Monday, September 25, 2006

Concurrent workshops

• Session A-1 Non technological innovation
• Session A-2 Multidisciplinary science, technology and innovation
• Session A-3 Global knowledge flows - Human resources and science and technology

Session A-1 Non technological innovation

• The determinants and effects of non-technological innovations
• Just how innovative are New Zealand firms? Quantifying and relating organisational and marketing innovation to traditional STI indicators
• Design as source and enabler of innovation – New and improved indicators
• Better by design? Capturing the role of design in innovation
• Industrial reflexity: An institutional approach to measure innovativeness of organisations  

The determinants and effects of non-technological innovations

Biographical Note

Tobias Schmidt studied Economics at the University of Augsburg and Wayne State University (WSU) in Detroit. He currently works at the Center for European Economic Research (ZEW) in Germany. His primary research interests are the economics of innovation. 

Christian Rammer is mainly concerned with research on innovation, technology policy, regional economics and regional policy. Since April 2000 he works at the ZEW, Department for Industrial Economics and International Management.

Abstract

In 2005 Eurostat and the member states of the European Union conducted the fourth Community Innovation Survey (CIS IV). In anticipation of the new Oslo Manual the harmonized questionnaire contained some questions on non-technological innovations, to be more precise marketing and organizational innovations. In this paper we make use of the German part of the CIS IV to analyse the determinants and effects of non-technological innovations and compare them with those of technological innovations. A first step will be to look at expanded figures on the prevalence of non-technological innovations in certain industry groups, with a special focus on service industries. This will be followed by multivariate analysis of the determinants of non-technological innovations for all firms and the subset of technological innovators. First bivariat and multivariate probit estimations show that the determinants of technological and non-technological innovations are quite similar. There is one main distinguishing group of factors, however, that is the competitive environment. The more important technological leadership is to be successful the more likely are firms to introduce technological innovations. The harder it is to foresee demand, the more marketing innovations are introduced. For technological innovators we show that innovation activities related to technological innovations induce non-technological innovations, too. To give an example, firms which bought machinery or software for their technological innovation activities are significantly more likely to introduce organizational innovations than other firms.

The effects of non-technological innovations are evaluated with respect to performance in terms of return on sales, cost reductions and sales with market novelties. The first results indicate that non-technological innovations need to be combined with technological innovations in order to have an effect on the return on sales in the short run. For technological innovators the share of sales due to market novelties is higher if the technologically new product is accompanied by a marketing innovation. Similarly, cost reductions are highest if firms combine technologically new processes and organisational innovations. The analysis shows that non-technological innovations do matter for the success of firms. Their determinants are similar to those of technological innovations, however, which implies that no specific policy measures to support non-technological innovations seem to be necessary, since firms that are encouraged to introduce technological innovations also have an incentive to introduce non-technological innovations. To investigate if this is indeed the case, future studies should look at the link between public funding for technological innovations and the introduction of non-technological innovations.

Just how innovative are New Zealand firms? Quantifying and relating organisational and marketing innovation to traditional STI indicators

Biographical Note

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Richard Fabling is Chief Adviser (Economic Strategy) at the NZ Ministry of Economic Development. He holds a doctorate in Applied Mathematics (Magnetohydrodynamics) and has published in economics and astrophysics. His current research focuses on links between firm-level practices and performance.

Eileen Basher

Abstract

There is a wide variety of views on the strategies, practices & characteristics of firms that make the greatest contribution to innovation and productivity improvement. Previous research within the New Zealand Ministry of Economic Development (MED) has examined the practices of New Zealand firms, focussing on those behaviours that have the strongest causal impact on firm performance. Behaviours that are shown to be particularly important include innovation activity, human resource management and marketing (Fabling & Grimes, forthcoming1). While traditional STI indicators were found to be good signals of firm success, so too were activities underlying? Non-technological? Innovation, such as investments in market development or organisational improvement. STI indicators generally provide a mixed message on the innovative capacity of New Zealand businesses. For example, cross-country comparison of business expenditure on R&D suggests relative weakness, while product & process innovation outcomes suggest performance comparable to the EU average. This paper investigates how broader measurement of innovation changes our understanding of what an innovative New Zealand firm looks like.

Following revised Oslo manual guidelines, Statistics New Zealand and relevant policy agencies have developed a new suite of innovation indicators. In 2006, Statistics New Zealand will produce economy-wide measures of product, process, organisational & marketing innovation under the new guidelines. Data has been collected within the Business Operations Survey (BOS) for a sample of over 9000 enterprises. Uniquely, innovation data has been collected in conjunction with a broader set of qualitative measures of general business practices, including questions on strategy, customer & supplier relations, human resource management, benchmarking & quality control. Further, for a sub-sample of roughly 1200 respondents, consistently measured business practice data is also available from 2001.

We use this dataset to understand NZ firm-level innovation in two ways. Firstly, we compare and contrast different innovation measures (across both outcomes & practices) within the BOS cross-section, focussing on variables that prior research has shown to be important determinants of firm performance. Secondly, using panel data, we ask two questions: for firms that reported organisational innovation in 2005, to what extent is this innovation related to changes in general business practices measured over 2001-2005 (in absolute terms and relative to other innovator types & non-innovators)? For firms that reported product & process innovation in 2001, how have their general business practices evolved consequently (again in both absolute and relative terms)?

We conclude by briefly outlining the longer term research programme planned with this dataset. Driving the research agenda is a desire to use our understanding of these empirical phenomena to foster better policy design and implementation. To that end, our work will focus on examining the two-way causal relationship between practices (including innovation practices) and performance ? Particularly how firms? Practices change in response to market signals.

Design as source and enabler of Innovation – New and improved indicators

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Biographical Note

Ray Lambert studied economics at the LSE. He has worked in several government departments, recently specialising in technology and innovation policy, including the quantification and assessment of UK innovation performance and its determining factors, including design and the technology infrastructure. UK Department of Trade and Industry, Office of Science and Innovation.

Abstract

Objectives:

• To develop concepts of design in the family of innovation indicators and analytical frameworks.
• Review the use of existing data and the need for revised guidance on measuring and modelling design in innovation.

Background:

Indicators for broad policy purposes still dominated by R&D, even though it is recognised that only a minority of businesses invest in R&D themselves, while the dissemination and application of technology and other innovation relevant knowledge is essential for the welfare benefits of both publicly and privately funded research to be achieved.

In the measurement of R&D under the guidance of the Frascati manual, design can be covered in the as part of the development process. But it is typically not identified separately or featured in policy frameworks for addressing national R&D targets or strategies.

The 3rd revision of the Oslo manual has extensive treatment of innovation outside of or ancillary to the development or use of technology. But the manual remains limited in its treatment of design:

• It is discussed under the category of marketing innovation. That is, it is conceptualised largely as a decorative add on to product innovation.
• In the treatment of innovation activities and expenditures, guidance on surveys design does not suggest that separate identification of design should be the norm.

However some recent developments in thinking broadly about innovation suggest that good design:

• can be the bridging function that adapts technological possibilities to the needs and preferences of customers, though new and improved products (goods and services);
• takes the ideas generation role in many industries, especially but not exclusively services, and
• is needed even in business processes, marketing and delivery.

UK DTI review of design and creativity in the economy.

This review brought out the importance of creative industries in themselves as a sector that has outperformed many others, and as sources for innovation elsewhere.

Some commissioned supporting academic studies showed contribution of design to innovation and its management, not only in the traditional domains of product design but also in services and the management and organisation of business processes.

The authors noted a lack of systematic data on design even at the national level, so that gauging performance and international benchmarking was hard to achieve reliably.

Design Indicators.

Following from these analyses, the paper will present some new indicators on design inclusive indicators, for example "design led", innovation in production, services, processes and business processes. These concepts will be illustrated using data from the UK CIS and other surveys and thus to ideas for ways forward in broader indicators under NESTI auspices, probably including:

"Frascati for Design"

Is the design in innovation topic of sufficient importance and distinctiveness to warrant a new guidance manual on measurement and interpretation?

Possible amendments or annexes to Oslo manual.

Eg. Oslo 3A. Amend guidance on design in innovation definitions and expenditure categories.

Oslo 4. Annex on measuring Design investment and applications.

Better by Design? Capturing the Role of Design in Innovation

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Biographical Note

Meric S. Gertler is Professor of Geography and Planning, Goldring Chair in Canadian Studies,and co-director of the Program on Globalization and Regional Innovation Systems at the University of Toronto. He also co-directs the Innovation Systems Research Network, a national network of scholars in Canada funded by a $2.5 million SSHRC grant (2006-2010) to study 'Social Dynamics of Economic Performance: Innovation and Creativity in City-Regions'.

Tara Vinodrai, is a Post-doctoral Research Fellow in the Department of Geography and the Program on Globalization and Regional Innovation Systems (PROGRIS) at the University of Toronto. Her doctoral dissertation examined the relationships between design, innovation, knowledge flows and local labour market dynamics. She recently co-authored the report Designing the Economy: A Profile of Ontario 's Design Workforce. She is also a member of a research team developing statistical indicators to examine the relationship between innovation, social dynamics, economic performance, and quality of life in Canadian cities. Previously, she has worked as a research economist in the Microeconomic Analysis Division of Statistics Canada on issues related to the knowledge-based economy.

Abstract

The essence of innovation is the process of bringing to market new products or processes which, if successful, generate new economic value. Traditionally, we have come to view this process as one in which the primary inputs are scientific, technological, or commercial. Scientists working in university, corporate or public labs generate new knowledge in a variety of forms that may lead to commercializable outputs. Institutions of higher learning produce highly qualified personnel who transmit knowledge in embodied form throughout the economy, enhancing the innovative capacity of firms. Engineers, technical workers and organizational specialists develop new production processes and improvements to existing processes. Interaction with customers and suppliers provides important knowledge inputs that further contribute to the innovation process.

Despite the increasing sophistication in our ability to conceive of and measure innovative activity – inputs, interaction, and outputs – the traditional approach fails to capture an important dimension of the innovation process that leads to the creation of economic value: design. This paper reviews the accumulated evidence – both quantitative and qualitative – that documents the growing importance of design as a key input in the innovation process and as a source of value added in a wide range of sectors. We demonstrate that design employment is growing more quickly than the labour force as a whole, and document how the design workforce is becoming more widespread in a wide range of sectors right across the economy, although its geographical distribution is strongly concentrated in larger metropolitan areas. We then review a set of conceptual arguments that help us understand the more fundamental transformation underlying these recent empirical trends. Included here is a set of recent literatures on the 'cultural economy' and creativity, as well as a related literature on the 'business of design'.

The rise of design as a source of innovative content and economic value also poses significant challenges for the measurement and statistical documentation of innovative activity. We enumerate these challenges and suggest some strategies for modifying existing innovation surveys to capture the role of design in the innovation process. Our analysis is informed by a recent study of employment dynamics, contracting relationships, freelance activity, and longitudinal mobility in industrial and graphic design in the Toronto economy.

Industrial reflexity: An institutional approach to measure innovativeness of organisations

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Biographical Note

Manfred F. Moldaschl, Chair for Innovation Research and Sustainable Resource Management, Faculty of Economics, Chemnitz University of Technology. Director of the Institute for Human Resource Management, Chemnitz, and Head of the Innovatop, Center for Innovation Research, Munich.

Abstract

On the level of firms and - sometimes on organizations – hundreds of indicators are offered to measure their innovativeness. This can refer to the shown innovation performance or to the "ability" of firms/organizations to adapt to new situations and/or to create new goods and services. Particularly the latter seems to be the province of scholars and consultants. Almost daily, new concepts (or labels) which claim to conceptualize the ability of firms to survive or to be successful in the future, compete for attention.

Most of the indicators used are based on ad hoc criteria, lacking a theoretical foundation or even awareness of its necessity. Some well known concepts do have theoretical support, such as "absorptive capacity" (Cohen and Levinthal 1990), "change capabilities" (Pettigrew and Whipp 1993), "dynamic capabilities" (Teece et al. 1997) and there are others. However it is not clear as to where these competencies reside, whether in people, cultures, organizational structures, or to what extent. When indicators are developed to show these competencies, theoretical questions are not addressed. For example, Cohen and Levinthal measure "absorptive capacity" by the share of total expenditures of the firm allocated to R&D. The OECD and Eurostat (OECD/Eurostat 2005) have codified the practice of collecting and interpreting measures of new products, processes, market development and organizational changes, but stop short of offering a theoretical foundation for the measurement of innovation.

My paper gives a critical description of this situation and offers a new proposal to classify and to measure the "inclination" of organizations to change, concerning not only technical but also organizational and cultural dimensions of change. This proposal is grounded in pragmatic thinking as it is represented in the theory of reflexive modernization, in the pragmatic version of organizational learning theory, and in the "old institutionalism" of socioeconomics. The concept of "Institutional Reflexivity" which has been developed on this basis, tries to operationalize the "inclination" to change (or the probability for it) in organizations in the first step without any reference to individual or collective competences. Instead, it analyzes the institutional arrangements with respect to their reflexivity, e.g.: to what degree and in which forms are self-observation and self-critique is institutionalized? Which practices are implemented to evaluate also unintended consequences of action? How much and how does the organization use, adopt, implement and integrate external perspectives?

Starting from the hypothesis that 'structural' and 'strategic' views of innovation are complementary (since, in the pragmatic view, structures are man-made, unintentionally and intentionally), we have to add a "Resource Perspective" in the second step. This second part deals with human and social capital and conceptualizes the relation between institutional and social factors facilitating change. The paper presents operationalizations and some empirical findings from a study in the Chemical industry.