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.
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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.
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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.
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Types of innovation - Marketing (2)
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.
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Types of innovation - Marketing (3)
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.
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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.
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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.
Types of innovation - Organisational (2)
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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.
Types of innovation - Organisational (3)
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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.
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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)
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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.
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Innovation activities (2)
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.
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Innovation activities (3)
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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Innovation activities (4)
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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Characteristics of innovation in
developing countries
Size and structure;
Instability;
Informality;
Particular economic and innovation environments;
Reduced innovation decision-making powers;
Weak innovation systems;
Characteristics of innovation.
Characteristics of innovation in
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Characteristics of innovation in
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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Innovation indicators - examples(2)
Product or process innovation:
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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Innovation indicators - examples(3)
Product or process innovation:
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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Innovation indicators - examples(4)
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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Innovation indicators - examples(6)
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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Innovation indicators - examples(7)
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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Innovation indicators - examples(8)
Outputs:
1. % of turnover from product innovations (as a % of turnover)
2. % of turnover from new-to-market product innovations (as a % of
turnover)
I ti i di t l
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Innovation indicators - examples(9)
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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Innovation indicators - examples(10)
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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Innovation indicators - examples(11)
Key policy-relevant characteristics:
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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Innovation indicators - examples(12)
Key policy-relevant characteristics:
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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Innovation indicators - examples(13)
Key policy-relevant characteristics:
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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