The measurement of innovation Advanced Workshop “Science, Technology and Society” Lisbon, 24 November 1999 The measurement of innovation Giorgio Sirilli

Advanced Workshop“Science, Technology and Society”

Lisbon, 24 November 1999

The measurement of innovationThe measurement of innovation

Giorgio Sirilli

Institute for Studies on Scientific Research and Documentation National Research Council of Italy

Outline of the presentation

• Definition and measurement of innovation

• R&D and innovation

• Science and technology indicators

• The “Oslo Manual”

• Some evidence from innovation surveys

• Concluding remarks


Technological innovation(Oslo Manual)

• Technological innovations comprise new products and processes and significant technological changes of products, services and processes.

• An innovation has been implemented if it has been introduced on the market (product and service innovation) or used within a production process (process innovation).


Technological innovation(Oslo Manual)

• Innovations involve a series of scientific, technological, organisational, financial and commercial activities.

• The product or process should be new (or rignificantly improved) to the firm (it does not necessarily have to be new to the relevant market)


Definition of research and development (Frascati Manual)

• R&D is defined as 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.


Science and technology indicators

• S&T indicators may be defined as a series of data designed to answer questions about: - the state of the science and technology enterprise, - its internal structure, - its relationships with the outside world, and - the degree S&T is meeting the goals set it, and about its evolution.



• Statistical data are the basic elements (atoms) with which indicators (molecules) are constructed.

• The questions indicators have to answer concern aspects which can be tacked using quantitavive techniques.



• R&D• Innovation surveys• Patents• Bibliometrics• Technological balance of payments• Human resources for S&T• Trade in high-tech products




The linear model

• Research-based

• Sequential

• Tecnocratic




The exponential growth of S&T indicators at the international level

Decades 50s and 60s 70s 80s 90s

Main indicators used Re&D Re&D Re&D Re&DPatents Patents PatentsTechnological balance Technological balance Technological balanceof payments of payments of payments

High-tech products High-tech productsand sectors and sectorsBibliometrics BibliometricsHuman resources Human resources

Innovation surveys Innovation surveysInnovations mentioned intechnical literatureSurveys of productiontechnologiesGovernment support toindustrial technologyIntangible investmentIndicators of informationand communication technologiesInput-Output matrixes *Productivity *Venture capital *Mergers and acquisitions *

* Indicators mutuated from economic analysis.

Period 1960's-1970's 1980's-early1990's

1990's - nextmillennium

Model Linear model Chain-linkedmodel

Systemsapproaches

Conception Simple Complex Extremelycomplex

Number ofindicators

Few(R&D, patents,TBP)

Many(R&D, patents,bibliometrics,innovation, hightech products,humanresources)

Too many(combinationsof existing andpossibly newindicators,quantitative/qualitative)

Development of indicators


The Community Innovation Survey (CIS)The harmonised EU/OECD questionnaire

• General information about the firm

• Type of innovation (product, process)

• Sources of information for innovation

• Objectives of innovation

• Factors hampering innovation

• Cost of innovation

• Impact of innovation


The Community Innovation Survey (CIS)The harmonised EU/OECD questionnaire

• R&D

• Cooperation in innovation

• User sector of innovation

• Public policies for innovation

• Impact of innovation on employment, the environment, firm’s organisation


Main indicators from innovation surveys

• Number of innovating firms– by sector– by firm size

• Cost of innovation

• Percentage of sales due to new products


Innovative firms in manufacturing and services in Italy (1990-92)

25,9

65,1

79

40,8

48

58,5

31,0

38,6

43,4

50,9

25,9

84,3

33,1

74

0 20 40 60 80 100

20-44

50-99

100-199

200-499

500-999

1,000 over

Total

Services Manufacturing


29

50

57

63

68

62

33

39

48

0 10 20 30 40 50 60 70 80

Leather, footware

Apparel

Textiles

Printing, publishing

Average manufacturing

Electrical engineering

Chemicals

Mechanical engineering

Office machinery

Innovating firms in manufacturing in Italy (1994-96)


58

28

27

21

20

14

37

74

42

37

0 10 20 30 40 50 60 70

Quality of products

New markets

Reduce labour cost

Extend product range

Improve flexibility

Comply with standards, regulations

Reduce impact on environment

Reduce energy consumption

Reduce materials consumption

Replace existing products

Objectives of innovation Manufacturing in Italy1994-96

(percentage of firms for which the factor is very relevant)


55

28

28

13

13

11

14

39

29

0 10 20 30 40 50 60

Cost too high

Risk too high

Lack of financing

Standards, regulations

Lack of qualified personnel

Comply with standards, regulations

Lack of interest from customers

Lack of information on markets

Lack of information on technologies

Organisational rigidity of the firm

Obstacles to innovation Manufacturing in Italy1994-96

(percentage of firms for which the factor is relevant)

42


77

53

44

24

14

14

13

13

37

74

74

70

0 20 40 60 80 100

Internal sources

Consultants

Fairs, exibitions

Customers

Cmpetitors

Conferences

Suppliers

Telematic networks

Patents

Other firms

University

Public/private R&D

Sources of information for innovation Manufacturing in Italy1994-96

(percentage of firms for which the factor is relevant)


Cost of innovation (percentage) - Italy (1990-92)

Computers Chemicals Textiles Clothing

R&D 65 43 12 16

Design engineering 22 9 18 38

Production investment 12 44 68 27

Marketing 1 4 2 19

Total 100 100 100 100


Service firms which have carried out innovation activities in Italy 1993-1995 (percentage)

• R&D• Design• Know-how• Software• Training• Marketing• Investment

• 13.8• 18.5• 12.7• 52.2• 28.9• 12.2• 53.8


Innovation activities of service firms (percentages)

• R&D 13.8• Design 18.5• Know-how 12.7• Software 52.2• Training 28.9• Marketing 12.2• Investment 53.8• Total -

• 23.7• 8.1• 3.5• 14.1• 2.6• 1.9• 46.0• 100.0

Firms which have carried out the activity

Innovationexpenditure


R&D25%Design

7%

Know-how3%

Software15%

Marketing2%

Investment46%

Training2%

Innovation expenditure of Italian service firms


Innovation expenditure (percentages)

• R&D 23.7• Design 8.1• Know-how 3.5• Software 14.1• Training 2.6• Tooling-up, patents -• Marketing 1.9• Investment 46.0• Total 100.0

• 35.8• 7.4• -• -• -• 8.1• 1.5• 47.2• 100.0

Service firms (1993-95)

Manufacturingfirms (1990-92)


Lessons from the CIS survey (1994-1996) Percentage of innovating firms

• Germany 83

• Austria 81

• Ireland 79

• Finland 69

• Spain 53

• Italy 50 Poland 34

• Turkey 33

• 82• 64• 62• 46• -• 31• -• -

Manufacturing firms Service firms


Concluding remarks

• Innovation can be measured

• We have learnt a lot from innovation surveys and other indicators

• Still many challenges ahead of us


Lessons learned

• Technological innovation is quite a diffused phenomenon

• There are wide differences across sectors and size of firm

• Firms rely on a wide range of innovation sources: investment, R&D and software are the major components of firms' innovation expenditure


Lessons learned

• Major obstacles for introducing technological innovation are of an economic nature - i.e. cost and risk too high

• Technological information is drawn mainly from outside suppliers of equipment, materials and components as well as from in-house technical departments

• Internal sources of information are much more important than public research institutions


Some challenges

• Software

• Services

• Organisation

• Information and communication technologies

• Biotechnologies

• Employment

• Environmental sustainability


Some challenges

• Indicators: a “heavy ship”


Some challenges

• Risk of too much information


Some challenges

• The advantage of international comparability (“Big science”)


Some challenges

• Further development of theories in the knowledge-based economy

• Innovation surveys allow to take into account complexity

• Linkage with other industrial data


Documents

The measurement of innovation Advanced Workshop “Science, Technology and Society” Lisbon, 24 November 1999 The measurement of innovation Giorgio Sirilli