Metrics and evaluation for innovation in firms

Multiple measures can be used to evaluate innovation in firms, including measures of innovation inputs, innovation processes, and innovation outputs. Inputs for measurement include various statistical sources including firm innovation surveys. Appropriate measurement of innovation in firms is critical for innovation policy. Metrics and evaluation for innovation in firms should include different dimensions of innovation, adopt a broad approach to innovation determinants, go beyond targets and aggregates, address the role of government, capture knowledge interactions, and measure the social impacts of innovation.
 
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Why is metrics and evaluation for innovation in firms important?

Appropriate measurement is critical for policy to support innovation in firms (see Innovation in Firms(OECD 2010a, 2010b) since it may help policy makers in accomplishing the following: 
 
  • Assessing the contribution of business innovation to achieve social and economic objectives. 
  • Understanding the determinants of and obstacles to innovation to design policies with higher chances of success.
  • Evaluating the effectiveness of different policy approaches, and consequently adapting current policies or designing new ones. 
  • Benchmarking innovation performance and conditions for innovation to those of other countries.

 

What measures can be used to proxy innovation in firms?

Multiple measures can be used to proxy innovation in firms and get complementary insight into firm innovation.
 
Measures may:
 
  • Deal with various modes of innovation in firms (Figure 1)
  • Focus on innovation input, such as business enterprise expenditure on research and development (BERD) (Figure 2)
  • Reveal dimensions of the innovation process, such as collaboration for innovation (Figure 3)
  • Focus on innovation output, such as patents (Figure 4)
 
Figure 1. Innovation strategies by firm size, 2006-08 
As a percentage of all SMEs and large firms
 
Source: OECD, based on Eurostat (CIS-2008) and national data sources, June 2011. See chapter notes
 
Figure 2: Business enterprise expenditure on R&D, 1999 and 2009 
As a percentage of GDP
 
Source: OECD, Main Science and Technology Indicators Database, June 2011. See chapter notes.
 
Figure 3. Firms collaborating on innovation activities, by size, 2006-08 
As a percentage of innovative firms
 
Source: OECD, based on Eurostat (CIS-2008) and national data sources,June 2011. See chapter notes.
 
Figure 4. Patenting activity by sector, 2007-09 
As a percentage of patents filed by firms, at the EPO and USPTO
 

Source: OECD, calculations based on the Worldwide Patent Statistical Database, EPO, April 2011; and ORBIS© Database, Bureau van Dijk Electronic Publishing, December 2010; matched using algorithms in the Imalinker system developed for the OECD by IDENER, Seville, 2011. See chapter notes.

StatLink:  http://dx.doi.org/10.1787/888932488084  

 

What are the sources for measuring innovation in firms?

Inputs for measurement include various statistical sources, such as the following:
 

 

What types of metrics and evaluation for innovation in firms are needed for innovation policy?

Metrics and evaluation for innovation in firms should:
 
  • Include different dimensions of innovation. Innovation may be characterized by several dimensions including (1) the degree of novelty (e.g. new to the firm, new to the market or new to the world), (2) the type of innovation (e.g., product, process, organizational or marketing innovation), (3) the impacts (e.g. radical or incremental innovation) and (4) the source of innovation (technological and non-technological innovation). Taking into consideration these different dimensions is important when measuring innovation in firms and designing innovation policy as each of these dimensions (e.g. the degree of novelty, the type and the source of innovations) may influence the impacts of innovation on firm performance (e.g. turnover, cost reduction, and productivity), as well on socioeconomic performance (e.g. contribution to growth and job creation). Recognising this is important for innovation policy agendas.
  • Adopt a broad approach to innovation determinants. Innovation is affected by a wide range of factors at multiple levels of analysis (e.g. those determined at the firm, industry, region and country levels).
  • Go beyond targets and aggregates to an analysis level that will help understand why and how innovation happens in firms.
  • Address the role of government, including central and local government and various agencies, in fostering innovation.
  • Capture knowledge interactions since the production of new knowledge is often a collective process involving individuals and organizations within networks.
  • Measure the social impacts of innovation—evaluating not only the contribution of innovation to economic performance, but also its impact on well-being and its contributions to achieving social goals
 
For more details, see Measurement for Innovation Policy (see Measurement for Innovation Policy).
 
 
 
Contributor: OECD
 
References
  • OECD (2013), OECD Science, Technology and Industry Scoreboard 2013, OECD Publishing. 
  • OECD (2012), “Country profiles”, in OECD Science, Technology and Industry Outlook 2012, OECD Publishing. doi: 10.1787/sti_outlook-2012-en
  • OECD (2011), OECD Science, Technology and Industry Scoreboard 2011, OECD Publishing. doi: 10.1787/sti_scoreboard-2011-en
  • OECD (2010a), "Improving Governance and Measurement", in The OECD Innovation Strategy: Getting a Head Start on Tomorrow, OECD Publishing. doi: 10.1787/9789264083479-9-en
  • OECD (2010b), Measuring Innovation: A New Perspective, OECD Publishing.doi: 10.1787/9789264059474-en
  • OECD (2009a), Innovation in Firms: A Microeconomic Perspective, OECD Publishing. doi: 10.1787/9789264056213-en
  • OECD (2009b), OECD Patent Statistics Manual, OECD Publishing, doi: 10.1787/9789264056442-en
  • OECD (2009c), OECD Science, Technology and Industry Scoreboard 2009, OECD Publishing. doi: 10.1787/sti_scoreboard-2009-en
  • OECD (2008), “Country profiles”, in OECD Science, Technology and Industry Outlook 2008, OECD Publishing. doi: 10.1787/sti_outlook-2008-en
  • OECD (2007), OECD Science, Technology and Industry Scoreboard 2007, OECD Publishing. doi: 10.1787/sti_scoreboard-2007-en
  • OECD/Eurostat (2005), The Measurement of Scientific and Technological Activities—Oslo Manual: Guidelines for Collecting and Interpreting Innovation Data, 3rd ed., OECD Publishing. doi: 10.1787/9789264013100-en
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Innovation in Firms

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Relevant Indicators

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