1. Measuring innovation
SUB-REGIONAL HANDS-ON TRAINING ON SCIENCE, TECHNOLOGY AND INNOVATION INDICATORS
Damascus, Syria September 2010

2. Measuring Innovation
Oslo Manual – 2005 (Guidelines for collecting and interpreting innovation data)
UIS - Annex to the Oslo Manual on Measuring Innovation in Developing countries

3. 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.

4. The innovation measurement framework

5. 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.

6. Types of innovations Product innovation Process innovation
Marketing innovation
Organisational innovation

7. Diffusion and degree of novelty
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.

8. 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.

9. 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

10. 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.

11. 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.

12. 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.

13. 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.

14. 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

15. 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

16. 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.

17. 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

18. 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 public innovation support svcs
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)

19. 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.

20. 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)

21. Expenditures Current innovation expenditures Capital expenditures
labour costs
other current costs
Capital expenditures
land and buildings
instruments and equipment
computer software

22. 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)

23. Classification by size
Number of employees
10-49
50-249
250 and above
Detailed
1 - 9
5 000 and above.

24. 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.

25. 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.

26. 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.

27. 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

28. 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

29. 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

30. 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

31. 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.

32. 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?

33. Thank you!