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Www.uis.unesco.org Measuring innovation: Main definitions & indicators Regional Workshop on Science, Technology and Innovation (STI) Indicators for Gulf.

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Presentation on theme: "Www.uis.unesco.org Measuring innovation: Main definitions & indicators Regional Workshop on Science, Technology and Innovation (STI) Indicators for Gulf."— Presentation transcript:

1 Measuring innovation: Main definitions & indicators Regional Workshop on Science, Technology and Innovation (STI) Indicators for Gulf countries Doha, Qatar 15 to 17 October 2012

2 Measuring Innovation Oslo Manual: Guidelines for collecting and interpreting innovation data UIS - Annex (OM, 2005): Innovation Surveys in Developing Countries

3 Why Why measure innovation? Innovation and economic development; Innovation is more than R&D; Innovation policy should be evidence-based; Innovation data… Understanding of innovation and its relation to economic growth; Indicators for benchmarking national performance.

4 What What is innovation? Innovation is the implementation of: New or significantly improved product or process; New marketing or organisational method. Implementation: 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 into actual use in the firms operations.

5 The innovation measurement framework

6 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 enhance performance.

7 Types of innovation - Product (2) Product Innovation - examples: New products: » The first microprocessors; » The first digital cameras; » The first portable MP3 player; Significantly improvements: » Introduction of ABS braking, GPS navigational systems, or other subsystem improvements in cars; » The use of breathable fabrics in clothing; » Improvements in internet banking services, such as greatly improved speed and ease of use.

8 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.

9 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 product development; » Implementation of a new reservation system in a travel agency.

10 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 firms sales; Marketing method NOT previously used - part of a new marketing concept or strategy; For both new and existing products.

11 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 firms goods and services; Pricing: new pricing strategies to market the firms goods or services.

12 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.

13 Types of innovation - Organisational (1) Organisational Innovation: Implementation of a new organisational method in 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.

14 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 of activities; External relations: new ways of organising relations with other firms or public institutions. Types of innovation - Organisational (2)

15 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)

16 Diffusion and degree of novelty Degree of novelty: Firm; Market; World; Radical innovations: Significant impact on a market; Impact of innovations (as opposed to their novelty); May become apparent only long after introduction.

17 Types of innovation - example Innovation in a restaurant: Product innovation: Product innovation: delivery (new service); Process innovation: Process innovation: new type of oven (new equipment used in the production process); Organisational innovation: Organisational innovation: new delivery unit (new organisational unit/model); Marketing innovation: 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)

18 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.

19 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.

20 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 and training; Expenditures for using these methods in daily business are NOT included.

21 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 and training.

22 Kinds of innovation activities Successful - resulted in the implementation of a new innovation (not necessarily commercially successful); Ongoing - work in progress, which has not yet resulted in the implementation of an innovation; Abandoned - before the implementation of an innovation.

23 Classifying firms by degree of innovativeness Innovative firm: Implemented an innovation; Not necessarily a commercial success; Innovation-active firm: Had innovation activities - ongoing and/or abandoned; Regardless of implementation; Potentially innovative firm: Innovation efforts but no achieved results; Key element for innovation policy; (Annex).

24 Factors influencing innovation Objectives: Motives for innovating; Effects: Observed outcomes of innovations (Table 9) ; Impacts on firm performance; Time lag; Hampering factors: Reasons for not starting innovation activities at all; Factors that slow innovation activity or have a negative effect on expected results (Table 10).

25 Linkages Linkages: connections with other agents; Source, cost, level of interaction; Types of external linkages: Open information sources; Acquisition of knowledge and technology; Innovation co-operation.

26 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 firms Suppliers 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 *

27 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.

28 Developing countries Developing countries 3 rd ed. OM standards, adaptations; LA: the Bogota Manual (RICYT, 2001); UIS: Annex (A) to 3 rd ed. OM; Innovation Surveys in Developing Countries.

29 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.

30 Characteristics of innovation in developing countries Potentially innovative firm; Measurement priorities - why / what / how: Innovation capabilities (HR, Linkages, ICTs); Expenditure on innovation activities; Organisational innovation.

31 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 resources and training.

32 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

33 How 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 us understand 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 and helps 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)

34 How How do we measure innovation? (2) Indicators - definition: Basic indicators: based on one question; Composite indicators: combine answers to several questions in order to examine a number of policy- relevant factors and better capture the diversity of innovative firms.

35 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

36 Innovation indicators - examples (2) Product or process innovation: 1. % of firms that implemented product innovation (N) = Number of firms that implemented product innovation (in each economic activity) *100 (D) =Total number of firms (in each economic activity) (N) = Number of Manufacturing firms that implemented product innovation *100 (D) =Total number of Manufacturing firms

37 Innovation indicators - examples (3) Product or process innovation: Source: 2011 UIS Pilot Data Collection of Innovation Statistics

38 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

39 Innovation indicators - examples (5) Marketing or organisational innovation: 3. % of firms that implemented marketing or organisational innovation (N) = Number of firms that implemented marketing or organisational innovation (in each economic activity) *100 (D) =Total number of firms (in each economic activity) (N) = Number of firms in the Electrical machinery industry that implemented marketing or organisational innovation *100 (D) =Total number of firms in the Electrical machinery industry

40 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

41 Innovation indicators - examples (7) Inputs: 3. % of firms that performed R&D (N) = Number of product or process innovation-active firms that performed 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-active firms that performed R&D *100 (D) = Total number of Services product or process innovation- active firms

42 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)

43 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

44 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

45 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 that co-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 that co-operated with universities or other higher education institutions *100 (D) =Total number of product or process innovation-active firms

46 Innovation indicators - examples (12) Key policy-relevant characteristics: Source: 2011 UIS Pilot Data Collection of Innovation Statistics

47 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 with other institutions *100 (D) =Total number of R&D-performing firms (N) = Number of R&D-performing firms that co-operated with other institutions *100 (D) =Total number of R&D-performing firms

48 Final remarks Data collected with innovation surveys are a important component of comparative studies about countries competitive performance; Strategically important for policy-makers; Data confidentiality; Data reliability.

49 Thank you!


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