms employees greater autonomy in decision making and

encourages them to contribute their ideas.




Diffusion and degree of novelty

Degree of novelty: Firm;

Market;

World;

Radicalinnovations:

Significant impacton a market;

Impactof innovations (as opposed to their novelty);

May become apparent only long afterintroduction.



Types of innovation - example

Innovation in a restaurant: Product innovation: delivery (new service);

Process innovation: new type of oven (new equipment

used in the production process);

Organisational innovation: new delivery unit (neworganisational unit/model);

Marketing innovation: billposting (new media for

promoting the delivery service).

Note. Source: Adapted from Heinlo, A. (2011). Measuring R&D&I

in Estonia. Almaty, Kazakhstan S&T Indicators Workshop.

(PowerPoint Presentation)



Innovation activities (1)

Innovation activities:all scientific, technological,organisational, financial and commercial steps

which (intended to) lead to the implementation of

innovations;

Some innovation activities are themselves

innovative, others are not novel but necessary;

R&D not directly related to the development of a

specific innovation.




For product and process innovations:

Intramural (in-house) R&D;

Acquisition of (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.




Preparations for marketing innovations:

Activities related to the development and

implementation of new marketing methods;

It includes acquisition of other external knowledge and

of machinery, equipment, and other capital goods andtraining;

Expenditures for using these methods in daily business

are NOTincluded.


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Preparations for organisational innovations:

Activities undertaken for the planning and

implementation of new organisation methods;

It includes acquisition of other external knowledge and

of machinery, equipment, and other capital goods andtraining.


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Kinds of innovation activities

Successful-resulted in the implementationof a newinnovation (not necessarily commercially successful);

Ongoing - work in progress, which has not yetresulted in the implementation of an innovation;

Abandoned - before the implementation of an

innovation.

Classifying firms by degree of


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Classifying firms by degree of

innovativeness

Innovative firm: Implementedan innovation;

Not necessarily a commercial success;

Innovation-active firm: Had innovation activities - ongoing and/or abandoned;

Regardlessof implementation;

Potentially innovative firm: Innovation effortsbut no achieved results;

Key element for innovationpolicy;

(Annex).


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Factors influencing innovation

Objectives: Motives for innovating;

Effects:Observed outcomes of innovations (Table 9);

Impacts on firmperformance;

Time lag;

Hamperingfactors:

Reasons for not startinginnovation activities at all;

Factors that slowinnovation activity or have a negativeeffecton expected results (Table 10).


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Linkages

Linkages:connections with other agents;

Source, cost ,level of in teract io n;

Types of external l inkages:

Open in format ion sources;

Acquis i t ionof knowledge and technology;

Innovation co-operat ion.

S f t f f Open Sources for Co


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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 *

Other enterprises within the enterprise group * * *

External market and commercial sources:Competitors

Other enterprises in the industry

Clients or customers

Consultants / consultancy firmsSuppliers

Commercial laboratories

*

*

*

*

*

*

*

**

*

*

*

*

**

*

Public sector sources:Universities and other higher education institutions

Government / public research institutes

Private non profit research institutes

Specialised (semi) public innovation support services

*

*

*

*

*

*

*

*

*

*

*

*

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

*


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Appropriability

Ability of enterprises to appropriate gains from

innovation activities:

Formal methods: patents, registration of design,

trademarks, copyrights, confidentiality agreements,

trade secrecy; Informal methods: secrecy that is not covered by legal

agreements, complexity of product design, lead time

advantage over competitors.


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Developing countries

Developing countries

3rd ed. OM standards,

adaptations;

LA: theBogota Manual(RICYT, 2001);

UIS:Annex (A) to 3rded. OM;

Innovat ion Surveys in Developing Coun tr ies.

Characteristics of innovation in


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developing countries

Size and structure;

Instability;

Informality;

Particular economic and innovation environments;

Reduced innovation decision-making powers;

Weak innovation systems;

Characteristics of innovation.



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developing countries

Potent ial ly innovat ive f i rm;

Measurement priorities - why / what / how:

Innovation capabilities (HR, Linkages, ICTs);

Expenditure on innovation activities;

Organisational innovation.


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Adaptations

ICTs in innovation surveys;

Linkages: Agents+Types+Location;

Innovation Activities: Hardware purchase and Software purchase (split);

Industrial design and Engineering activities (split);

Lease or rental of machinery, equipment and other capital goods;

In-house software system development;

Reverse engineering;

Human resourcesand training.

Methodological issues for developing


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Methodological issues for developing

country contexts

Weakness of statistical systems;

Questionnaire design;

Survey application;

Frequency;

Publication;

Difficulties

Lack of appreciation of the importance of innovation;

Managers are secretive about finance;

Lack of adequate legislative base.

Will be discussed

later


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How do we measure innovation?(1)

Indicators - definition:

Statistics and data, often gathered through specialised

surveys, are the building blocks from which

indicators are constructed;

An indicator can be defined as something that helps usunderstand where we are, where we are going and

how far we are from a specific goal. Therefore it can

be a sign, a number, a graphic;

An indicator quantifies and simplifies phenomena andhelps us understand complex realities.

Source: International Institute for Sustainable Development / Adapted

from Blakley, W. (2012). Providing and calculating innovation

indicators. Cape Town, South Africa. ASTII/HSRC/UIS Workshop.

(PowerPoint Presentation)


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How do we measure innovation?(2)

Indicators - definition:

Basic indicators:based on onequestion;

Composite indicators: combine answers to several

questions in order to examine a number of policy-

relevant factors and better capture the diversity ofinnovative firms.


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Innovation indicators - examples(1)

Product or process innovation:

1. % of firms that implemented product innovation

2. % of firms that implemented process innovation

3. % of firms that implemented product or process innovation

(innovative firms)

4. % of firms that developed in-house product or process innovation

5. % of firms that implemented new-to-market product innovation


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1. % of firms that implemented product innovation

(N) = Number of firms that implemented product innovation (ineach economic activity)

*100(D) = Total number of firms (in each economic activity)

(N) = Number of Manufacturing firms that implemented productinnovation

*100

(D) = Total number of Manufacturing firms


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Source: 2011 UIS Pilot Data Collection of Innovation Statistics

15

30

45

60

75

Brazil China Colombia Egypt Israel Malaysia Philippines RussianFederation

SouthAfrica

Uruguay

Product innovation Process innovation


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Marketing or organisational innovation:

1. % of firms that implemented marketing innovation

2. % of firms that implemented organisational innovation

3. % of firms that implemented marketing or organisational

innovation


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Inputs:

1. Total expenditures on innovation (as a % of total turnover)

2. Expenditure on innovation by type of expenditure (as a % of total

expenditure on innovation)

3. % of firms that performed R&D

4. % of firms that performed R&D on a continuous basis

I ti i di t l


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Inputs:

3. % of firms that performed R&D

(N) = Number of product or process innovation-active firmsthatperformed R&D (in each economic activity)

*100(D) = Total number of product or process innovation-active firms

(in each economic activity)

(N) = Number of Services product or process innovation-activefirms that performed R&D

*100

(D) = Total number of Services product or process innovation-active firms

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Outputs:

1. % of turnover from product innovations (as a % of turnover)

2. % of turnover from new-to-market product innovations (as a % of

turnover)

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Outputs:

1. % of turnover from product innovations (as a % of turnover)

(N) = Turnover from product innovations (in each size class)*100

(D) = Total turnover

(N) = Turnover of Small firms from product innovations*100

(D) = Total turnover of Small firms

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Key policy-relevant characteristics:

1. % of firms that were active on international markets

2. % of firms that co-operated with foreign partners on innovations

3. % of firms that co-operated with universities or other higher

education institutions

4. % of firms that received public financial support for innovation

5. % of firms that applied for one or more patents

6. % of R&D-performing firms that co-operated with other institutions

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3. % of firms that co-operated with universities or other higher

education institutions

(N) = Number of product or process innovation-active firms thatco-operated with a specific partner

*100(D) = Total number of product or process innovation-active firms

(N) = Number of product or process innovation-active firms thatco-operated with universities or other higher educationinstitutions *100

(D) = Total number of product or process innovation-active firms

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Source: 2011 UIS Pilot Data Collection of Innovation Statistics

Any type of

co-operation

partner

Other

enterprises

within your

enterprise group

Suppliers of

equipment,

materials,

components, or

software

Clients or

customers

Competitors or

other

enterprises in

your sector

Consultants,

commercial

labs, or private

R&D ins titutes

Universities or

other higher

education

institutions

Government or

public research

institutes

Brazil 9.7 1.1 5.0 3.5 1.0 1.9 1.9 n.a.

China n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Colombia 47.8 18.3 31.8 24.9 5.8 20.7 14.9 n.a.

Egypt 7.5 n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Ghana n.a. 28.1 21.1 31.6 17.5 22.8 12.3 8.8

Indonesia n.a. 37.8 66.3 n.a. 18.4 24.5 19.4 11.2

Israel 33.4 8.3 19.6 21.3 14.4 17.3 12.6 8.2

Malaysia n.a. 65.5 55.1 56.1 30.0 84.0 45.0 37.0

Philippines n.a. 91.2 92.6 94.1 67.6 64.7 47.1 50.0Russian Federation 37.3 12.6 16.9 10.9 3.9 5.1 9.1 15.6

South Africa 33.0 14.2 30.3 31.7 18.6 21.1 16.2 16.2

Uruguay n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

EU-27 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.

Eurostat min 12.9 2.4 7.1 4.2 2.7 4.4 4.3 1.1

Eurostat max 56.2 23.0 41.5 36.0 30.8 33.9 30.8 26.3

Co-operation partner

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3. % of R&D-performing firms that co-operated with other institutions

(N) = Number of R&D-performing firms that co-operated withother institutions

*100(D) = Total number of R&D-performing firms

(N) = Number of R&D-performing firms that co-operated withother institutions *100

(D) = Total number of R&D-performing firms

Fi l k


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Final remarks

Data collected with innovation surveys are a

important component of comparative studiesabout countriescompetitiveperformance;

Strategically important for policy-makers;

Data confidentiality;

Data reliability.

Th k !


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Thank you !

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Measuring Innovation_main Definitions (Part I)