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Innovation indicators
Svein Olav Ns
NIFU STEP and
Research Council of Norway
Science, Technology and Innovation Indictors
ENID-PRIME summer school on S&T indicators
Amsterdam September 1-4 2009
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My background
Researcher since early 1990s
Co-founder of STEP group in Oslo
Currently analysis for policymaking
OECD NESTI delegate
Drafting of Oslo manual
Economics a starting point
Evolutionary approach
Innovation systems
Administrative data
Firm demography, HRST
Non-R&D innovation embedded knowledge
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Outline
Part 1 (2x45 min): What are innovation (indicators)?
Explicit measures; Frascati family, Oslo manual
CIS
Indirect/related measures; Other economic indicators
Outputs and effects
OECD innovation strategy
Micro analysis
Part 2 (45 min): Papers and posters
Knowledge investment agenda photo (Edo Haveman)
Measuring innovation in emerging economies (Marins and Zawislak)
The correlation between social capital and incremental innovation in
small and medium enterprises (Maria Katia Orteca)
Part 3 (45 min): Needs, shortcomings and prospects
Innovation in public sectors
Entrepreneurship and firm demography
Skills for innovation
Policy for innovation
Other ideas
Discussion
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Introduction of new products
New methods of production
Opening of new markets
Development of new sources of
supply for raw materials or other
inputs
Creation of new market structures
in an industry
What are innovations -
Schumpeter
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What are innovations - and
-indicators?
New, improved, new context, knowledge, intention, economic
benefit, marketed/implemented
Modified?, copied?, embedded?, finalised?, successful?,
profitable?, public sectors?, embedded?, ..
Product (good, service, solution/adventure?), process
(organisation, marketing, delivery, business model?), source of
raw materials?, market?
Timing: For how long is it new?
Inputs
Activities
Outputs
Effects
Complementary information?
Surveys or administrative data?
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STI indicators
The Frascati family of OECD manuals
STI as the starting point
R&D in Frascati the first concept long time series
The conditions for and value of (academic) research
Explicit borderlines to development and innovation
A broadened perspective over time (for the family)
Patents as an output, trademarks, trade in intangibles (TBP),
high-tech trade, scientific publications and citations
Human resources (HRST) (Canberra)
Globalisation a big challenge to measurements
Generic technologies: ICT, Biotech, nano
Business demography
Oslo.
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R&D in Frascati
Research and experimental
development (R&D) comprise creative
work undertaken on a systematic
basis in order to increase the stock of
knowledge, including knowledge of
man, culture and society, and the use
of this stock of knowledge to devise
new applications.
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Not R&D in Frascati
Education and training
Other related scientific and
technological activities
Other industrial activities
Including innovation
Administration and other supporting
activities
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Oslo Manual
Oslo manual 1992
Explicitly addressing the left-overs from
Frascati
R&D kept as a core activity
Biased towards manufacturing TPP
innovation
Product focus
Limited to what was considered measurable
pragmatic approach
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Oslo
Second edition in 1997
Adaptation to services
Third edition in 2005
Linkages in focus
Marketing innovation
Organisational innovation
Recommends measure for output
from process innovations
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Oslo innovation definition
2005
An innovation is the implementation of a
new or significantly improved product (good
or service), process, or marketing method,
or a significant organisational change.
Innovations are the result of deliberate
plans or activities aimed at improving the
firms products and/or business functions.
Innovations can utilise new knowledge or
technologies, or can be based on new uses
or combinations of existing knowledge or
technologies.
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Oslo innovation activities
definition 2005
Innovation activities are all scientific, technological,
organisational, financial and commercial steps,
including investment in new knowledge, which actually,
or are intended to, lead to the implementation of new
or significantly improved products, processes,
marketing methods or significant organisational
changes. Some may be innovative in their own right,
others are not novel activities but are necessary for the
implementation of innovations. Innovation activities
also include basic research that (by definition) is not
directly related to the development of a specific
innovation.
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Oslo (CIS) type innovation
Differences between the manual and actual surveys like
CIS, Canada, Australia, Brasil which also differ..
CIS the de facto standard but variations also in CIS
(countries, time)
Intended to be inclusive
Diffusion; new to firm, open for mainly developed by
others
Incremental innovation; New or significantly changed
Focus and filtering by outputs; innovations launched last
3 years or activities with the intention to launch
Innovative products shares of sales as output measures
Activity metrics by types of innovation activities
R&D bias
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CIS questionnaire 2008
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What did we get from Oslo?
Better understanding of innovation
Innovation is much more than R&D
Innovations are everywhere
Useful for micro-data analysis
International comparisons
Innovation modes more nuanced
concepts
Increasing number of academic publications
Good platform for further improvements and
linking to external data
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What did we not get from
Oslo (so far)?
Measures are not very accurate indicators
in the true sense
There is a lack of rigorous links to explicit
theory ad hoc modelling
Economic results and effects must be
added from other sources
Insufficient information on non-innovators
Response rates are low
Lack of confidence among policymakers
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Outputs and effects
Innovation activities may result in measurable outputs, like
New products share of sales
Scientific publications
Patents, trademarks
Firms are not trying to innovate, but to earn money
Governments are not trying to be innovative, but to create
welfare
Economic results are thus the first order effect
Defending a position may be a positive effect but difficult to
identify as such
Second order effects relate to other firms and society
Difficult to judge when, where and why effects occur
Metrics for effects to a large extent exist in the form of standard
economic indicators although sometimes difficult to match
Modelling and underlying theory - essential for how causal
relationships are understood
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Indirect/related measures
All the other Frascati family manuals, education, HRST
Other economic indicators, accounts, employment,
wages, industry structure, market shares
New firm formation; entrepreneurship and firm
demography, FDI
The timing issue: causality, panel data
Immeasurable effects: Things we dont see or count,
keeping position
Public sectors without measurable output
Social versus private effects and benefits
Anything new or only useful new which is??
Indirect effects input output tables
Policy interventions
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OECD innovation strategy
Initiated by Ministers 2007 to deliver
by summer 2010
Broad notion of innovation as engine
of sustainable growth
Whole-of-government approach
References to current crisis and
global challenges
The quick pace of change and the
new forms innovation is taking,
require thorough consideration of
what should and can be measured
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IS NESTI roadmap
NESTI roadmap inspired by Blue sky II, Canada
Gap analysis what we know and need to know
(Econometric) analysis of micro data (CIS and similar)
CDM type productivity model
Innovation modes, cluster analysis
Matching with external data; accounts, patents
Skills for innovation, HRST
Innovation in public sectors
Public support to innovation
Harmonising and rethinking R&D and innovation
surveys
Output indicators - results, effects
Openness and knowledge flows
Intangible assets revisited
Measurement of generic technologies a common
approach?
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Extended
CDM Nordic
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CDM core model findings
20 countries, 4 with extended model
Surprisingly robust despite important
problems (timing, productivity, endogeneity)
Similar results across countries
Innovation inputs affect innovtion outputs
positively which affects productivity
positively
The model needs and can be refined
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Extended model in 4
countries
Confirms core model although smaller
coefficients
Better productivity measures
Inclusion of output of process innovation
with positive coefficient
Panel to time inputs and outputs correctly
Dummies replaced with metrics where
possible
Herfindahl index for concentration and
industry characteristics, previous
performnce
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Papers and posters
Knowledge investment agenda photo
Edo Haveman
Measuring innovation in emerging
economies
Marins and Zawislak
The correlation between social capital and
incremental innovation in small and medium
enterprises
Maria Katia Orteca
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Innovation in public sectors
Make up large shares of the economies
Conscious renewal and improvements going on
Much activity similar to private services
Highly competent, utilises knowledge by persons,
embedded, codified, commissions new knowledge
What are the public sectors?
Administration
Health
Education
Infrastructure, security
SNA, ownership, NACE?
Public sectors are very different, nationally and across
countries
Address activities independent of sector?
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Innovation in public sectors 2
What are the relevant units to address?
Command lines, cost cutting, producing more
efficiently
Different incentive structures from business
Lack of markets and prices; outputs==inputs, difficult
to establish productivity measures
Two approaches:
CIS inspired survey (Nordic, NL)
Re-use/interpretation of national accounts data (UK)
Questionnaires become complex, conflicts with
massive existing reporting systems
Existing data less accurate in terms of
contents/definitions
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Entrepreneurship and firm
demography
Economic growth and restructuring via two
(interrelated) main routes:
Innovation in existing firms
Firm creation, destruction and reorganisation
The relationships needs to be investigated
Firm demography poorly understood
Success criteria and potential for
entrepreneurship still open q.
Can be studied using business registers
and matched employer-employee data
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Skills for innovation
Knowledge society interpreted to signify more theoretical
knowledge to all:
Longer and more theoretical educations
R&D as core ingredient for innovation
Only R&D and education data available/in use
Innovation means doing something different, original, new or in
a new setting
Most likely it involves things like ability to combine knowledge,
coordinate, communicate, organise, market, establish positive
relationships, trust, risk management, being visionary, seeing
opportunities,
Where do we find the relevant information on this?
Education is not enough
Is something hidden in CVs, other types of track records,
income statements?
Can the issue be surveyed who and what should be asked?
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Policy for innovation
Govenments support R&D and higher education and to some
extent other types of innovation activities
Right types of education other skills?
Is R&D it and do we supply the necessary complements?
Do we manage to support other things than things for
business services, new business models, public services?
How much do governments effectively spend on innovation
policies? Composition? Does it work? International
comparisons?
Are R&D tax credits better than direct support, crowding out or
additionality?
What innovation related bi-effects occur from all other types of
regulations?
Are anti-trust policies conducive for innovation, from a national
perspective?
Is the national level relevant for statistics on operations that are
global in nature?